Don’t Sell!

If you’ve read my book, The Stock Market is for Everyone, and was inspired to begin investing in the stock market, right about now you might be second-guessing your decision to purchase the book in the first place.  The volatility in the stock market has returned with a vengeance, after being missing in action for most of the last eight years.

It’s never fun to watch your portfolio go down in value, whether you’ve been investing for six months or six decades.  Moments like these, though, will make you a better investor…if you can stomach the volatility and follow my advice.

Don’t sell!

For most investors, this principle is the most difficult practice to adhere to.  However…the number one reason investors fail is not because they buy the wrong companies.  It’s because they sell too soon.

Warren Buffett and the founders of The Motley Fool, Tom and David Gardner, have two of the best track records of any investors over the last 25 to 50 years.  They have each done empirical studies of every single investment they’ve made.  Both concluded that their returns, although staggering, would be even better had they never sold a share of any winner, as well as any loser!

Here’s why.  A correction, which is what we are in at the moment, can last a few months to a few years.  It is impossible to know how long any correction will last; however, the one thing that we can be sure of is that the market goes up a lot more than it goes down. 

And that’s why the best strategy any investor can have – in spite of everything you hear in the mainstream media – is don’t sell.

Let me give you an example.

Over the last five decades, Berkshire Hathaway has been an enormous wealth creator.  In fact, a $1000 investment in the early 1980s would be worth over a million dollars today.

In the period between then and now, there have been five instances where the stock has fallen between 30 and 60 percent.  If you had sold at any one of those times, you would have missed out on some of the biggest returns the company has to offer!

That’s why we at Wealthy Joe Investing are long-term investorsWe will not be shaken up by short term volatility.

Again, if you are new to investing, this could be very unsettling.  And I do understand!  I am, however, 100 percent confident that if you ride this out, you will be very happy that you did.

Don’t sell!

Guest Post: Dividends

Hello, everyone!  Today we’re going to hear from Chris Pascale, who is going to talk about dividends.  It’s always a pleasure to have you here, Chris!  Take it away:

Dividends: When Your Money Makes You Money

As noted in my posts about The Gap and Starting a Roth at 15, my financial writing tends to center around my kids being better off than I am.  This piece will be no different.

Over the years, my daughters have built up passbook savings accounts with money received from relatives on birthdays and holidays.  When they make deposits, the interest that accumulates can be seen, often between 1 and 5 cents a month.

As we’ve viewed the interest, I always point out that by having money, they are getting more money.

My older children are now learning about stocks, bonds, and real estate investing.  Among the things we discuss is the value of getting dividends.

What Is A Dividend?

Some companies divide up profits at the end of a financial period and pay that money to shareholders.

Divided at the End = Dividend

Are Dividends Better Than Interest?

Dividends are generally better than interest because they are attached to a security that can go up in value.  Cash in the bank can only lose value against inflation.  While stocks have a risk of loss, cash guarantees it.

Also, dividends are almost always higher than the interest you can earn these days, even on a current CD or bond.  There may be some CDs and bonds earning more interest, but the capital is then tied up for an extended period of time.  Contrastingly, you can sell the dividend-paying stock anytime you want.

This does not mean that stocks are better than bonds and CDs, but they are different, and those differences need to be understood.

Dividend Example

This year, I bought some shares of General Electric (GE) that I intend to hold for a long time, and acquire more of.  I bought 35 shares at the start of the year, and another 25 shares this week.  My overall investment is down, but I like GE for the following reasons:

  • They make quality products I use.
  • They are a solid American manufacturer.
  • The stock appears to be on sale, having dropped 25% in the past few months.
  • The dividends are reliable.

GE is not a stock you can get rich with by buying $1,000 worth.  For such ventures, you might consider Hemp, Inc. or other pot stocks, of which I own over 300,000 shares and would like to buy 300,000 more.  What GE is, though, is a stock you might be able to double your money with over the next 10 years while being paid dividends along the way.

Earnings on GE Dividends

GE is paying dividends of roughly 3%.  This means that owning $1,000 worth will bring you $30 in cash.  If you were to slowly add shares to your investment over the next 20 years (not making GE your only investment, of course), it would not be unreasonable to see your investment grow to $50,000.

