My Favourite Way to Invest





Hi folks

Although I use several ways to invest, my most favourite way to invest is dividend investing.

Dividend investing is often viewed as old fashioned, boring and slow.....

Old fashioned?  I am immediately interested! If it worked for the wise folk in times past, then it must be worth a look.
Boring? That's me alright - no dramas please. I value my sleep too much.
Slow? I'm not into losing quickly-gained profits to the caprice of 'the market' thanks very much.

You see, dividend investing (dividend growth investing to be exact) is certainly old fashioned and is currently largely out of favour compared to the excitement of value growth investing and/or index investing. Investing styles fall in and out of favour depending on the prevailing trends in the investment world - nevertheless, despite these ever-changing trends, dividends just quietly keep happening like the steady ticking of a mechanical clock.

I do not have the nerve or risk tolerance for value growth investing or even the more staid index investing (let alone speculative investing or day trading!) - I need more certainty and I need to create an ever-increasing source of real cash income from my investments. I need to build a future source of steady income. Hence dividend investing.




Dividend investing sends me a cheque every six months on the knocker of about 4% - 7% of the value of my investments which I immediately add to my savings. When I have a decent amount saved up from my salary added to my pile of ever-reliable dividends, I then wait till the price of my favourite investments drop below their real worth and I buy up as much as I can whilst they are 'on special'. The more of my favourite investments I own, the more dividends I get paid and the quicker I can save and purchase more of my favourite investments when they are 'on special' .... and so the snow ball grows and grows. At the end of each financial year I get a nice fat tax refund cheque on these dividends as they have already paid 30% tax paid on them before I received them ..... bonus! Soon enough, my investments will be paying enough to replace my current income - this is known as being financially independent.  I never sell my investments (I ignore all the irrelevant stock market news on TV etc).  I never have to worry about a stock market crash because my dividends will still pay regardless of a crash. I simply plow the dividends I earn back into my investments exactly as you would dig compost and fertiliser back into the soil.

Dividend investing is quiet, methodical, unexciting, cyclic, prudent and altogether way too sensible.


Take care folks and stay nice

Mr HM (Phil)

Comments

  1. Phil, we never had to worry about what to do with our money as we never had much due to being on a pension but I am sure your tips are very helpful to those in the workforce. Are you doing some changes on your blog as the Home Page comes up as Pages?

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    1. Yes, the blog is a construction site at the moment - sorry about the mess!

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  2. Wise advice once again Phil. Thanks for the nudge to turn some of those savings into dividend earning shares to expand the portfolio. Your blog is looking good already and I'm sure I'm not the only reader to appreciate the effort you're making to simplify finding particular posts.

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    1. Oh dear, it still is very messy for my liking and re-tagging all my posts properly is an insurmountable task (sigh). There are several functions on this new look that I just have not figured out properly yet ...... I'll get there eventually.

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  3. what share can I ask?

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    1. I specifically buy and hold Licensed Investment Companies (LIC's) that have been around for many years, have very low costs and have an increasing dividends . For example, I hold Argo (ARG), Milton (MLT), AFIC, BKI and a conglomerate called Washington H Soul Pattinson (SOL). I only ever buy them when their price falls below NTA. I hold other stocks as well but these are certainly very core to my portfolio.
      Nevertheless, always do your own homework as I am not a financial adviser.

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  4. Damn I think you're onto something here mate! But alas, it's too boring for most people to take notice.

    No glitz, no glamour, no magic formulas. But very very effective. I guess we get to keep all the fun to ourselves ;)

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    1. We'll never be crowded out Dave - no many are interested in this approach. Oh well, I guess you are right ..... all the more for us then.

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  5. I'm a bit envious of your SOL holdings. I'd love some but I think I found out about them too late...

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    1. Be patient, they'll come down again one day.

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  6. Very nice explanation about invest articles, thks

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  7. What are your thoughts on taking the dividends directly compared to doing the Dividend Reinvestment Options?

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    1. That depends on what stage you are at .... if you are retired or semi retired then this is the whole purpose of dividend shares. If you are still accumulating then always reinvest your dividends as this is part of the power of compounding.

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