Let me guess.
You know you should invest…
But you feel lost.
So you don’t even start investing. 😕
I get it – the world of investing can seem extremely complicated and scary from the outside, so it’s perfectly understandable that you feel lost!
However, investing the right way and as soon as possible is probably the best thing you can do to improve your finances and your future life.
I know this because my life has completely changed over the last few years. I’ve gone from knowing nothing about investing… to building a six-figure portfolio that pays me a very nice amount of income every month.
Check out my dividend income page.
The best part?
I don’t have to do any work to earn those dividends. It doesn’t matter whether I work or play; I’ll get paid whatever happens.
This is basically me:
So in this article, I’m gonna get my virtual machete and slash through the jungle of confusion and complexity to give you a good enough understanding of what investing in stocks is actually like.
And, more importantly, which steps you need to take to get started.
Plus, at the very end of the article, I’ll give you a free course that I’ve put together with more details on those exact steps so that you can hit the ground running!
Let’s get started!
What Investing Looks Like
Have you seen the film Wolf of Wall Street?
You should. It’s amazing.
Well, there’s a fantastic scene between Leo Dicaprio and Matthew McConaughey in which the latter explains what his job is all about.
They, as brokers, basically sell smoke to people…
They fool them and only have their own best interest in mind… because they’re earning commissions and getting rich at the expense of regular people.
Even though it’s just a movie, that is the image that a lot of people have when it comes to investing in stocks.
A suited broker that is probably going to sweet-talk you into giving them all your hard-earned money…
Which will probably disappear in their next “hot tip” investment.
Now I’m not saying this isn’t possible. There are many people who’d like nothing better than to take all your money!
But that’s only a fraction of what investing is.
A tiny fraction.
Isn’t Investing Very Risky?
Whenever I talk to people who are just getting started with investing, this is one of the first questions I get asked.
“Investing is like gambling in a casino, right? It’s all luck?”
Short answer: NO.
Longer answer: you could get lucky with a stock and multiply your money by 10 in a week, sure.
In that sense, it is like gambling…
But that is not what you should do. It’s not the right attitude to have. It’s also not exactly repeatable…
Instead, follow a proven strategy, have patience and invest for the long-run and you will make great returns.
This is NOT a get-rich-quick scheme or shortcut.
It’s a get-rich-slowly kind of thing.
Don’t be the hare. Be the turtle. 🐢 You know who won that race.
To help you along, I’ll show you some really exciting real-world data. But first, I want to show you another barrier that prevents people from investing…
This is another culprit that is probably responsible for you not investing and feeling lost.
There really is too much information out there… and a lot of it isn’t even good information!
All you have to do is read the news and I guarantee that you’ll see one of two things:
- If the stock market has been rising, people will be happy. They’ll say the market will keep rising forever!
- If the stock market has dropped, they’ll tell you that you should sell all your stocks and go live underground in a bunker…
I might be exaggerating a tiiiny bit, but that’s basically what happens!
So when you read stuff like that, do you really want to put your hard-earned money in the stock market??
Of course not!
You stay out of that and keep your money in the bank where it’s safe… right?
Well, I used to do the same and then wondered why I was only earning a 1% interest on my savings… 😅
What Investing Is Actually Like
Ok, it’s time for you to learn the truth about the stock market – the reason it was invented and why it’s the best wealth-generation tool out there.
You see, when you buy a stock, you’re buying a piece of a company – a slice of the entire business.
Let’s say you buy 1 share of Apple.
It will cost you $269. But with that share, you now own a tiny bit of the whole company.
A conveyor belt in one of their iPhone factories…
A part of a computer that is used by one of their designers…
The point is that you OWN the business – even if it’s a small part.
When you look at investing this way, the game changes.
Business owners don’t care about what people think about their business. They care about the results.
If their business is making money, they’re happy.
And that’s the key to investing.
You should focus on two things:
- Is the business healthy?
- Can the business make more money over time?
This is what’s going to make you a successful investor.
Because the average person who buys some stocks or funds is not going to succeed…
It’s sad but it’s true.
They don’t understand that a stock is a business.
So they’ll happily buy any stock just because its stock price is going up (this is often the only reason they buy… why bother researching the stock a little bit when there’s money to be made?!)
They feel confident.
They’re feeling greedy.
They fantasize about the car they’re going to buy when they’re rich!
Maybe the stock price keeps rising for a while… maybe they buy some more.
But inevitably, at some point, the stock’s price will decrease. Maybe to a lower price than they bought it at!
