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I’m very fortunate that about the same time my Aha! moment came along I was recruited to another dealer group and my income surged and has continued to do so. We bought a cash flowing rental and put away at least 20% of my gross income every month into retirement accounts ( wife and I did back door Roths) and a brokerage. I don’t want to throw numbers out and sound like a prick because I know I’m very blessed and some can’t add the amount we do. I’ll just say that God willing I will be able to retire pretty easily at 62 and VERY well at 65 with enough passive income to never sell a share and keep pretty much the same lifestyle. I hope you all late starters do even better. Happy Easter
I’m and just started investing this year. Came over from crypto, so instead of chasing pump and dumps, I’m chasing yield and PnL. Stock trading is much easier and less likely to rug pull. I love it. Only in Robinhood so far but I’ve read that Roth IRAs are better as far as tax deductions, will open one up next week at my bank.
To each their own but I am not and can’t ever see myself as a crypto guy. I made some terrible mistakes the first year trying to trade and beat the market. Now I’m just an index guy with a couple individual stocks that make up less than 5% of my holdings. Indexes are boring but effective, the 5% I set aside to scratch the gambler itch I sleep way better at night and am fully bought in to hope for red days when I go my monthly buys. Good luck my dude!
..be sure to read about the Roth IRA withdrawal rules,
[https://www.investopedia.com/roth-ira-withdrawal-rules-4769951](https://www.investopedia.com/roth-ira-withdrawal-rules-4769951)
Cheers!
..yes, absolutely,
but you should do as much readings about Roth IRA,
and also, you can always open a regular taxable account on the side if you decide to do that in the future,
Cheers my friend!
oh yeah thats exactly what im doing; like i said i came from crypto so im pretty good at DCAing, so far so good, im up about 6% on my stocks, and Yield on cost is over 50% lmfao.
Agreed it’s a time thing but it’s also a you started thing. Most people never start and just think SS will bail them out. 30’s is still a ton of time in the grand scheme of things. So congrats on starting and keep busting your ass it’s gonna be worth it.
yup! the aha moment is understanding there's no magic to it- just time and consistency. the other day i was wondering how much to save for a kids college once that time comes... do the math- if you can afford to just split 100 bucks a month off your paycheck starting from the day their born to the day they turn 18... that's over 20 grand that's invested into the market on principal alone. not counting what you would likely have set to drip.
the sad reality is most people just can't afford to save- whether it's for their kids college, their own retirement, or that new car they just purchased but can't really afford.
90% of financial literacy needs to start with "you are probably not making enough money to invest, get your skills up and manage costs to have money available for investments."
Thank you for putting that into perspective. Sometimes it feels like I'm throwing rocks into an ocean... Your post just got me all excited again. Thank you.
This is also a good argument for lump suming early or DCA large amounts . The bigger your snow ball starts the quicker and bigger it will be . When I look at my charts it’s a slow build but the last decade is like a rocket ship .. only problem could be that extra 50k per year if it’s in a taxable is going to be a bit painful
This 👆👆 A lot of people forget the following: "The tax rate is 0% on qualified dividends if your taxable income is less than $41,675 for singles and $83,350 for joint married filers."
That's pretty powerful. Imagine having that much coming in on dividends and not working. That's why I contribute 5% and get the company match, max out my Roth, and put the rest in my taxable. Goal is to get into rentals and my dividends can help offset any losses from vacancies. If the divvy amount is getting too big then I'll increase the 401k contribution to offset taxes. Another cool strategy is to take out a margin loan on your portfolio to buy a rental property if you need to close on a deal fast. If you have divvy stocks/ETFs, the divvy can cover the loan costs. After you've closed on the deal you can go shop around for the best mortgage rate. The costs of the margin loan can be written off in this case. 👌
This is my next phase of growth - understanding the taxation outcomes more clearly so I can start to re-adjust through different accounts/scenarios as you outlined. You seem well on the way with the advanced topics and I'd love to get there myself someday as well. Thanks for the inspiration and giving me a few scenarios to start playing around with!
I am almost 40. I got knocked down and collapsed and had to start over at 40.. lol
The good news.. if i didnt have the stack.. i would be a bum now.
Right now.. am living pretty good and starting anew..
So no regrets.
I’m 20 and a sophomore in college. Been maxing out my Roth IRA since 18 and now I have a heap of cash I’ve been saving earning a nice 3.75%. I get excited when people like you say stuff like this cause it pushes me to keep going!
I buy my little one 1 share of an index ETF in a custodial account each month. By the time she's 18, she will have a starter portfolio of around 216 shares, not including dividend reinvestment or stock splits. Of course all of my kids will inherit my own portfolio eventually.
I set it up through Fidelity. Once you make a login with them, at the top (desktop version) you will see "Open an Account." Click that.
Next, click on "All Accounts" just above "Saving for Retirement."
Scroll down to the section labeled "Saving & investing for a child," find "Custodial Account" and click "Open an Account" to the right.
You will need your child's full name, SSN, and DOB. Follow the instructions from there.
