Am I too focused on just one thing?

If you’ve read my book and my blog posts you may find that they seem to repeat the same thing over and over again: Invest for income. Does that make me too focused on just one aspect of investing? Am I disregarding other ways to achieve one’s investing goals? To test my investing philosophy I decided to review other “philosophies”, and found they generally fall into four categories:

The Unconcerned:    This style of investor will have a company pension, and with any federal pensions may feel guaranteed that at least 80% of their retirement expenses are covered. They could invest in GICs and would likely never out-live their savings.

The Traditionalist:    These people are probably like the majority of investors who want to play it safe and follow the 60/40 investment strategy. Possibly owning some Blue-chip stocks, then Mutual Funds or ETFs for diversification, Internationals and bonds. As they age they’ll most likely increase their fixed assets while planning to draw down the 4%, 5% or VPW.

The Enlightened:      These investors will be those who really understand the benefits of dividend growth investing, often acknowledging its benefits to generate income during retirement or even help one to retire early. But, they can’t quite break away from what I consider investing distractions: diversification, low-fees and market returns. They will still hold ETFs, never being quite fully committed to the DG strategy.

The Quality Outlier:  There seem to be a few of us that prefer the word Quality and apply it to our investment strategy, religiously. Our goal is income and its growth, so we reject or ignore many of the standard strategies and investing distractions that can dilute or compromise our growing income. 

I believe we can all achieve the goal of becoming financial secure, provided we save enough and stick to the plan of our choice, but I’ve become so dedicated to my philosophy of Income investing because:

1. It is easy. We achieved our goal of being able to retire with enough income without following any complicated or difficult investing strategy.

2. It makes sense. The simple statement I found from the Connolly Report just about said it all: “If a company doesn’t pay a dividend, don’t buy it. If it doesn’t grow the dividend don’t buy it either”.

3. It doesn’t cost as much as you would think. The rising yield on our investments generated more income from less investment on our part in order to achieve the level of financial freedom we wanted.

4. It remains simple. We didn’t (and still don’t) have to worry about finding new stocks or doing any detailed analysis to generate an on-going income.

5. It is worry free. Market and price drops didn’t affect our income growth, even after we retired. The market continues to fluctuate and we remain unconcerned.

6. Maintenance is uncomplicated. We don’t have to worry about rebalancing, selling for profits, re-allocating or diversification. We just hold on to our stocks and the income keeps growing.

7. It is stable. We don’t have to switch strategies or re-allocate an ever larger portion of our investment to fixed assets as we age. I never fret about our financial security.

8. It’s low cost. So low that I pay no fees at all. Even if I held ETFs with a fee as low as 0.05% I’d be paying thousands of dollars per year for little to no benefit.

9. It works. The more we invested in dividend growth stocks, the more our income grew and even after we stopped adding funds in retirement the income continued to grow. This investing strategy has paid off, I simply cannot find any fault.

10. And finally it is fun. I really enjoyed watching my income grow over the years, finally reaching my end-goal. It’s even more fun now that we are retired, our investments continue returning an ever-growing financial reward!

Yes, I admit I am focused on just one thing, our growing income. But I also can’t help but ask why shouldn’t I be? One doesn’t often get an opportunity to find a “sure thing”. If anything I feel very fortunate to have found this path (thanks Tom Connolly) and with my own hard work and patience, it paid off in spades. I hope you also find your own path, and that it leads you to exactly where you want to be!

 


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