∙ Make every investment in the stock market a long-term investment.
My Mother worked as a teller in a small bank in Dover, New Jersey. The name of the bank was called The Dover Community Bank. While working at the bank (she eventually became a branch manager) she enrolled in the bank's dividend reinvestment plan, making purchases of the stock through pay-roll deductions. She continued purchasing the stock through the years, having the dividends from her shares in the bank reinvested into more shares every quarter. By the time she left the bank (in the early seventies) she had accumulated around 300 shares of The Dover Community Bank.
My Father, when he retired, had the dividends from those shares sent home ? to help ends-meet. When my Dad passed away at age 80, my brother and I inherited over 7,600 shares of The Bank of New York, all originating from those 300 shares of what was once called The Dover Community Bank.
From this personal experience grew an investment philosophy that all stock market investments in a security should be purchased with the intent of providing dividend income to help ends-meet during retirement, with the understanding that no one can successfully retire without financial freedom. So every investment now in a security is purchased with the intent of holding that security (and adding to it during the years) until the dividend income from that security is ample enough to ease the loss of income from retiring from my job.
∙ Make every investment in the stock market provide you with an ever-increasing cash dividend for the rest of your life.
With the philosophical investment approach of holding a security position forever, what criteria should I be looking for in that security? Certainly dividend income ? that's a given! And since I never intend to sell the security, capital gains may not even be an issue.
I would argue that a company that just pays a dividend isn't good enough. Instead, I will only purchase those companies that have a long history of raising their dividend every year. This will eliminate a whole bunch of risk. It would eliminate the possibility that the company is 'cooking their books;' after all, the money has to be there to pay the shareholder. And because this company has been raising their dividend every year for many years, it eliminates the risk of investing in a start-up company that may not even be around in a year or so.
Also, the rising dividend every year would help off-set the risk of inflation and the risk of a lower stock price during the year would actually accelerate my income from the security.
Since I would want my position in the stock to grow through the years, thus increasing my dividend income, all dividends would be reinvested back into the stock, until retirement. A lower stock price during the year, therefore, would allow the dividend from the company to purchase more shares, at a higher dividend yield, and would simply accelerate my dividend income.
∙ Diversify into no more than twelve different companies.
Owning shares in twelve companies is plenty. It would provide the diversity to sleep well at night, and provide a cash dividend every week of the year. Start by owning three companies, and build from there. Determine how many shares you want of each company before moving on to the 4th, 5th, and 6th. Invest in sets of three different companies at a time, until twelve are owned.
∙ Persevere
Success in the stock market is not so much derived by buying a company's stock at the lows, but is almost guaranteed successful through dollar-cost-averaging over the years. One of the most powerful methods of investing in the stock market is having the perseverance to continue adding shares to your stock positions over the years, through reinvested dividends and quarterly infusion of funds, be it 50 dollars, or 100 dollars a month. Persistence, persistence, persistence, and your stock market investment philosophy will become unbeatable!
To read the PREFACE from the book 'The Stockopoly Plan- Investing for Retirement' visit: http://www.thestockopolyplan.com
Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book The Stockopoly Plan ? Investing for Retirement; published by American-Book Publishing. You can invest in the book at: http://www.thestockopolyplan.com
You have permission to publish this article either electronically or in print, free of charge, as long as the author bylines are included. A courtesy copy of your publication would be appreciated. Please email to mailto:charles@thestockopolyplan.com
eco-friendly cleaning service Buffalo Grove ..Did you run out to buy that duct tape yet?... Read More
As I said in Part I everyone in the insane... Read More
The higher the market goes the more confusing are the... Read More
I know there are a lot of you out there... Read More
It has been said that low cost or even free... Read More
When it comes to 401k's there is an overabundance of... Read More
Ever have one of those sample boxes of candy? Each... Read More
Carefully thinking through your goal as a trader is of... Read More
This is the continuing story of our two imaginary traders,... Read More
As an investor you will want to check out any... Read More
There can't be many traders who haven't at least considered... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
As the man said, "I've got some good news and... Read More
We are already in it, but you can't see it.... Read More
Have you bought any mutual funds this year or late... Read More
Where is the beef? Or maybe it should be where... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
You probably have been told that options are risky. Even... Read More
Checked your 401K lately? Going back to about a year... Read More
One of the great truisms of Wall Street is "Don't... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
What the heck am I talking about?It is often said... Read More
express cleaning service Arlington Heights ..I have a 2-car garage. There are nice shelves on... Read More
Before we get into all the good news out there,... Read More
It has often been said that there is only two... Read More
Humpty Dumpty had a great fall and all the King's... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
Every broker and financial planner will tell you that you... Read More
A common problem I often see when working with living... Read More
You probably know the story of Sherlock Holmes and the... Read More
For weeks, no, months we have been bombarded with nothing... Read More
Are you paying any attention to your retirement savings? Do... Read More
How is it possible that trash Companies are posting less... Read More
The fight continues to rage among traders who use technical... Read More
So you're started trading, you bought some positions with your... Read More
Many people would like to diversify their portfolios to expand... Read More
Every day I see in the financial section of newspapers... Read More
Checked your 401K lately? Going back to about a year... Read More
I receive emails from Morningstar. This company provides statistics and... Read More
Index Fund Trading can be one of the most profitable...or... Read More
With the internet such a huge part of our daily... Read More
If you haven't heard of the technical indicator with the... Read More
When an individual investor wants to roll up his sleeves... Read More
I mean it when I say that. While plastic silverware... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
A few years back ? it seems like an eternity... Read More
Stocks & Mutual Fund |