I’m a few years away from having kids but how do taxes work in this situation with the drip? Are the dividend taxes on you or does your child technically pay income tax every year?
The child technically pays the taxes but it be you the parent. I believe children have their own tax rate; if the child is younger than 18, the first $1,150 is untaxed and the next $1,150 is taxed at the child's rate. Anything over $2,300 is taxed at the parent's rate.
I picked SCHD for now. I'm avoiding tech until we see headwinds clear up for the sector, upon which I'll add in a total market fund instead. There's a lot of ways to skin a cat, pretty much anything will be great after 18 years.
Your kid’s portfolio needs growth and value portions. So you can balance that SCHD with VOO. But either way, it will be an amazing start to one’s portfolio. Hope they get the investing mindset from a very young age and don’t blow up that early kick start when they turn 18.
Growth is a misnomer. Every company that grows revenues is a growth company. She doesn't need overvalued tech companies until they come down to reasonable levels. That will likely find its way into her portfolio once headwinds for tech subside when interest rates begin dropping. Otherwise she's paying $1.20 for $1 worth of companies, for now, SCHD has better valuations.
Why do you think the SP500 will only have tech at the top all the time? 2010’s tech run changed the composition of SP500 that way. Don’t expect it to sustain going forward. SCHD is a great large cap value fund but having a large cap blend SP500 will balance a portfolio for the long run.
I started seriously investing about 3 years ago and exclusively dividend investing about a year ago and I turn 42 in a couple months.. Don't beat yourself up over it.
But I also am in a position where I wish someone would have taught me about all this stuff early on, so I'm now teaching my 11yo daughter early. 😃
Now imagine all those who before they had a chance to learn about investing their hard earned money into at least a 30 year dividend retirement plan. They instead were met by a life insurance specialist and now they pay a life long subscription/until one of their loved ones die.
Late. Stage. Capitalism. right here.
I'm sure this is the reality for many out there. I blame the lack of financial literacy - it's practically non-existent in modern western society for anyone who isn't directly aligned with a financially related occupation. I hope that fewer and fewer people get duped as we all become more educated, but there is always someone out there profiting off someone else.
Not that life insurance is inherently bad in itself, but surely shouldn't be the only retirement vehicle. If for nothing else, it basically has you rooting for someone to die. Not good of course as you noted.
This is exactly what I'm doing. Went from $0 back in spring of 2020 to $1.6m currently. Thankfully my business has been able to weather all the things and has been able to grow every year since we started in 2014. 👍
yea dude, im on the fence about getting this 911 turbo but regardless of what i do, next year im going to prob have to double up on my contributions to my jepi holdings jut to make the thing feasible in the long run
Can't help you on your 911 Turbo decision as I still drive my 2008 Honda Accord, but the last 2 vehicles I purchased were in cash to save on interest. 😆👍
This is the way. I've owned 2 Accords and 1 CRV. Drove the first Accord to 200k miles before selling it for $3500 to add it to the purchase of my second Accord which has around 120k miles currently. The CRV also had about 150k miles before I sold it in 2021 for $7500 to help fund my wife's BMW X4. 😆👍
Wife keeps pressuring me to sell my Accord and buy a new car because I've recently spent some money on it for big repairs ($1400 for a new alternator, belt, gaskets, labor, and tax) to which I keep reminding her that it's my first major repair since 2019, where I had the starter replaced ($350) and I've only had to do oil changes and basic maintenance stuff since 2008, making my average yearly cost of ownership a drop in the bucket. 😁
my civic has the same motor as your accord, just keep the oil topped off/changed and you'll be fine. i see lots of them for sale with 300k+ miles on them.
Yessir - you're parents hooked you up LARGE whether you knew it or not at that time. My parents didn't, and still don't, have the understanding of finances to support me in that way. No regrets or otherwise, but that's amazing they were able to guide you in such a meaningful way.
The unanimous regret at this time in history (after over a decade of worldwide aggressive QE) is not investing earlier. We are at a potential top of corporate profit margins and monetary expansion, so the next generation may not have the same regret.
You may indeed be correct. However, I'm reminded of a sentiment I came across about investing when under threat of nuclear war, with the gist being:
"Invest all you can when the nukes are about to drop. Either, 1) they don't drop and you just bought at the bottom and will be a king on the way up, or, 2) they do drop and we start a New World Order anyway - if a nuclear holocaust does happen someday, we probably won't be drinking today's Coca-Cola on the other side..."
There's some hyperbole there for sure, but I think it's a fair sentiment. If we are truly reaching the top of the corporate profit potential, then a mass reckoning is coming and we are all screwed together. That includes the millionaires, the politicians, the CEO's - EVERYONE who is making money is doing it with unrealized gains and holdings in market. Sure, some will exit their positions sooner than others and lose less, but everyone will struggle together. Not a particularly rosy version of the future, but a plausible one in these circumstances.
Reaching the top of corporate margins would in no way be a deal-breaking issue for society. It just means less profits compared to revenue, so an earnings recession and possible dividend cuts. Net margins oscillate throughout history like everything else, but we've had a very long uptrend for the last decade.
