The Biggest Misconception About Dividend Investing
The biggest misconception about dividend investing is that it's a tax-inefficient way to invest that is only good for retirees seeking regular income. While the first part of that statement may be true depending on how you structure your portfolio, the fact is that dividend investing holds tremendous advantages for individuals of all ages, especially the young and ambitious.
When you invest in dividend-paying stocks early on, you have the luxury of time to harness the power of compounding, which is an advantage you lose with each passing second.
The longer your investment time horizon, the more your reinvested dividends can accumulate. This, in turn, allows for even more significant reinvestment, which defines the dividend snowball effect that we all know and love.
With that in mind, many investors are (understandably) drawn to the allure of fast returns, and will turn their nose up at a tried-and-true dividend investing strategy while opting for higher-risk assets. They believe that because dividend investing is a slow and steady game, it lacks the excitement and potential for rapid gains.
Fair enough.
While it's true that dividend investing will never give you instant gratification (which, in the long run, is a good thing), there's no denying that it offers a proven path to building long-term wealth. The sooner you get going, the sooner you can experience the benefits of this wealth-building journey.
I can assure you that if you were to ask a group of investors about their biggest regret, most of them would say, "I wish I had started earlier." Speaking from my own experience as a 29-year-old dividend investor, I can tell you that it (literally) pays off to begin investing as early as you can.
On that note, I want to hear from you. Write to me here and let me know how old you were when you first started investing.
And a big thank you to the 21 readers who responded last week. It really means a lot that you actually take the time to read these emails and write back to me. You rock! 🙌
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IN MY PORTFOLIO
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ICYMI
Had you invested only $10,000 in the three stocks in this video, today you'd be sitting pretty with a million dollar portfolio and you'd have more dividend income than you know what to do with.
In this portfolio update video for the month of July, I'm spilling the beans on what's cooking in my portfolio - the dividend stocks I've been buying, how much my income has grown, and the juicy details on which stocks are currently sitting on my watchlist.
In last week's Dividend Happy Hour, I was joined by my main man Russ Knopf and we talked all about 3M (MMM) and what are plans are for this fallen dividend king.
CAREFULLY CURATED
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SINCE YOU ASKED
"I haven't gotten any dividends yet but I'm starting to get anxiety with it all. Is there any advice you could give me? I've only been investing for a month or so."
- Just A Leeds Thing | YouTube
The best advice I can give you is to stay focused and stay the course. Once you start receiving those dividend payments, I promise you'll feel more excited than concerned.
Right now, it might seem like your stocks are going up and down a lot, which can make you feel anxious, and rightfully so. But when those dividend payments start rolling in, they'll give you a new perspective and will remind you why you started this journey in the first place.
Hang in there — good things are coming your way!
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