That base of $50,000 would be paying dividends of $1,500 a year, if they only paid out once a year.

If you had 10 other dividend-paying stocks, then a portion of your retirement income would be $15,000 in dividends.

Reviewing Retirement

$15,000 is not going to cut it if you want to retire well.  That’s why it’s such a shame when an older person only has Social Security to rely upon.  Let’s review what your retirement will look like with dividend income.  This may be very modest because it assumes no rental real estate, spouse’s retirement, or valuable collectibles.

Assets at 60 years old:

Personal residence: $250,000

Retirement account: $700,000

Stock account: $500,000

Total assets: $1,450,000 

 

Income at 60 years old (working for pleasure, part-time):

Job income: $20,000

4% retirement draw: $28,000

Dividend income: $15,000

Total income: $63,000 

 

As noted, this assumes that only one person in the home worked, so there is only one retirement account and there will be only one Social Security income later on, which will add at least $20,000 to the total income when drawn upon.

What is important to note is the difference this dividend income makes.  Going from $48k to $63k is still on the spectrum of middle class comfort for those who have unburdened themselves of the shackles of a home mortgage and car loan payments, but it’s a big difference.  It can allow for important home improvements to be made.  A couple can go on a very nice vacation, or they can comfortably give a loved one in need as much as $2,000 without feeling as though they are making a great sacrifice.

Lastly, the dividends come from a base amount of capital that is worth $500,000, which can go up, but even if it went down, the value of having gotten paid for years will equal a net gain.

And you can always sell the stock.

 

 

 

 

 

Wealthy Joe $1.00 A Day Challenge!

When I tell you that almost anyone can build wealth over time, I mean it!

I recently ran the numbers on how much a dollar a day invested in the stock market, starting on the day I was born, would have accumulated to be.  The number was staggering: a whopping $650,000!

Let’s put this in perspective:

Total number years: 50                                                                                                            Amount invested over time period: $18,378 ($365 annually)

Stock market crashes in 1987, 2000 and 2008.  Countless geopolitical risks over the years. Yet, I would still have $650,000 towards retirement.

The excuse that “I don’t make enough money to invest” simply isn’t true.  Surely you can figure out a way to eke out a dollar a day!  There is something you can sacrifice for the benefit of becoming financially free one day.

I am challenging you to start investing a dollar a day, today.  It’s easy.  My 24-page absolute beginner’s guide to investing will show you everything you need to know to get started.

If not for yourself, do this today for your children!  (Karate ain’t going to do a damn thing for them in 30 years. Not a thing…)

If you don’t have children, do it for your nieces, nephews, or other favorite young people in your life.

Just DO IT!!

Ladies and gentlemen, the age of artificial intelligence (AI) is upon us, and will be here before you know it.  I’ve shared here and here about how AI stocks are quite likely to explode in growth in the same fashion Amazon and Netflix did.  We all have the potential to become very wealthy through investing in these companies!

Start arming yourself by building wealth that can secure your future.  I challenge you to start investing just a dollar a day, today.

 

 

A Guide to Financial Freedom

Good evening!  We have gotten quite a few new visitors to the blog recently, and I wanted to welcome you all.  I hope that this blog inspires you to begin investing.  I truly believe that investing in the stock market is the key that opens the door to financial freedom.

In addition to my posts here, I have written a short, simple guide to investing basics that is specifically geared toward regular Joes and Janes who wish to become wealthy but have never thought investment was for them.

Titled THE STOCK MARKET IS FOR EVERYONE, my book walks you through what a stock is, how to decide what stock to buy, the mechanics of how your money grows in the stock market, and more – all in 24 easy-to-read pages.

You can purchase the e-book for $3.99 here, and the paperback for $9.99 here. After you read it, your comments, questions and suggestions are more than welcome!

Here’s to your wealth!

It Goes By Fast…Life, That Is!

Like anything else in life, the younger you start, the better off you will be in the long run. Tiger Woods could putt at the age of 3.  Warren Buffett started investing at age 11.  My cousin Sonny, at 5, knew he wanted to be a doctor; he went on to become a very successful surgeon.

