Steal These 5 Lessons To Improve Your Investing

November 14, 2022

After becoming a dividend investor, I've learned a few things that might help you out.

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Today we’ll be taking a deep dive into 5 lessons I’ve learned from dividend investing so far.

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5 Lessons I’ve Learned From Dividend Investing So Far

About Me

I began my investing career as more of a gambler than an investor. I was day trading penny stocks — sometimes I hit big, sometimes I lost 90% of my position in one day. I was on my phone constantly buying and selling only to make a little bit of money. That little bit of money was not worth the stress but it did teach me a valuable lesson: I’m not a day trader & the best shot I have at building wealth is to become a long term investor. From that realization, I became a long term investor.

After becoming a long term investor, I began to dig around and research different investing styles. I fell link love with dividend investing for a multitude of reasons:

  • You get passive income

  • Dividend stocks are stabler, more established companies

  • Dividend raises and the power of compounding create a beautiful wealth-building machine.

I was hooked!

Dividends have been my main strategy ever since. I’ve learned a lot about stocks, analysis, valuation, and about myself on this transformative journey. Today I’ll be sharing 5 lessons I’ve learned since becoming a dividend investor. I hope they help you on your investing journey :)

1) My Money Mindset Has Completely Changed

Dividend investing has completely changed my mindset about buying material items. Before I started dividend investing, I used to spend $100 on a pair of sneakers like it was nothing. Now I think, "If I invested that $100 yielding 3%, I could have $3 of passive income.” It’s just $3 here and there, but do that for each purchase and it adds up. Now when I want to buy a material object, I focus on buying an asset that will cash flow enough money to pay for that object.

2) Every Dollar I Make Is Prioritized For Passive Income

One big difference in my life since I’ve started investing is that now I save first and spend what’s left as opposed to spending then saving. It has kept me disciplined and I dedicate a predetermined amount of money to investments every month. Each dollar I invest is money I’ve earned from my active income and when I invest it it will provide passive income for as long as I hold my investments. Years ago, the only money I ever made was from active income but there’s a limit to how much active income you can make. Your boss is only going to give you a set amount of hours per week, you’re only going to get a certain percentage raise every year that fits in the budget, and your body and mind can only work for so long.

On the other hand, there is no limit to how much passive income you can make. By rerouting my active income into passive income, I buy my time with every investment I make. When I finally have enough passive income to cover my expenses, I’ll become work optional.

3) Being Patient Is Easier Said Than Done

It’s easy to look at Warren Buffett’s success over the long run and tell yourself to “buy and hold”. It’s easy to tell yourself to hold through the vicious bear market drawdowns, or to “just keep buying”.

It's a lot harder to follow through when those bear markets come around.

The most successful dividend investors hold their stocks for the long term and let the power of compounding do the heavy lifting. However, it’s a lot harder to be patient and wait for your dividends to compound than it may seem.

Patience is also difficult in a bull market. So far in 2022, stocks in the Energy sector have been ripping to all time highs. It’s taken a lot of discipline for me to not sell my energy stocks that are up big. I’m sticking to the process and letting my dividends do the heavy lifting.

Know what you own, have conviction, patience is key

4) Dividends Make Holding Long Term Much Easier

2022 has been the year of growth stocks being slaughtered. While growth names like Shopify and Meta are down significantly, dividend stocks like United Healthcare and PepsiCo are holding steady, up 3.94% and 2.93% respectively YTD. These companies are rewarding shareholders with dividends through uncertain times and this gives me even more confidence to hold through bear markets. I sleep well at night knowing my investments are paying dividends like clockwork and I don’t have to worry about my growth stocks having to make a 90% comeback.

5) Add To Your Winners, Not Your Losers

I know, this seems counterintuitive. It makes sense to add to your losers and lower your average cost basis, but if you're just adding to lower your price, it's not an effective strategy. If the company isn't growing earnings or getting any better you might as well be throwing money away in hopes that the stock price recovers back to your average cost and you can sell.

Your winners are winning for a reason. These are the stocks that you want more of. Even though it hurts to add shares at a higher price, if the stock is at a better value than the last time you bought shares it makes sense to buy.

Final Thoughts

I'm grateful that I learned about dividend investing early on in my investing career. If I had continued down the path of day-trading penny stocks, I would have likely lost a lot of money. Dividend investing has allowed me to grow my wealth steadily and steadily.

One of the best things about dividends is that they provide a passive income stream. This is especially helpful in bear markets when stocks are down and volatility is high. Knowing that my dividend stocks are continuing to pay me regardless of the stock market conditions is very reassuring.

Lastly, dividend investing has taught me the importance of patience and discipline. In order to be successful in this strategy, you need to be able to hold onto your stocks for the long term and ride out the ups and downs of the market. This can be difficult at times, but it is worth it in the end.

Memes Of The Week

Sam Bankman-Fried, CEO of the second-biggest crypto exchange FTX, has become public enemy #1 in the crypto space after losing over $1B of customer funds. He himself lost 94% of his net worth ($14.6B) in a single day, a world record. FTX was rumored to be bought out by the biggest crypto exchange Binance but after doing due diligence they’ve decided not to buy out FTX. FTX has filed for Chapter 11 bankruptcy.

First and foremost, I hope anyone affected by this FTX scandal gets their money back and is mentally okay. There are people you can reach out and talk to. I hope justice is served to SBF and all accomplices.

If two good things came out of this whole situation, one was that regulation may be coming to crypto to help prevent bad players from taking people’s money. The other was the memes:

Can't wait to see this one in theaters...

It's also reported that SBF's net worth is now down to $3.

Twitter users can also now pay $8 per month to get a verified badge next to their name. Of course, everyone will use it responsibly and nothing can possibly go wrong. Oh wait–

Pick Stocks Like A Sniper!

The number one question I get from people is, “How do you know which metrics to use when researching a stock?” There are hundreds to choose from and it can be incredibly overwhelming. I felt overwhelmed when I started too, so I decided to write a book to help people skip over the overwhelming part of stock picking and confidently jump right in!

My book, “Stock Market Sniper: How To Use The Metrics That Matter To Pick The Most Profitable Stocks” is out now! You’ll walk away from this book knowing the metrics that matter when investing and how to use them to pick the best stocks for your portfolio. These metrics have led me to pick stocks that have outperformed the S&P 500 YTD and contribute over $1,300 in dividend income. Check it out here.

If you’re reading this, chances are you’ve been overwhelmed by the amount of metrics you can use to analyze a stock. It’s not your fault, the stock market is a complicated place.

But it doesn’t have to be.

I’ve written the book, “Stock Market Sniper” to share the metrics that have brought success to me and so many other investors. After reading this book, you’ll be able to find the metrics that matter most when investing and be able to use them to pick the best performing stocks with confidence.

You’ve already done the hardest part, deciding that you need to invest. That one decision puts you ahead of the majority of people who don’t invest. Now with the metrics in this book, you can kick your investing into high gear.

Helpful Resources Are Here!

Don’t forget to check out my website full of awesome free resources to jumpstart your investing! 👇

Here’s my list of the best resources for financial freedom, enjoy!

Thanks for reading, if you liked this issue please tell a friend!

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