Tuesday, August 28, 2018

Why Not Start Investing Today?

If you're anything like me, you probably enjoy the idea of your money working for you. After all, it takes money to live. If your money isn't working for you, you must work for your money. But you may be wondering what I mean when I talk about making your money work for you. That serves as the basis of what we'll be outlining today.

What Do I Mean?

When I refer to making your money work for you, I am referring to the keyword in this post being "investing." Quite simply, investing is the act of expending money with the expectation of that money you expended growing in purchasing power over time. In other words, investing is the act of delayed gratification. When you adopt the mindset of delayed gratification, you are adopting the mindset that by not spending this dollar I have today, I can grow this dollar to 2 dollars 10 years from now. This capital that you earned through time and patience can be used to fund your lifestyle, and in turn, it can be used to provide you the freedom that many workers yearn for.

As I mentioned not long ago, the path to becoming an equity investor has never been easier. As such, it deeply saddens me that 46% of Americans don't own stocks. I liken the US stock market as equivalent to the "Wal-Mart Supercenter" of investing. The US stock market has exposure to every industry in the US economy to diversify your portfolio, from utilities, to energy companies, to pharma companies, to media companies, to railroad companies, financial services companies, and so much more. Now, there are many ways to invest, including real estate, and I don't want to dissuade anyone from pursuing those investment options, but my personal philosophy is why go through the hassle of being a landlord when real estate investment trusts (REITs) like Realty Income (O) can handle all the headaches that go along with being a landlord on your behalf as an investor in their business.

My Preferred Method of Investing

As anyone that has followed this blog a bit can guess, I am a dyed in the wool dividend growth investor. This short piece about dividends by Morgan Stanley concisely illustrates precisely why I am a dividend growth investor. Companies have different ways to manipulate earnings through accounting, which means that dividend growth investing is a way for companies to "show me" the success of their business, and not just tell you about it. Secondly, dividend paying stocks tend to be less volatile in bear markets, meaning that their stock price is less likely to be as negatively impacted by a downturn in the stock market. And when done right, investors in these dividend paying companies continue to be paid growing dividends through these tough times. This is very helpful to many investors psychologically as I certainly wouldn't want to part with a company that continues to pay me a growing dividend even through a recessionary period. Moreover, because management generally takes paying sustainable dividends seriously, it forces them to be more discerning about how they reinvest their profits back into the business with the intent of increasing profits. Lastly, management can't screw up what it doesn't control. If a company sends half of its profits to an investor, the investor now has the responsibility to decide how they should allocate their capital. They can use it to pay bills, save it, or reinvest it into another dividend paying company.

But What About The Market Near All-Time Highs?

As everyone is probably aware, the market has been constantly hitting or testing new highs. With that said, investors and wannabe investors would be wise to remember the adage that "time in the market beats timing the market." There have been countless times since this bull market began in 2009 when the investor community believed that we would enter another recession and stocks would soon plummet. One such instance that I remember was when major credit rating agencies downgraded the debt of the US government. However, as we know, the market continued to soar to all time highs, and these news events look completely irrelevant now looking back. As Dividend Sensei over at SeekingAlpha puts it, the market is constantly climbing a wall of worry. Investors that exited the market years ago when there was concern the market would crash have missed out on serious gains, which goes to show that nobody can accurately predict exactly when the market will crash. It's been proven that the typical equity investor significantly under-performs the market. This isn't because investors lack in the intelligence to perform in line with the market or outperform the market, rather it comes mostly from a lack of discipline and emotional intelligence.


One can begin to create a mostly passive dividend income stream today by selecting dividend growth companies that are trading at fair to better valuations. There are nearly 900 dividend paying companies that have increased their dividends for at least the past 5 years that you are free to skim through for idea generation for investing purposes. The longer a company's dividend growth streak continues, the more indicative it is that the company has strong fundamentals (i.e. wide business moat, strong balance sheet). As dividend growth investors, we are looking for such companies to grow our dividend income, and allow our money to work for us, so we don't have to work for our money.