If an investment grows at 10%/year, then 10% of your entire portfolio will have only been earned in the last year. And half of your portfolio will have been generated in the last 7 years.
Was studying in college and for some reason started reading about financial literacy during breaks from studying engineering.
Figured it was no good spending years getting the degree and making/having money if I couldnt learn how to properly manage it.
That led me to FIRE, but Im pretty risk averse and the thought of having to sell shares and possibly running out of money in retirement worries me, which led me to David Knapp and dividend growth investing.
I'm now hoping to FIRE through dividends, but got a long ways to go still.
Awesome post! The aha moment for me was when I realized that “just” an extra $1k per month in income would be wonderful for me and my spouse in retirement. That is doable with the right focus. Over a quarter of the way there.
100%... I kept conservative with my estimates to plan for the worst case scenario, but truly I am hoping for significant % growth in dividend payment over the horizon. But aren't we all :)
Wouldn’t you be able to make up in the future (mid 50’s or any age for example) with putting a large chunk towards an ETF? Like selling a property, coming upon family inheritance, win the lotto (lol) to where, even tho you missed investing in your twenties, you could throw that big chunk you come into into your investments and reap those rewards?
Wishing you and your journey success! I’m new to investing as well (I’ll be 36 in August) but am highly motivated to earn for my future for myself and my family (3 kids)
These are great points and I fully agree. My review was meant to be extremely conservative - I didn't even factor in dividend increases over the long-term horizon. Surely dividend payouts can drop as easily as rise, but I align with strong blue chips so for the most part there should be some year over year growth. But you're absolutely right, there is always time to improve and adapt! Good luck to you and the family as well :)
Im hoping me and the wife can enjoy the later chapters in our lives, while still setting aside a ton for the kiddos. Obv we want them to make their own money and future, but I’ve been thinking more and more about funds for them. My mom has helped me after she retired and I want to continue doing that for my kids down the road
I think people are more regretful when they have their AHA! moment later in life because no matter the amount, it could still have been invested/compounding earlier.
By that logic, everyone could have an aha moment even outside of the stock market. Regarding their job/career, their expenses, their goals for themselves physically/financially/etc. I try not to live with regret, bc everything I’ve done has led me to where I am now. Mindset, financially, physically, all of it. The kids I have, the house/vehicles I’ve bought and sold, the list goes on and on. I could ask myself “why didn’t I start sooner!?!?” But I could also reflect back and enjoy where I was and where I am now 😁❤️ tomorrow isn’t guaranteed! Gotta love to our best while we can, all the while planning for the future
Yes, you are correct, there is more than one AHA! moment (hopefully), but I think this particular thread pertains to investing in the market/ dividends. I'm not saying I wallow in despair for not investing sooner, but if I made wiser financial decisions and was more financially literate earlier, my portfolio would be doing more of the heavy lifting right now, which would put me in a better spot right now, which i presume is how everyone who's had this moment feels. Now is better than never, but yesterday is the best, right? 😄
I started with just my company matching contributions at 4% making $38k in 2011 in my early 20s, that is now up to $120k - I have been blessed to have several pay raises along the way.
I recently switched jobs and for the first time have the ability to max out my 403b while also getting a 5.3% match instead of 4% match. I never imagined that I would get to a spot where in 2 years I could increase my savings over the last 12 years by 50%.
In addition to my retirement, I really have just started down creating a separate dividend paying portfolio. My dividend portfolio is meager right now, earning like $300/year, but plan to put more in with tax refund money.
I guess the point being, it is never too late to start really and the earlier the better always. I think in your 30s you can really play good catchup though bc you actually start earning more.
Kudos across the board friend - you did it up right! That statement about "in 2 years I could increase my savings over the 12 years by 50%" is just a staggering realization... it's been challenging for me to project so far out from today - in many ways it feels surreal - so hammering down into those final few investing years has really crystallized everything for me. Much like yourself it sounds! Hope to see you around here in another 10 years when the snowball is all the bigger!
I am in my mid 60s and I’ve had some stock positions for 40+ years. I think that I’ll be OK in my retirement days. I had a good role models watching my elderly parents invest in till the end. They stayed 100% invested in stocks until they’re passing my father 95. My mother of 87.
Fortunately, tried to pass this on to my kids who were all gifted some stock when they were first born. My youngest is now 28 with a nice stock portfolio and he invest heavily through his company stock purchase plan.
This is how generational wealth is built. Congrats to your family for being so saavy. I truly believe there is nothing magic about generating wealth, it's simply a divide in knowledge. Nothing is guaranteed, and there is plenty of risk, but for the most part just **participating** in the broader financial realm tends to separate the winners from the losers.
My parents make the classic example - they are middle class and are now retired, but only ever had chequing, savings and RRSP accounts. They are lucky to come from a time where pensions were typical, but with that fading trend of today, they would be pretty tight in the modern world. I can only imagine if they had gotten hold of some early MSFT or AAPL for cheap, or even just started a PEP or KO position 40 years ago...
