My personal interest in investing started back in the 90s. I was 14 or 15 years old and earned some money delivering papers. Saving money was a hobby of mine, but I was always greedy to make more money (the easy way of course!).
Stock markets were bullish back then and I remember my father got a tip from an uncle (or someone else related). He told me about Antonov, a Russian company that builds airplanes. They had developed some kind of unique gearshifting mechanism. Of course the stock price of Antonov would explode if this product hit the markets. Without thinking about underlying business fundamentals I invested $200. I didn't think about the costs, probably costing me 10% of the transaction value back then. Needless to say the stock lost a lot of ground for different reasons. I refrained from investing for a few years.
A few years ago I read different books about investing. 'The Little Book That Beats The Market' by Joel Greenblatt was one of them. I remember I was in awe: could it really be so simple?! I constructed a portfolio of 5 MagicFormula stocks and left them for 1 year. The results were disastrous.... again. I picked two ForProfit-education stocks in this portfolio, but this sector got hit hard during 2011-2012. I sold all my shares.
After this little venture I started reading about index investing a few months later. This investing approach sounded relatively easy to me. Just buy a well diversified index fund with low costs and you'll be fine. Especially with dollar cost averaging and monthly deposits it's a useful strategy for starters because you receive instant diversification. I followed this strategy for over a year and I still think it's great strategy to accumulate some money.
However, I was still not very thrilled by the thought that bearish markets could wipe out 20-30-40% or more of my networth. Until I realized that with sturdy, dividend paying companies this volatility didn't matter! As long as the dividends are robust (and growing!) it is of no relevance what the underlying stock price is. The cash-flow still continues!
Another advantage of dividend growth investing is you invest in individual companies which are fairly valued if you do your job. With index investing you buy a lot of companies with varying price/earning valuations, some of which may not be really good investments at that price.
Brad Thomas is a research analyst and he currently writes weekly for Forbes and Seeking Alpha where he maintains research on many publicly-listed REITs. In addition, Thomas is the Senior Analyst at iREIT Forbes and Editor of the Forbes Real Estate Investor, a monthly subscription-based newsletter.
Thomas has also been featured in Forbes Magazine, Kiplinger’s, US News & World Report, Money, NPR, Institutional Investor, GlobeStreet, and Fox Business. He was the #1 contributing analyst on Seeking Alpha in 2014 (as ranked by TipRanks) and he is currently writing a book on the legendary investor Donald Trump.
Thomas has co-authored a book (The Intelligent REIT Investor) that is available on Amazon.
Thomas received a Bachelor of Science degree in Business/Economics from Presbyterian College where he played basketball. He resides in South Carolina with his wife and kids.