As always, please remember that I encourage investors to do their own due diligence, and the mention of any companies in this article should not be construed as an endorsement to invest in them.


What is your preferred method of investing? How hard is your money working for you?

Saturday, August 25, 2018

The Path to Becoming An Equity Investor Has Never Been Easier

In this era of investor friendly, low cost brokers that we find ourselves living in, I find it somewhat unsettling that 46% of Americans don't own stocks. The even more disturbing part is that those who don't have access to a retirement account through an employer are less likely to have money invested in the stock market.

Given that we know the US stock market is the single greatest creator of wealth over medium to long term time horizons, why don't more Americans invest in the stock market? Below, I'll present some of the misconceptions that some Americans may have regarding the stock market that hold them back from investing. I will also offer a rebuttal for each of these misconceptions.

Reason 1: "Investing Is Only For The Wealthy"

I believe that one of the primary reasons that so many Americans don't own stocks is that they believe one must have access to thousands of dollars to begin to invest, so they just never start because of this mistaken belief. As we will discuss below, there are no shortage of options to choose from when investing. 

Twenty years ago, I'd agree to an extent that investing wasn't as accessible. Investing wasn't automated in those days, meaning more work to execute a trade (calling your broker to place a trade), and the costs were considerably higher; although in the last few years this has changed considerably. As I alluded to in my review of Robinhood, signing up for the broker is a very easy and user friendly process. It didn't take me more than 5 minutes to sign up, and a couple minutes to link my bank account to begin investing funds. Robinhood charges no fees to purchase stock. This is fantastic for investors that are just starting out and only have a few hundred dollars to invest. As long as you have enough money in your brokerage account to buy whole shares of stock rather than fractional shares, there is nothing stopping you from becoming a shareholder in some of the finest companies on the planet, and making your money work for you. If Robinhood isn't exactly your style, you could perhaps consider M1 Finance for free automated investing. Even if you prefer the bigger online brokers like Schwab, you can still trade cheaply for $4.95. The point is that regardless of if you have $300 to invest or a cool $1 million, you have access to so many fantastic brokers that allow you to begin investing with much less than you may have thought.

Reason 2: "The Stock Market Is Rigged"

What many Americans will argue when you tout the benefits of investing in the stock market is that it is rigged. In their view, institutional investors (also commonly referred to simply as "Wall Street") are screwing over the retail investor also known as "Main Street" or "the little guy"). This couldn't be further from the truth. Like retail investors, institutional investors also participate in the stock market. Unfortunately, what we continually see is that retail investors commonly try to time the market, and they also panic sell at rock bottom prices when we encounter recessions or a cyclical industry like energy experiences a bust cycle. It should come as no surprise to anyone that when one bases their investment decisions off emotion, they will make foolish decisions, selling precisely when they should be buying or buying precisely when they should be selling. As a result of these foolish decisions on one end of the spectrum, the party on the other end will benefit from the foolish decisions of the other party. Somewhere out there, there is someone who sold BP at $29 a share in January 2016, while someone else bought BP at $29 a share. The former likely experienced significant losses depending upon their cost basis, while the latter has experienced 49% in price appreciation with the current price of over $43 a share, not even including 10 dividend payments the latter investor has collected from BP over this time meaning they collected another $5.95 in the form of cash dividends that they could have reinvested into BP or other dividend paying stocks during that time, or they simply enjoyed the dividends however they chose during that time.

Reason 3: "Investing is Complicated. It's Rocket Science."