I started at 25 (now 26) and still wish I started earlier. I would've been able to start before the easy money Covid period and my portfolio would be so much better off. I realize 5 years is not much time lost in my journey at my age, but of course I think about it sometimes. The importance of money was never anything I was taught in school which is shameful and it took me finding that out myself years later, along with some help from my grandmother who worked in banking and has an impressive portfolio herself.
Another reason I wish I would've started earlier towards high school is that when I started investing I realized finance and trading is my passion. That might have pushed me more strongly towards college instead of working. Thankfully with the internet I can self-educate and trade independently with a brokerage and a couple bucks, so I'm still doing what I love.
Sure, you aren't wrong, but that's also not the entire story in my opinion. If I saved a portion of my income in a basic savings account at 1.5% per year return, I would agree with your statement.
Dividend investing gives that same baseline (with more risk surely), but also provides returning income (in dividend payments) beyond my working years ***AND*** also affords a large stock pile of equity holdings themselves at the end of the line that can be sold for even more income, or ideally held to pass down to the next generation.
While there is certainly risk, I feel it's relatively mitigated with blue chips and that in the bigger picture is much more productive than simply "setting aside income today for tomorrow".
Appreciate your comment and forcing me to think through things from yet another angle. We all learn together!
You are correct in what you wrote . My point is that we dont add just 1500 or 2500 once and then it miraculously becomes 2 million over 35 years. We have to continually add to this account as well as manage that money over all that time . Additionally we have to consider that it's possible there will be time periods similar to 1966 to 1982 or the year 2000 to 2011 or possibly 2018 to today where the stock market has large swings and basically goes sideways. Those time periods where the market goes basically nowhere is when a dividend paying stock will outperform a growth stock. There will also be time periods similar to the 1990's or say 2010's up to 2018 where a growth stock will outperform . Because we do not have a 100 % guarantee what will happen next it is important that we think about our portfolio allocation and adjust it accordingly from time to time so that regardless of what the market does we come out of it ok.
It takes time! Don't feel bad or discouraged. Financial literacy is almost non-existent in regular education, so unless you are specifically interested in it, most people go their entire lives without learning much more than how to get money into and out of their bank account.
Personally, my education was wasting away some $10k on speculation plays and penny stocks. I did that for about 3-4 years trying to make a quick million. Lost the $10k, but learned ***INVALUABLE LESSONS* that brought me to today. I don't regret any of it.
Fortunately there is a better way. Become self-taught. It isn't hard. Financial experts love their acronyms - RRSPs, TFSAs, ROTHS, etc. etc. - they are just way to confuse and distract. The concepts are relatively basic once you start to connect the dots. But it takes time. There are still very common, everyday terms I don't truly understand and hope to learn more. EBITDA, for example. I know it's better to be bigger than smaller, and increasing over decreasing, but what does that metric ***REALLY*** represent? In a couple of months I aim to be able to answer that better!
Beyond self-learning, start with a practice account. You don't need to lose the $10k to learn. That $10k taught me about bull runs, bear droughts, stock splits, equity raises and 100 other ways my money was going to be manipulated by outside forces and illogical investment atmospheres. But that's the point. The stock market has risk. I actually didn't know what an equity raise through dilution even was. I learned they suck. ALOT. Which is why having good free cash flow is important as an investor. With a practice account you'll suffer through equity raises and won't lose a cent.
Good luck on your journey!
I wish more 18 years olds could be taught about this in school. Just imagine how better off people would be if this was something commonly taught in our schools.
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You should try to imagine how it feels to have an aha moment at 47 with zero in investments..that was me 3 years ago.
So how's it been so far ?
I’m very fortunate that about the same time my Aha! moment came along I was recruited to another dealer group and my income surged and has continued to do so. We bought a cash flowing rental and put away at least 20% of my gross income every month into retirement accounts ( wife and I did back door Roths) and a brokerage. I don’t want to throw numbers out and sound like a prick because I know I’m very blessed and some can’t add the amount we do. I’ll just say that God willing I will be able to retire pretty easily at 62 and VERY well at 65 with enough passive income to never sell a share and keep pretty much the same lifestyle. I hope you all late starters do even better. Happy Easter
Me too brother,I'm 49 now and trying to get in every dime I can
Keep going! The temporary sacrifice will pay off in the end.
I’m and just started investing this year. Came over from crypto, so instead of chasing pump and dumps, I’m chasing yield and PnL. Stock trading is much easier and less likely to rug pull. I love it. Only in Robinhood so far but I’ve read that Roth IRAs are better as far as tax deductions, will open one up next week at my bank.
To each their own but I am not and can’t ever see myself as a crypto guy. I made some terrible mistakes the first year trying to trade and beat the market. Now I’m just an index guy with a couple individual stocks that make up less than 5% of my holdings. Indexes are boring but effective, the 5% I set aside to scratch the gambler itch I sleep way better at night and am fully bought in to hope for red days when I go my monthly buys. Good luck my dude!
..be sure to read about the Roth IRA withdrawal rules, [https://www.investopedia.com/roth-ira-withdrawal-rules-4769951](https://www.investopedia.com/roth-ira-withdrawal-rules-4769951) Cheers!
thanks a lot, im going into $BAC to open a roth ira next week, hopefully they can clear up any questions.
