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Dennis McCain
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I am a dividend growth investor that seeks out companies with a long history of increases in revenue, earnings and dividends. I then enhance those dividends and increase my income through the use of a proactive option strategy. My goal is to create a stream of passive income that will provide me... More
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Dividends, Derivatives and a Camera
  • Everyone Should Have An Investing Goal 1 comment
    Mar 29, 2014 11:32 AM

    Everyone should have a goal. But a goal without a plan is just a wish.

    I think I'd like to be independently wealthy some day. The kind of wealthy where I could wake up every day and do exactly what I want to do and not what someone else wants me to do. I don't want a boss and I don't want employees. I don't want business hours and I don't want to be anywhere in particular at any given moment. And I think most people would also want these things too. So why don't we have this?

    If you don't inherit wealth, where does it come from? Except for the lucky few that'll win the lottery, the rest of us will have to earn it. The road to riches starts with a good education. That's a must. It's followed by a successful career in your chosen field. And thirdly it's your ability to save and invest your wages. It is this third part that I have written about so often and is the main subject I like to write about -- Investing.

    My type of investing is simple. I like to buy dividend growth stocks and then use those dividends to compound ownership in the same or other similar dividend growth stocks. I then supplement the income from those dividends by selling covered puts and calls which are also compounded into additional ownership of dividend growth companies. It is this compounding or "snowball" effect that will help me reach my goal of having a sufficient amount of stocks to produce a stream of dividends equal to the amount of money I think I need to retire. Sounds simple and it is. It just takes awhile. It's not something that will occur overnight.

    "Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success."
    -- Pablo Picasso, Painter, Sculptor, Printmaker.

    My minimum goal is $50,000 per year in dividends. I think that's the minimum that I will need in retirement to have a pleasant retirement. I am always looking for companies that produce an average return of at least 8% and a dividend of approximately 4%. At an average dividend of a 4% an investor would need a total of $1.25M in equities to generate $50,000 per year. That seems almost unobtainable but everyone has to have a goal, right?

    So how do I start down this path? First of all I need to live well within my means so that I can save/invest in myself first. Most people either won't or can't do this because they spend every penny they make every week. That's a huge mistake. The best thing they could do for themselves is to have money taken out of their paycheck before they ever see their check. It's forced savings. As time goes on more and more can be put away for investing as the paycheck increases. Once an individual begins see the benefits of saving they begin to understand that wealth really is attainable. These savings soon need to be put to work. They need to work at making money for the you as hard as you work in your career for your wages.

    I invest in dividend growth companies because I want my money invested in companies that are increasing sales and earnings and therefore making money for me, as a shareholder. I expect these companies to use some of their earnings to grow the company and some of their earnings to pay me a dividend. I expect my investments to grow and I expect to get paid by my investments. I'm in this to make money.

     
    "What you get by achieving your goals is not as important as what you become by achieving your goals."
    -- Henry David Thoreau, Author, Poet, Philosopher.
     

    During my working years I expect to receive dividends and then reinvest those dividends in the same company or a similar company. This reinvesting or compounding will eventually increase the total value of my portfolio and simultaneously increase the amount of dividends I will receive. During my retirement years I intend to receive those dividends and not reinvest them. I intend to for those dividends to remain in cash and live off that money. Hopefully one day my plan will be complete but for now it's simply my goal.

    Thankfully just having a goal like this has caused me to simplify the problem of knowing when to retire. It has also given me the confidence to know that when I do achieve that goal I will have the ability to retire without complications. It's these goals that clarify our thoughts and actions.

    Everyone should have a goal.

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    Great thoughts, Dennis. These are steps that a lot of people want to circumvent on their path to prosperity. Some are able to do it, but they're the exception to the rule. Hard work, planning, and accountability are absolutely essential.
    30 Mar 2014, 05:31 AM Reply Like
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