As we discussed in the second reason, many believe that the stock market is rigged primarily because they don't understand that the stock market is filled with many great businesses that generate real profits for their owners (shareholders). That is simply because although we live in the golden age of investing, we also live in the age of  "information overload" or "analysis paralysis." People will often over-analyze the stocks that they own, and sell for the most immaterial reasons because of the opinion of some writer about a particular company they own. Many that don't invest are discouraged because they have been led to believe by the financial media that only professionals with an MBA in finance are qualified to invest in the stock market. The truth is that investing can be as simple or as complicated as you'd like it to be. If you don't have the time to invest yourself or you don't feel qualified, you can absolutely invest in low cost index funds. Even Warren Buffett, the world's greatest investor advocates that the vast majority of people should contribute regularly to a low cost index fund, set it and forget it for a few decades to let compounding do the heavy lifting, and propel individuals to a safe and secure retirement. Because investing is a game of patience and endurance, it's incredibly important to know your risk tolerance. I believe the question of whether you are possibly equipped to invest in the market yourself can be answered by the following question. If the stock market were to drop 50% in the next week (assuming that the fundamentals of the global economy are relatively intact and there isn't a zombie apocalypse) would you say A) "Heck yeah, the stock market dropped 50% for absolutely no reason. I'm going to buy up as many quality dividend paying companies as I can." Or would you say B) "Oh no! The stock market dropped by 50% in the last week. I better sell before I lose everything!" Regardless of what you said, it's absolutely fine either way. One of the most important rules in investing is to know thyself. If you would continue buying stock if the market plunged, you may possibly be suited to strike out on your own and begin a strategy such as dividend growth investing (DGI). If not, you'll do well for yourself to contribute to a low cost index fund, and mostly forget about it for a few decades. There is no right or wrong answer. Investing isn't a one size fits all subject. That's exactly what makes it such a broad and fascinating subject.


In no way do I write these sorts of posts to demean or criticize my fellow Americans. Actually, I write these types of posts to try to educate and inspire everyone to invest in the stock market. As they say, "getting started is the hardest part." Whether you decide to invest on your own or you invest through index funds, please know that before you do either, you must know your risk tolerance. Whichever way you choose, just know that there are so many great low cost options at the tips of your fingers that weren't around 5 or 10 years ago.


Are there any reasons you think I missed why more people don't become equity investors? What is your investing style? Do you prefer an active approach like DGI or a more passive approach like index fund investing?

Tuesday, August 21, 2018

My Robinhood Review After 1 Year

In today's world, investing has never been easier for those who are just starting out. There are several platforms out there that are very investor friendly. I thought I'd take a few moments to give my review of one of those platforms I use called Robinhood after one year of using it to purchase dividend stocks.

What is Robinhood?

Robinhood is a broker that is backed by FINRA and is SIPC insured. Because they are federally registered and monitored, this should alleviate any concerns that prospective Robinhood users have about if Robinhood is legitimate. Robinhood is able to charge no fees or commissions because they earn interest income on any uninvested cash in the brokerage accounts of their customers. Secondly, Robinhood makes money off of margin account interest when Robinhood Gold users utilize the margin feature. Lastly, Robinhood earns money by offering the Robinhood Gold service to users for $10-$25 a month. This service allows Robinhood users unlimited instant reinvesting, instant deposits, and added buying power.

Robinhood Pros

User Friendly App/Website: Because Robinhood is a fintech company that seeks to democratize the process of investing, they have no account minimum to open an account. Regardless of if you have no money to invest or $50,000 to invest, you can open an account. Opening an account is very easy and user friendly. It took me about 5 minutes to provide the necessary information to have my account approved a couple days later. Linking a bank account in order to be able to invest was also a very quick and easy process. Also, since I joined Robinhood, they have added a desktop site for users to check their accounts.

Investing Options: Robinhood has ramped up the number of investing options that are available to its users. Since I started my account last August, they have added options trading and cryptocurrency. I'll probably never use either of these new features, but for anyone that would like more options than just stock investing, Robinhood has become a great platform for so much more than just stock investing.

Free Commissions: As I alluded to earlier, Robinhood charges no fees or commissions. This can save users of Robinhood quite a bit of money.

