Why is it so important to develop your own dividend machine? This multiple part article should help you come to the realization that few investors do until it is too late: The importance of building your own dividend machine
A 25 year old whose portfolio is only thirty thousand dollars, can buy a stock with a dividend of about 8.5% The twenty seven hundred dollars of annual dividends should double about every 9 years at least. With no further investment this particular dividend machine should return over eighty six thousand dollars annually at age seventy. Sound impressive? By reinvesting dividends the first fifteen years this amount should be well over two hundred thousand dollars annually at age seventy. How many of your friends do you think will have done that? Not bad for a one time investment. See the importance of a dividend machine now?
What happens if you don't have the thirty thousand dollars to get started ?Borrowing the money from a loved one or relative is a great alternative. Many parents, grandparents and loved ones loan money to a child for an automobile or school which may or may not have a future tangible value. Giving your loved one their "inheritance" early may create a permanent dividend machine that can be transferred for many generations to come
Wharton School of Business professor Jeremy Siegel said that about 97% of the gain of the Dow since 1900 has been from reinvested dividends . Only 3% was caused by capital gains. Yet many"gamblers" ,disguised as value investors ,have lost hundreds of thousands of dollars, investing in financials like AIG ,Bear Stearns and others. Their mistake is concentrating ONLY on capital gains and not dividends.
Disclosure: No positions