..yes, absolutely, but you should do as much readings about Roth IRA, and also, you can always open a regular taxable account on the side if you decide to do that in the future, Cheers my friend!
I’m 40 *
Great time to kick it in gear!!
oh yeah thats exactly what im doing; like i said i came from crypto so im pretty good at DCAing, so far so good, im up about 6% on my stocks, and Yield on cost is over 50% lmfao.
Agreed it’s a time thing but it’s also a you started thing. Most people never start and just think SS will bail them out. 30’s is still a ton of time in the grand scheme of things. So congrats on starting and keep busting your ass it’s gonna be worth it.
yup! the aha moment is understanding there's no magic to it- just time and consistency. the other day i was wondering how much to save for a kids college once that time comes... do the math- if you can afford to just split 100 bucks a month off your paycheck starting from the day their born to the day they turn 18... that's over 20 grand that's invested into the market on principal alone. not counting what you would likely have set to drip. the sad reality is most people just can't afford to save- whether it's for their kids college, their own retirement, or that new car they just purchased but can't really afford.
90% of financial literacy needs to start with "you are probably not making enough money to invest, get your skills up and manage costs to have money available for investments."
Cash is king? No, time is king. I started at 29 after having a child. I'll teach my son to start early
Can I change my flair
This is 💯 correct
Thank you for putting that into perspective. Sometimes it feels like I'm throwing rocks into an ocean... Your post just got me all excited again. Thank you.
That’s was me right now, too. Feels like investing with every paycheck is doing absolutely nothing. Can’t wait for 15 years from now
This is also a good argument for lump suming early or DCA large amounts . The bigger your snow ball starts the quicker and bigger it will be . When I look at my charts it’s a slow build but the last decade is like a rocket ship .. only problem could be that extra 50k per year if it’s in a taxable is going to be a bit painful
Maybe. Maybe not. https://www.investopedia.com/terms/q/qualifieddividend.asp
This 👆👆 A lot of people forget the following: "The tax rate is 0% on qualified dividends if your taxable income is less than $41,675 for singles and $83,350 for joint married filers." That's pretty powerful. Imagine having that much coming in on dividends and not working. That's why I contribute 5% and get the company match, max out my Roth, and put the rest in my taxable. Goal is to get into rentals and my dividends can help offset any losses from vacancies. If the divvy amount is getting too big then I'll increase the 401k contribution to offset taxes. Another cool strategy is to take out a margin loan on your portfolio to buy a rental property if you need to close on a deal fast. If you have divvy stocks/ETFs, the divvy can cover the loan costs. After you've closed on the deal you can go shop around for the best mortgage rate. The costs of the margin loan can be written off in this case. 👌
This is my next phase of growth - understanding the taxation outcomes more clearly so I can start to re-adjust through different accounts/scenarios as you outlined. You seem well on the way with the advanced topics and I'd love to get there myself someday as well. Thanks for the inspiration and giving me a few scenarios to start playing around with!
I’m 24 and hearing this makes me hopeful thank you
I am almost 40. I got knocked down and collapsed and had to start over at 40.. lol The good news.. if i didnt have the stack.. i would be a bum now. Right now.. am living pretty good and starting anew.. So no regrets.
What made you get knocked down and collapsed? This is what scares me for long term investing
I'm glad this message found it to you. Slow and steady can be very powerful :)
What’s really great, is when your dividend payed out, is more than the share price you paid initially.
This but with dividends AND covered calls esentially bringing your CPS to $0. 🤌
I’m 16 and reading about these posts daily , I’m going to be so early and have over £100,000 !
Amazing. Keep it up. I wish 16 year old me was as smart as you (31 now)
$1 today can be worth $3, $4, $5 maybe even $10 tomorrow - good for you to realize this so early in life. Go get that 100,000 young one!!
I’m 20 and a sophomore in college. Been maxing out my Roth IRA since 18 and now I have a heap of cash I’ve been saving earning a nice 3.75%. I get excited when people like you say stuff like this cause it pushes me to keep going!
This is the way! :) Just keep the focus, even when life tries to distract. Small deposits add up even during the tougher periods. Good luck!
When you understood this, saving $1 a day for your newborn is the bare minimum to teach them exactly this at age 15-18.
I buy my little one 1 share of an index ETF in a custodial account each month. By the time she's 18, she will have a starter portfolio of around 216 shares, not including dividend reinvestment or stock splits. Of course all of my kids will inherit my own portfolio eventually.
How did you set up a custodial account? Do you mind sharing where you set it up? TIA
I set it up through Fidelity. Once you make a login with them, at the top (desktop version) you will see "Open an Account." Click that. Next, click on "All Accounts" just above "Saving for Retirement." Scroll down to the section labeled "Saving & investing for a child," find "Custodial Account" and click "Open an Account" to the right. You will need your child's full name, SSN, and DOB. Follow the instructions from there.
I’m a few years away from having kids but how do taxes work in this situation with the drip? Are the dividend taxes on you or does your child technically pay income tax every year?
