How To Win The Game of Investing
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Infinite games—which are those with no clear ending—are my favorite kind to play. Since there’s really no finish line, there’s technically no winning. You just keep playing.
Because of that, success in these games comes from continuing to make progress. It’s not about “beating” anything—it’s about leveling up and consistently improving.
In my life, I play a handful of infinite games: running, weight lifting, building a YouTube channel, growing a newsletter—and of course, investing.
With investing, there’s no cap on how large your portfolio can grow. It can keep growing forever. And since you’re not limited by your physical ability in quite the same way as other activities, it’s a game you can play for the rest of your life.
On one hand, that’s a really exciting thought. I look forward to being an investor for the rest of my life. I think doing so will help keep my mind active and engaged well into old age (which is still at least a few years off—but approaching faster than I’d like to admit).
On the other hand, getting overly obsessed with growing your portfolio just for the sake of a bigger number isn’t always the healthiest pursuit—especially once more money stops meaningfully improving your quality of life.
Eventually, if you play this investing game long enough, you’ll have “enough.” The problem, though, is that most people never define what that point actually is.
As you get older and your life becomes more financially demanding, you’ll probably need to adjust the goalposts a little—that’s hard to completely avoid.
Just try not to move them for the sole sake of moving them. If you do, you’ll never feel like you have enough—which means no matter how much you’ve built, it’ll never feel like it’s yours to enjoy.
Speaking personally, “enough” has less to do with a specific portfolio size and more to do with the income it generates. I’ve always felt like once I’m bringing in around $2,000 a month in dividends—maybe $2,500 if I need to adjust the goalposts a bit—that’ll be the point where I start pulling from it. To me, that’s a number that lets me enjoy some of what I’ve built without completely stunting the growth of my portfolio.
Overall, you should work to define what “enough” looks like for you if you haven’t already. It’s important to know when to start enjoying what you’ve built instead of constantly chasing more—and if there were a way to “win” this investing game, that would be it.
With that said, I want to hear from you: What does “enough” look like for you? Write to me here and let me know.
Also, I just had my highest day of dividends ever! If you want to see what those numbers look like, I’m giving you all the details here.
Dividend Investing Democratized
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IN MY PORTFOLIO 📈
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ICYMI 🎥
Stocks Are SKYROCKETING Again (For Now) | Ep. 14
In this episode of The Deep End, Ari and I talk about the total 180 that happened in our portfolios last week.
CAREFULLY CURATED 🔍
📺 The Dividend Deception - You guys know how I feel about a lot of these new high-yield covered call ETFs that have been all the rage the past couple of years. My main man Russ did a great job breaking down the dangers of these dividend ETFs, and it’s always good to see we’re on the same page about them.
📚 Dividends Are Your Secret Weapon - I’m a pretty big proponent of investing in ETFs, but I also get a lot of enjoyment out of picking individual companies—I know many of you do as well. In this article, Leo Nelissen does a great job explaining why he personally avoids ETFs and sticks strictly to individual stocks.
SINCE YOU ASKED 💬
"This market drop has been an adrenaline rush for me. I'm conflicted between continuing to dollar cost average into all my positions, versus not funding some, and redeploying the extra cash to positions with current drops in share price, or some combination of the two. I'm wondering what your thoughts are on this situation."
- Robert | Email
This is a really good question—and truth be told, I don’t think you can really go wrong with any of those approaches.
Personally speaking, I only DCA into ETFs. I feel like with those, you can get away with buying no matter what the share price is doing, and timing matters a lot less when you’re buying something that tracks the overall market.
Plus, the whole point of investing in ETFs—at least for me—is to make the process as hands-off and automated as possible. So not worrying about timing fits right in with that approach.
When it comes to individual companies, though, I treat things a little differently.
You certainly can dollar cost average into them—especially as a dividend investor, since you’re really buying the stock for the cash flow. But still, I personally prefer to focus on the companies where I feel like I’m getting the best bang for my buck.
For example, it makes more sense for me to be putting more money into a position like JNJ right now since the current share price is below my average cost. That gives me a chance to lower my cost basis, build a bigger margin of safety, and increase my yield on cost with the position.
On the other hand, that’s exactly why I’m not adding to my WSM position right now. I’m still up about 130% on that one, so the current share price is way above my cost basis.
It just doesn’t feel like as good of a deal, so I’d rather let that one sit for now and put more money into something like JNJ while the valuation looks attractive.
Have a question? Ask me here to see it featured in an upcoming newsletter.
LAST WORD 👋
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