And here is where the story ends for most people.
They’ll read the news and some “expert” will claim that this stock – or even the entire stock market – is done for. It’s every man for himself out there!
They’ll sell all their stocks, take the losses and vow to never invest in stocks again because they’re “too risky”.
Worse of all, they’ll tell everyone about their experience as a cautionary tale.
What a Business Owner Does
Do you see where this person went wrong?
I bet you know someone who sounds just like this – a family member, a colleague, a friend…
Obviously, this is NOT what you should do.
Here is what you should do instead:
- First, do a little research on the company – you must understand what it does and a few key metrics
- Then you buy some shares at a reasonable price – this is important
- If the stock price drops, figure out why. If the company is making good money and has good long-term prospects, then you’re good 🙂
- Stay invested for many years and get results like this:
This is the S&P 500, a collection (also called “index”) of the 500 best companies in the United States.
This graph is inflation-adjusted, so $1 now is worth the same as $1 in 1930. The grey lines are recessions.
Check out the live graph and have a play – it’s here.
Now, the S&P 500 has averaged around 8% yearly over that time.
Here comes the really cool bit…
If you’ve never learned about the ridiculous power of compound interest, this is it in action.
At an 8% yearly return, your money will double every 9 years or so.
If you invest, let’s say, $10,000 today… in 30 years it should be worth just over $100,000. Then times the amount.
The reality is that it’s tougher to wait and do nothing when your stocks are volatile and going up and down in price…
You’ll feel scared…
Your finger will hover over the “sell” button…
You’ll be thinking stuff like:
“What if I lose it all?? Better to cut my losses that lose it all!”
Well, luckily there is one thing that helps with this. It helps a lot…
The Soothing Effect of Dividends
Dividends solve so many problems with investing.
As a business owner, which is how you should approach investing, you will be entitled to a share of the profits. It’s only fair!
Those come in the form of dividends.
This is how it works:
Let’s say you buy a stock – let’s stick with Apple from earlier. The board of directors will sit down and approve a dividend to be paid next quarter, which at the moment is $0.77 per share.
Once announced, that dividend will be paid no matter what.
Whether the stock price rises to $400 or it dips to $100.
So all of a sudden, when you see your dividends coming in no matter what, even if it seems like the world is ending, things don’t look so bad.
I should know – the amount that I earn in dividends every month is enough to cover a lot of my expenses and it keeps me calm even if the market is shaky. 😎
Something else you should know:
Not all stocks pay dividends, especially if they are young companies. But a lot of them do.
Some will pay the same amount for years…
Others will cut and grow their dividends as they please…
Some will decide to eliminate them if they aren’t doing so well…
But the best companies out there – the cream of the crop – are so good at what they do that they increase the dividend they pay every year.
You want to focus on those stocks. This drives the point home:
In a nutshell, this graph divides the stocks in the S&P 500 by their dividend policy; whether they pay one and whether they grow it.
Companies that don’t pay a dividend or are cutters (i.e. they are not consistent with their dividends) didn’t do so well…
Compare that to companies that grew their dividends every year. That’s the line in light blue. It outperforms everything else.
Yes, even the overall S&P 500, which is the light green line!
This is why my investing strategy focuses on stocks that are able to increase their dividend every year; dividend growth stocks.
How To Get Started
So if you felt lost about investing, I hope I was able to show you the path.
Or at least point you in the right direction!
Because investing is very simple if you know what to do.
As you saw earlier, the recipe is simple:
Investing Wealth Casserole ( Serves 4)
- High-quality companies – 1 cup
- Rising dividends – 2 tbps
- A pinch of patience
- A business owner’s mentality
The best and also the worst part about dividend growth investing is that it’s boring. Well, it definitely isn’t exciting!
This is great because it’s a strategy that has always worked, will always work, and is extremely powerful. But on the flip side, it’s not as exciting as buying Bitcoin or some other “get-rich-in-3-months” scheme.
Which also means that most people will never invest… As I said earlier, this is more of a “get rich slowly” strategy.
Now, I’ve put together a FREE email course that consists of 7 lessons that will teach you the steps you need to take to start buying stocks that pay dividends and grow them.
If you’ve enjoyed this article, you’re gonna LOVE the course.
To sign up, just click the button below, fill in your info and you’ll get the first lesson in seconds!
Lastly, if you know someone who feels lost about investing, please send them a link to this article!
Do you have someone in mind? 😉