Wall Street is in the business of making money by selling investment products to include stocks, bonds, mutual funds, ETF’s, commodities & precious metals, limited partnerships for real estate and oil & gas ventures, ad infinitum. The big firms prepare and sponsor courses so that individuals in the financial planning community are able to sell Wall Street’s investment products (e.g., Securities Licenses); and, obtain various credentials (e.g., Certified Financial Planner) which supposedly makes them experts in the field of investing.
There is, however, one investment strategy that is completely overlooked and not talked about because Wall Street can’t make any money from it. Furthermore, it turns the entire investment philosophy of diversification, as created by Wall Street, into a fraud since diversification’s primary purpose is to generate continuing sales of all investment products, constantly encouraging investors to move in and out of investment products regularly. Every time you buy and sell, commissions are earned by Wall Street on both sides of the transaction!
If you want to obtain financial independence, and, just as important, maintain it and outlive your money, there is only one investment strategy needed. With this strategy, it does not matter whether the stock market continues to rise; or, crashes like it did from 2000 through 2002 and again in 2008.
Invest in great businesses that have paid and raised dividends continually through recessions, depressions and wars. These businesses have dividend reinvestment programs (DRIPs). This is really the only viable strategy available anywhere, which fully utilizes the principle of compound interest. For example, The Coca Cola Company (KO) was purchased in 1994 with a dividend yield of 1.53%; after 8-years the annual dividend yield was 11.69%; in 10-years, it was 15.17%; and, in 14-years it was 25.58%. Today, the dividend yield of KO is over 3% at its current price. If KO was purchased now, with a dividend yield in excess of 3%, and, we experienced the same growth, we would be looking at a dividend yield of 23.38% in 8-years; 30.34% in 10-years; and, 51.16% in 14-years. Eventually between 20 and 25 years, the dividend yield should exceed the original cost of the investment. In fact, if you purchased a DRIP stock yielding 3% and it increases its dividend each year by 10%, in 25-years, you would be receiving approximately 350% or 3 and ½ times the original cost of your investment. And, your dividend cash flow keeps increasing each, and every year!
There are at least 127 Dividend Champions, great businesses that have paid and raised their dividends each, and every year, for at least 25-years; KO has been doing this for 56-years; McDonald’s (MCD) for 43-years; Johnson & Johnson (JNJ) for 56-years. There are another 209 Contenders, great businesses that have paid and raised their dividends each, and every year for 10-to-24 years; and 560 Challengers, which have paid and raised their dividends for 5-to-9 years.
The choice is yours, lose 10-years of retirement income for every 1% you pay in fees and risk running out of money; or, create a private annuity with no fees or restrictions, using DRIPs, which will provide passive income through dividends that just might exceed the earnings from your job or business within 10-to-15 years.
You can do this yourself by reading our free newsletters; and/or, by purchasing our recent book, Unlock the 4-Doors to Financial Independence, available for only $4.99 from Amazon.
It’s time for you to take care of your own financial affairs, steer clear of the sharks on Wall Street, outlive your money, and attain financial freedom.
Dum Spiro, spero—While I breathe, I hope.
Robert G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.