Some of my family members and I have received consistent income from the Stock Market for many years.
That’s why today I want to share with you some investing “how-tos”.
However, I want to preface this newsletter by stating that, considering the current economic environment and the stock market performance, you must be EXTREMELY cautious.
The information in this newsletter is NOT a recommendation to buy anything or sell anything right now.
It meant to ignite your curiosity and motivate you to learn more about income investing.
Because right now is a great time to learn about strategic investing, and income investing in particular.
As a financial independence mentor, I often remind my clients and students that having multiple sources of income is a cornerstone of being financially independent.
You cannot rely on a single income source and have a peace of mind about your financial life… because in life things happen – businesses close (think pandemic), jobs disappear (think recession), cost of living skyrockets (think inflation), etc.….
So, having diversified sources of income is a wise thing to do if you don’t want to experience constant money worries.
If you follow me for a while, you know that I am investing in the Stock Market since the 90s and it’s one of my sources of income.
“How? How do you receive consistent income from the Stock Market?” – you may ask.
The answers is simple.
You see, when I started investing in the Stock Market in the 90s, I was gambling!
I was ambitious and ignorant, which is a dangerous combo!
So, I tried to raise money for the house down-payment and was buying “hot stocks” to double and triple my money quickly.
For a short time, I had what investors call the “beginners’ luck” and made money on speculative stocks. But this luck vanished rather quickly.
That’s when I realized that I must become a strategic investor, not a gambler.
So, I diversified my positions among
– Growth stocks (stocks of the companies that have great new technologies and grow quickly),
– Value Stocks (shares of solid companies but cheap at the moment because of temporary, non-structural issues), and
– Income stocks – stocks of the companies that pay consistent and increasing dividends (basically, share their profits with the shareholders).
Here’re the thing…. There’re two possible ways to receive income from stocks.
The first way is when a stock you own appreciates in value and people who want to buy the stock decide that the stock share is worth more than you paid for it.
If you hold a stock that has gone up in value, you have what’s known as unrealized gains. Only when you sell the stock you lock in your gains.
Since stock prices fluctuate constantly when the market is open, you never really know how much money you’re going to make from your stock until you sell it.
The second way is when the company that owns the stock issues dividends.
A dividend is a payout that some companies make to their shareholders that reflects the company’s earnings.
Dividends are often paid out quarterly and provide stockholders with a consistent stream of income, regardless of what happens to the stock price.
Typically, older, well-established companies pay dividends, while newer companies do not.
For example, Apple stock pays dividends now but it was not paying dividends a few years ago.
Dividends are not guaranteed, so a company can stop paying them at any time.
That’s why it’s super important to check the history of company’s dividend payments and see if the company is consistently increasing the dividends over time.
And to keep your money growing as fast as possible, it’s a good idea to keep reinvesting your dividends rather than spending them when you receive them.
That way your income from the dividends will grow larger and larger as it compounds over time.
Buying dividend-paying stocks may seem boring… comparing to promises to become a cryptocurrency millionaire within a couple of years.
However, my many years’ experience as an investor have taught me that get-rich-quick schemes don’t work.
Even get-rich-somewhat-quick efforts can too easily crash and burn your golden eggs.
That’s certainly happened in my life more than once.
Many people are in full panic mode right now because it’s very hard to see your retirement accounts losing half of their value, comparing to just a year ago….
Which is why today I invite you to consider safer income plays… many of which you can buy right through your brokerage account.
The stock market can generate massive returns for investors.
My father in-law was living off his dividends’ income in his retirement!!
But investing in dividend-paying stocks’ strategy requires patience and discipline.
Many companies that pay reliably increasing dividends are some of the world’s highest-quality businesses.
These companies are well managed, have great products and services, don’t take unmitigated risk, and focus on growing their businesses and rewarding shareholders steadily… and even increase their dividends’ payments.
I’m talking about companies like Apple (AAPL) – one of the most popular technology investments in the market today.
This far-from-boring company initiated its dividend in 2012. It’s paid out over $128 billion in dividends to its shareholders. And I believe its dividend will continue to rise.
My Stock Market Income strategy is simple: Accumulate shares of the safest, highest-quality dividend-paying growth stocks.
Then, once I own these stocks, my next step is easy: Do nothing.
That’s one of the ways to make money while you sleep…
The bottom line is this: You don’t have to gamble in Financial Markets to receive additional income from it!
Gambling in the Stock Market is not a great way to make money that lasts.
As an income investor (aka dividend growth investor), you can receive a great additional income from the highest-quality companies on earth.
Hope this article is helpful.
P.S. If you’d like to receive my Beginner Investor Toolkit e-book, feel free to message me.