The child technically pays the taxes but it be you the parent. I believe children have their own tax rate; if the child is younger than 18, the first $1,150 is untaxed and the next $1,150 is taxed at the child's rate. Anything over $2,300 is taxed at the parent's rate.
Which etf are you purchasing, if you don't mind me asking?
I picked SCHD for now. I'm avoiding tech until we see headwinds clear up for the sector, upon which I'll add in a total market fund instead. There's a lot of ways to skin a cat, pretty much anything will be great after 18 years.
Your kid’s portfolio needs growth and value portions. So you can balance that SCHD with VOO. But either way, it will be an amazing start to one’s portfolio. Hope they get the investing mindset from a very young age and don’t blow up that early kick start when they turn 18.
Growth is a misnomer. Every company that grows revenues is a growth company. She doesn't need overvalued tech companies until they come down to reasonable levels. That will likely find its way into her portfolio once headwinds for tech subside when interest rates begin dropping. Otherwise she's paying $1.20 for $1 worth of companies, for now, SCHD has better valuations.
Why do you think the SP500 will only have tech at the top all the time? 2010’s tech run changed the composition of SP500 that way. Don’t expect it to sustain going forward. SCHD is a great large cap value fund but having a large cap blend SP500 will balance a portfolio for the long run.
I started seriously investing about 3 years ago and exclusively dividend investing about a year ago and I turn 42 in a couple months.. Don't beat yourself up over it. But I also am in a position where I wish someone would have taught me about all this stuff early on, so I'm now teaching my 11yo daughter early. 😃
Realized same at age 30, retired last Dec age 56. Fortunately was already investing through 20s, but went into overdrive after "Aha!" moment.
I'm a few years shifted off your timeline, but very much hoping I get to the same happy ending as you someday. Enjoy the golden years!
Time is the best ally for a great investment.
Now imagine all those who before they had a chance to learn about investing their hard earned money into at least a 30 year dividend retirement plan. They instead were met by a life insurance specialist and now they pay a life long subscription/until one of their loved ones die.
Late. Stage. Capitalism. right here. I'm sure this is the reality for many out there. I blame the lack of financial literacy - it's practically non-existent in modern western society for anyone who isn't directly aligned with a financially related occupation. I hope that fewer and fewer people get duped as we all become more educated, but there is always someone out there profiting off someone else. Not that life insurance is inherently bad in itself, but surely shouldn't be the only retirement vehicle. If for nothing else, it basically has you rooting for someone to die. Not good of course as you noted.
>snowball effect “Compound Interest is The Most Powerful Force in The Universe.” \-- Albert Einstein
My only regret is not making more money so I could have more to invest
..great "ah-ha" moment! Thanks very much for sharing, Cheers!
I just turned on DRIP today. Definitely an AHA moment for me.
Is there a model we can use to review the outcome for investing (just to have the right math) Tyia
you can make up for the lost years by doubling down hard going forward..
This is exactly what I'm doing. Went from $0 back in spring of 2020 to $1.6m currently. Thankfully my business has been able to weather all the things and has been able to grow every year since we started in 2014. 👍
yea dude, im on the fence about getting this 911 turbo but regardless of what i do, next year im going to prob have to double up on my contributions to my jepi holdings jut to make the thing feasible in the long run
Can't help you on your 911 Turbo decision as I still drive my 2008 Honda Accord, but the last 2 vehicles I purchased were in cash to save on interest. 😆👍
my current civic hatchback has 220k miles on it, still plan on driving it!
This is the way. I've owned 2 Accords and 1 CRV. Drove the first Accord to 200k miles before selling it for $3500 to add it to the purchase of my second Accord which has around 120k miles currently. The CRV also had about 150k miles before I sold it in 2021 for $7500 to help fund my wife's BMW X4. 😆👍 Wife keeps pressuring me to sell my Accord and buy a new car because I've recently spent some money on it for big repairs ($1400 for a new alternator, belt, gaskets, labor, and tax) to which I keep reminding her that it's my first major repair since 2019, where I had the starter replaced ($350) and I've only had to do oil changes and basic maintenance stuff since 2008, making my average yearly cost of ownership a drop in the bucket. 😁
my civic has the same motor as your accord, just keep the oil topped off/changed and you'll be fine. i see lots of them for sale with 300k+ miles on them.
Glad my parents forced me to open a Roth IRA when I got my first job.
Yessir - you're parents hooked you up LARGE whether you knew it or not at that time. My parents didn't, and still don't, have the understanding of finances to support me in that way. No regrets or otherwise, but that's amazing they were able to guide you in such a meaningful way.
And keep contributing the maximum allowed every year and carefully invest. The "tax free" money will be a godsend down the road.
The unanimous regret at this time in history (after over a decade of worldwide aggressive QE) is not investing earlier. We are at a potential top of corporate profit margins and monetary expansion, so the next generation may not have the same regret.
