June 25th - July 1 Reading List

The following is a list of fantastic postings from around the dividend world:

Dividend Mantra presents: What are your dividends for?

Jae Jun (on Seeking Alpha) breaks down the fundamentals: Value Stocks Like a Pro: The Absolute PE Model

Dividend Growth Investor presents: Eight Golden Geese Laying Golden Eggs for Shareholders

Dividend Growth Stocks gives an inside look into the fantastic effects of compounding interest: 3 Powerful Concepts for Compounding Wealth with Dividend Stocks

The Dividend Guy gives a 6-step plan to preparing for retirement: How to Build a Solid Dividend Retirement Portfolio

The Passive Income Earner shows the steps necessary for early retirement: Financial Freedom at 45

God Owns Everything

Being a Christian, one of the most common questions I ask myself is, "What does God want to for my life?" Often, I ask this question to God in terms of my marriage, my friendships, my career, or how to overcome difficulties in my life. However, I often forget to ask God what he wants for my financial life. Therefore, I want to challenge myself to study more and gain a better understanding of what God wants for my family's finances. Each week, I am going to write about my studies, and I hope that you will join me, challenge me, help me, and pray for me on this path.

The place I wanted to start is with the understanding that God own everything. The very first sentence of the Bible says,

"In the beginning God created the heavens and the earth." (Gen. 1:1).


Now that seems like a really simple place to start, but when you think about the magnitude of that sentence, you realize that God created everything, and in creating everything, he owns it as well.

God makes his ownership claim very directly in the Book of Haggai. In this book, which is set in 520 B.C. in Jerusalem, the Jews are struggling to rebuild the temple. Morale is low and funds are running out for completion. Most importantly however, the Jews are focused on their own issues and not on God's work. Therefore God challenges them by saying,

Why are you living in luxurious houses while my house lies in ruins...Look at what's happening to you! You have planted much but harvest little. You eat but are not satisfied. You drink but are still thirsty. You put on clothes but cannot keep warm. Your wages disappear as though you were putting them in pockets filled with holes!" (Haggai 1:4-6)


Then a little later, as if that challenge is not enough, God makes it abundantly clear to the Jews,

"The silver is mine, and the gold is mine." (Haggai 2:8)


God owns everything in the universe, including money and wealth, and we are merely temporary possessors of that wealth. Therefore, we need to turn to God and ask him how he would like his wealth spent.

My Long Term Goals for Dividend Investing

One of my goals for the blog is to have a place where I can share my goals for dividend investing. I believe that if you write goals down, you are far more likely to stay committed to those goals.

I'll get into more specific goals in future posts, but today, I want to share with you what my long-term goals  for my portfolio.

#1. Live off the dividends
          Ultimately the goal for any dividend investor is to be able to live off the dividends of their investments. In that sense, I'm no different than most dividend investors. I believe that it's impossible to time the market, and I'll never fully be certain if "it's a good time to buy" or if "it's a good time to sell." Therefore, by investing in dividend-producing stocks, and using them to provide me an income in the future, I never have to time the market to figure out when to get the most income out of my investments.

#2. Provide a stable economic future for my children and their children
         Even more than living off the dividends, my goal is to create a portfolio that constantly grows, throughout generations, in a way in which I can pass it on to my children and their children. The fastest way dividend investors grow their portfolio and the dividends that they are paid is by constantly reinvesting their dividends in more dividend growth stocks. The beautiful law of compounding then begins to work its magic, essentially making it easier to grow our money the longer we are investing in such stocks.
         I want to be able to take advantage of that even after I "retire." (I don't believe I will ever "retire," but rather just move on to a new line of work or activity.) Many investors when they reach retirement age employ the 4% rule. Although I'll get into that in greater detail in a future post, the 4% rule relies on the premise that as one's portfolio is growing at a conservative rate of 8-9% a year, they can create an income by selling 4% of their assets every year and not run out of money.
        I want to use this same concept in terms of dividend investing. My ultimate goal for my portfolio is to reach a point where my dividend portfolio has a YOC of 9% or higher, while at the same time, I only need the first 4% to replicate my income. While I know this is a bit tougher to achieve, I know that if I can use 4% for income, and the remaining dividends to reinvest, I not only will never worry about running out of money in retirement, but I also know I can pass on my success to my children, should they ever need it.

My Fellow Disciples

It was a little over a year ago that I began to seriously look at dividend growth stocks as my path to financial freedom. While some of the ups and downs of the past year (and honestly 3-5 years) has shook my confidence at times, the support and reassurance that I've gotten learning from others experiences have been invaluable.

As you will see about, I have begun started a Blogroll. These are the investors and authors that, among others, I have pulled knowledge and support from in the past year. I am certain that I will continue to gain knowledge from their research, and I hope to contribute to it moving forward.

Included in this initial list are:

Dividend Growth Investor
Dividend Growth Stocks
Dividend Mantra
Dividend Partisan
Dividend Monk

This list is certainly not comprehensive, and I'm certain it will continue to grow, but I just wanted to throw some extra recognition out to fellow bloggers that have been paving the path on this dividend journey for me.

Thanks so much!

10% Rule

In order to have money to invest in dividend growth stocks, the first thing we need to be able to do is save money to invest. Everybody seems to have a different idea on how to save money. I've found that the two most common are saving first and budgeting.

Those who choose to budget allotting themselves specific amounts of money for food, clothing, housing, entertainment, etc. Typically, they keep a running tally to see how they are stacking up compared to their original budget. I started on my path to financial freedom by doing this very thing. Every month I would sit down in front of my Excel spreadsheet, map out what I was going to spend money on that month, make sure I had a little bit saved at the end of the month, and then diligently put in my expenses every night. I did this for six months straight. All I got at the end of it was a six-month long headache and no savings. 


My conclusion was I just wasn't disciplined to stop spending when my actual expenses matched my budgeted expenses. Actually it had less to do with discipline and more to do with the fact that I hit the number half way through the month. I decided I needed to go another way.

After doing further research, I found one recurring concept: The 10% Rule. Simply enough, this rule encourages savers to take 10% of their monthly income and put it directly into savings. The rest was free to be spent however the saver saw fit. They had already done their hard work for the month by saving 10% of their check. Additionally, the money had to be put into an account that was specifically designated for savings. The highlights of this plan had many benefits for me as well:

• Once I put away 10%, I didn't have to daily manage my accounts to make sure I was still on pace to meet my goal. 
• I liked that I could enjoy the fruits of my labor and treat myself when I felt compelled to without having to tap into the savings.
• I could see progress towards my savings goals as every month the account went up. (Withdrawing money from the account is only allowed for investment and extreme hardship cases)

I have really found the 10% rule to be easy to follow and extremely helpful getting me towards my goals. While I felt like my time budgeting was helpful, since it helped me see where I was overspending, the 10% rule has propelled me towards meeting my goals. I hope you find it as useful as I did.

Everyone needs a starting point...

I'm so excited to begin writing this blog. I've been inspired by many other investors who have shared their knowledge and experiences with the public. I want to add to that information and continue to provide forums for new investors to gain information and take control of their own financial futures. 

In this blog, I hope to share my experiences in investing in strong, dividend-growing companies. My investing goal is to produce an dividend income stream that will continue to grow every year. 

I hope you enjoy my thoughts and findings!

~Disciple