There’s a huge advantage to starting early; however many of us don’t.  It doesn’t mean we’re doomed. We do eventually have to get started, though; it’s better late than never.

Case in point: Today I met a gentleman in need of employment. He was looking for security guard training, to be more specific.  Without my probing, he revealed to me that he is 66 years old and receives $1300 per month in Social Security, and nothing else.

I couldn’t help but think how much this man could have accumulated had he invested in the stock market over the last 50 years.

The problem is that no one is taught the importance of investing for the long term.

The only reason I learned was through the huge mistakes I’ve made that I chronicle in my book, The Stock Market is for Everyone, available here as a download and here in paperback format.

I’ve said this before, and I’ll say it again: We are in one of the most exciting times in history with regards to investing! 

Please, if you haven’t gotten started, do so immediately!

If you don’t know how, then buy my book and learn how to get started.  If you still need help after purchasing the book, then reach out to me.

If you’d like to share your experience as a beginning investor in the comments section, I’d love to read it!

The Biotechnology Boom!

If you’ve read any of my posts in the past, you know that I’m a big believer in investing in artificial intelligence as a way to build wealth.  Another sector that I’m ultra-bullish on is biotechnology.

Now, biotechnology has the potential for great rewards, but it does come with significantly more risk.  It’s just the nature of partnering with these companies.  However, I think you should consider adding biotech companies to your watch list.  Here’s why.

During an interview last year, Bill Gates was asked what he would be interested in pursuing if he were enrolled in college today.  He said that the three most exciting areas are artificial intelligence, biosciences, and alternative energy.

I will admit that this is not the main reason I like biotechnology, but it’s a great place to start.

The reasons I like it are many.

Biotechnology has been around for about 35 years and is just now starting to hit its stride.  We are on the precipice of groundbreaking innovations in areas like gene editingCAR T-cells, and immunology.  People are living longer, healthier lives; innovations in biotechnology are a major reason for this.

Another factor that is enormous is the demographic tailwind that is the baby boom generation.  There are 70 million baby boomers.  They have wealth, and will live many years after they retire.  These 70 million people will demand drugs and medical innovations that improve the quality of their lives.

Let me give you a real-life example of how powerfully demographics can play in a trend.  When Home Depot went public in 1981, it was around the time the middle class in this country was starting to thrive.  The oldest baby boomer was around 32, and that’s around the time you purchase a house and start a family.  As people started feeling wealthier, they started spending.

Imagine 50 percent of baby boomers buying a home.  That’s 35 million people.  This trend was an absolute boon for Home Depot and its early investors – so much so that a $5000 investment in 1981 is worth a staggering $45,000,000 today!  Yes, you read that right – 45 million from a $5000 investment!

I think biotechnology is looking at the same tsunami of demand that will send companies’ shares into the stratosphere!

I will talk about various companies you may want to consider in an upcoming post.  Until next time, Joes!

 

The Most Valuable Resource On The Planet Is Not Oil Anymore!

I cannot overstate the importance of investors paying attention to what’s happening in the world.

If you want to become seriously wealthy, you have got to know that the world is changing…and how!

For example, during the 20th century, we used oil to power our homes and cars, and to make many of the products we use daily. We still use a great deal of oil these days, and global consumption is increasing, but…there’s a new sheriff in town.

Oil is no longer king of the hill when it comes to the worlds most valuable resource. That crown now belongs to data.

That’s right.  Data!

If you don’t believe me, just look at the five most valuable companies in the world: Apple, Google, Amazon, Microsoft and Facebook.

The mobile revolution has increased the amount of data the world generates by a staggering amount, and that number is only going to increase. Think of every text, post, email and video we produce every minute of each day.  All this data in the form of searches, purchases, conversations, social media posts, pictures, location tracking, travel arrangements, dating apps, food delivery apps,  and…well, you get the picture.

All this engagement creates data that is very important to all companies, tech and otherwise. The information we produce daily gives companies insights on human behavior that have not been available at any other time in human history.

Companies that have the greatest amount of data have a competitive advantage like no other. This is why data has become the most valuable resource on planet Earth.

Until next time, Joes!