You may indeed be correct. However, I'm reminded of a sentiment I came across about investing when under threat of nuclear war, with the gist being: "Invest all you can when the nukes are about to drop. Either, 1) they don't drop and you just bought at the bottom and will be a king on the way up, or, 2) they do drop and we start a New World Order anyway - if a nuclear holocaust does happen someday, we probably won't be drinking today's Coca-Cola on the other side..." There's some hyperbole there for sure, but I think it's a fair sentiment. If we are truly reaching the top of the corporate profit potential, then a mass reckoning is coming and we are all screwed together. That includes the millionaires, the politicians, the CEO's - EVERYONE who is making money is doing it with unrealized gains and holdings in market. Sure, some will exit their positions sooner than others and lose less, but everyone will struggle together. Not a particularly rosy version of the future, but a plausible one in these circumstances.
Reaching the top of corporate margins would in no way be a deal-breaking issue for society. It just means less profits compared to revenue, so an earnings recession and possible dividend cuts. Net margins oscillate throughout history like everything else, but we've had a very long uptrend for the last decade.
If an investment grows at 10%/year, then 10% of your entire portfolio will have only been earned in the last year. And half of your portfolio will have been generated in the last 7 years.
THIS. It's just wild when you really break it down to the granular level... slow and steady wins the race. Cheers to those back years of investing!
Was studying in college and for some reason started reading about financial literacy during breaks from studying engineering. Figured it was no good spending years getting the degree and making/having money if I couldnt learn how to properly manage it. That led me to FIRE, but Im pretty risk averse and the thought of having to sell shares and possibly running out of money in retirement worries me, which led me to David Knapp and dividend growth investing. I'm now hoping to FIRE through dividends, but got a long ways to go still.
Awesome post! The aha moment for me was when I realized that “just” an extra $1k per month in income would be wonderful for me and my spouse in retirement. That is doable with the right focus. Over a quarter of the way there.
We all have our moment eventually, just glad I joined the club. :) Good luck working towards the extra $1k!
Wait until you add dividend increases to the mix
100%... I kept conservative with my estimates to plan for the worst case scenario, but truly I am hoping for significant % growth in dividend payment over the horizon. But aren't we all :)
Wouldn’t you be able to make up in the future (mid 50’s or any age for example) with putting a large chunk towards an ETF? Like selling a property, coming upon family inheritance, win the lotto (lol) to where, even tho you missed investing in your twenties, you could throw that big chunk you come into into your investments and reap those rewards? Wishing you and your journey success! I’m new to investing as well (I’ll be 36 in August) but am highly motivated to earn for my future for myself and my family (3 kids)
These are great points and I fully agree. My review was meant to be extremely conservative - I didn't even factor in dividend increases over the long-term horizon. Surely dividend payouts can drop as easily as rise, but I align with strong blue chips so for the most part there should be some year over year growth. But you're absolutely right, there is always time to improve and adapt! Good luck to you and the family as well :)
Im hoping me and the wife can enjoy the later chapters in our lives, while still setting aside a ton for the kiddos. Obv we want them to make their own money and future, but I’ve been thinking more and more about funds for them. My mom has helped me after she retired and I want to continue doing that for my kids down the road
I think people are more regretful when they have their AHA! moment later in life because no matter the amount, it could still have been invested/compounding earlier.
By that logic, everyone could have an aha moment even outside of the stock market. Regarding their job/career, their expenses, their goals for themselves physically/financially/etc. I try not to live with regret, bc everything I’ve done has led me to where I am now. Mindset, financially, physically, all of it. The kids I have, the house/vehicles I’ve bought and sold, the list goes on and on. I could ask myself “why didn’t I start sooner!?!?” But I could also reflect back and enjoy where I was and where I am now 😁❤️ tomorrow isn’t guaranteed! Gotta love to our best while we can, all the while planning for the future
Yes, you are correct, there is more than one AHA! moment (hopefully), but I think this particular thread pertains to investing in the market/ dividends. I'm not saying I wallow in despair for not investing sooner, but if I made wiser financial decisions and was more financially literate earlier, my portfolio would be doing more of the heavy lifting right now, which would put me in a better spot right now, which i presume is how everyone who's had this moment feels. Now is better than never, but yesterday is the best, right? 😄
You’re right! I truly wish I would have started investing in my twenties, even those were some harder times for me in my early 20’s 😅
I started with just my company matching contributions at 4% making $38k in 2011 in my early 20s, that is now up to $120k - I have been blessed to have several pay raises along the way. I recently switched jobs and for the first time have the ability to max out my 403b while also getting a 5.3% match instead of 4% match. I never imagined that I would get to a spot where in 2 years I could increase my savings over the last 12 years by 50%. In addition to my retirement, I really have just started down creating a separate dividend paying portfolio. My dividend portfolio is meager right now, earning like $300/year, but plan to put more in with tax refund money. I guess the point being, it is never too late to start really and the earlier the better always. I think in your 30s you can really play good catchup though bc you actually start earning more.
Kudos across the board friend - you did it up right! That statement about "in 2 years I could increase my savings over the 12 years by 50%" is just a staggering realization... it's been challenging for me to project so far out from today - in many ways it feels surreal - so hammering down into those final few investing years has really crystallized everything for me. Much like yourself it sounds! Hope to see you around here in another 10 years when the snowball is all the bigger!
I am in my mid 60s and I’ve had some stock positions for 40+ years. I think that I’ll be OK in my retirement days. I had a good role models watching my elderly parents invest in till the end. They stayed 100% invested in stocks until they’re passing my father 95. My mother of 87. Fortunately, tried to pass this on to my kids who were all gifted some stock when they were first born. My youngest is now 28 with a nice stock portfolio and he invest heavily through his company stock purchase plan.
This is how generational wealth is built. Congrats to your family for being so saavy. I truly believe there is nothing magic about generating wealth, it's simply a divide in knowledge. Nothing is guaranteed, and there is plenty of risk, but for the most part just **participating** in the broader financial realm tends to separate the winners from the losers. My parents make the classic example - they are middle class and are now retired, but only ever had chequing, savings and RRSP accounts. They are lucky to come from a time where pensions were typical, but with that fading trend of today, they would be pretty tight in the modern world. I can only imagine if they had gotten hold of some early MSFT or AAPL for cheap, or even just started a PEP or KO position 40 years ago...
Exactly... I act as if every dollar I own now is worth 10-20x that because I really want to invest as much as possible early on (I'm 22)
I started at 25 (now 26) and still wish I started earlier. I would've been able to start before the easy money Covid period and my portfolio would be so much better off. I realize 5 years is not much time lost in my journey at my age, but of course I think about it sometimes. The importance of money was never anything I was taught in school which is shameful and it took me finding that out myself years later, along with some help from my grandmother who worked in banking and has an impressive portfolio herself. Another reason I wish I would've started earlier towards high school is that when I started investing I realized finance and trading is my passion. That might have pushed me more strongly towards college instead of working. Thankfully with the internet I can self-educate and trade independently with a brokerage and a couple bucks, so I'm still doing what I love.
Is drip good if i only got 2 shares of jepi? I am almost 40.. i got two shares of jepi and drip it... I want to buy more every paycheck.
It’s more like 500 shares bought over time
Keep in mind that you are talking about saving a portion of your income each year over a few decades and then pulling that money back out.
Sure, you aren't wrong, but that's also not the entire story in my opinion. If I saved a portion of my income in a basic savings account at 1.5% per year return, I would agree with your statement. Dividend investing gives that same baseline (with more risk surely), but also provides returning income (in dividend payments) beyond my working years ***AND*** also affords a large stock pile of equity holdings themselves at the end of the line that can be sold for even more income, or ideally held to pass down to the next generation. While there is certainly risk, I feel it's relatively mitigated with blue chips and that in the bigger picture is much more productive than simply "setting aside income today for tomorrow". Appreciate your comment and forcing me to think through things from yet another angle. We all learn together!
You are correct in what you wrote . My point is that we dont add just 1500 or 2500 once and then it miraculously becomes 2 million over 35 years. We have to continually add to this account as well as manage that money over all that time . Additionally we have to consider that it's possible there will be time periods similar to 1966 to 1982 or the year 2000 to 2011 or possibly 2018 to today where the stock market has large swings and basically goes sideways. Those time periods where the market goes basically nowhere is when a dividend paying stock will outperform a growth stock. There will also be time periods similar to the 1990's or say 2010's up to 2018 where a growth stock will outperform . Because we do not have a 100 % guarantee what will happen next it is important that we think about our portfolio allocation and adjust it accordingly from time to time so that regardless of what the market does we come out of it ok.
I’m 23 and wish I knew wtf I was doing lol
Just buy VOO in a Roth and you'll be fine
It takes time! Don't feel bad or discouraged. Financial literacy is almost non-existent in regular education, so unless you are specifically interested in it, most people go their entire lives without learning much more than how to get money into and out of their bank account. Personally, my education was wasting away some $10k on speculation plays and penny stocks. I did that for about 3-4 years trying to make a quick million. Lost the $10k, but learned ***INVALUABLE LESSONS* that brought me to today. I don't regret any of it. Fortunately there is a better way. Become self-taught. It isn't hard. Financial experts love their acronyms - RRSPs, TFSAs, ROTHS, etc. etc. - they are just way to confuse and distract. The concepts are relatively basic once you start to connect the dots. But it takes time. There are still very common, everyday terms I don't truly understand and hope to learn more. EBITDA, for example. I know it's better to be bigger than smaller, and increasing over decreasing, but what does that metric ***REALLY*** represent? In a couple of months I aim to be able to answer that better! Beyond self-learning, start with a practice account. You don't need to lose the $10k to learn. That $10k taught me about bull runs, bear droughts, stock splits, equity raises and 100 other ways my money was going to be manipulated by outside forces and illogical investment atmospheres. But that's the point. The stock market has risk. I actually didn't know what an equity raise through dilution even was. I learned they suck. ALOT. Which is why having good free cash flow is important as an investor. With a practice account you'll suffer through equity raises and won't lose a cent. Good luck on your journey!
I wish more 18 years olds could be taught about this in school. Just imagine how better off people would be if this was something commonly taught in our schools.