Diversification: Because Robinhood charges no fees or commissions, I've been able to invest small amounts of money into a wide variety of great dividend paying stocks. At the time of this article, I'm invested in 31 different companies through my Robinhood account. My investments in companies range from as little as $150 to over $500. The larger investment holdings in my account weren't even built in one purchase either. I've been able to average down my cost basis on positions like AT&T (T) and Exxon Mobil (XOM) through several purchases over time. I've had 52 transactions since I signed up for Robinhood which has easily saved me hundreds of dollars in fees. If not for investor friendly platforms like Robinhood, I'd have to invest much more money in fewer positions to not accumulate so much in fees, which would sacrifice the diversification of the portfolio.

Customer Service: To this point, the only interaction I've had with customer service was when I didn't receive my dividend from Royal Dutch Shell (RDS.B) a few days after the dividend pay date back in March of this year. This was when I wasn't aware that it can at times take longer for ADR shares to deposit dividends into your brokerage account. I emailed customer support and they promptly informed me of this. The dividend was deposited into my account a few days later just as they said it would be.

Order Types: Robinhood offers a variety of order types for users looking to buy or sell stock. There is the market order type that allows you to buy x amount of shares for whatever the most recent market price is. If one is looking to buy a stock for a specific amount, they can place a limit order stipulating the maximum price they are willing to pay for shares of a stock. The order isn't executed until the stock is at or below the demanded price. An investor can set the limit order to be good through the end of a trading day or until the trade is executed.

Free Shares of Stock: When one signs up for Robinhood, they have the choice to use a referral code in order to get a free share of stock from Robinhood. Both the referrer and the referred party receive a free share of stock. You have the opportunity to get your hands on a share of stock like Apple, Facebook, Microsoft, GE, Ford, etc. The maximum monetary value of stocks that one can be rewarded through using a referral code when they sign up, and for anyone they refer to Robinhood is $500. If for instance, one has received $490.00 of stock from Robinhood, they can only receive a share of stock worth $10.00 or less for referring someone else because of the $500 cap. Robinhood calculates the amount you are rewarded as whatever the stock is worth whenever you receive it from Robinhood. Please note that you cannot sell the stock you receive until 2 days after you received it, and you can't transfer the proceeds of the sale to your linked bank account until 30 days after you are rewarded the stock. If you are interested in signing up for Robinhood and getting a free share of stock, I'll include my referral link in this section of the review.

Robinhood Cons:

No Automatic Dividend Reinvestment: For those looking to for the ability to automatically reinvest their dividends into a company through a DRIP, this is one of the very few drawbacks to Robinhood as they don't offer this service at the time of this post. This is something that doesn't personally doesn't bother me that much as I prefer to let my dividends build up in my account, so that I can opportunistically buy whatever dividend stock I believe to be most compelling at the time.

No Retirement/Custodial Accounts: Unfortunately, Robinhood doesn't offer retirement accounts such as the IRA or Roth IRA at this time, nor do they offer custodial accounts for those looking to open an account for minors. I'd absolutely like to see these options added at some point in the future as this would be icing on the cake given how much I already love Robinhood.

Not Available Outside the US: Robinhood is not licensed anywhere besides the United States. Therefore, international readers are unfortunately unable to sign up for Robinhood at this time.

No research platform: While Robinhood doesn't have much of a research platform, I don't find this to be much of a problem anyways. I use Morningstar for most of my research, so expecting a value conscientious app to offer a top notch research platform is simply unrealistic. If you need an all in one investing app, this lack of a platform may be disappointing to you.


Like any other brokerage account, Robinhood has its advantages and disadvantages. For any new or experienced investors alike looking for an app that has value and utility in mind, I highly recommend Robinhood. I wouldn't even bother writing a review of Robinhood or continue to maintain an account with them if I didn't truly believe in Robinhood.


What are your thoughts on Robinhood? Did I miss any important points in my review of Robinhood? Do you have a brokerage account through them? If not, what is the biggest drawback that you'd like to see modified?

Saturday, August 18, 2018

Recent Stock Purchase - Abbvie Inc (ABBV)

After several months of gathering up dividends plus a bit of money left over from a purchase in June, I was able to add a share to my position in Abbvie (ABBV), bringing my stake in Abbvie to 3 shares. This purchase added $3.84 in forward annual dividend income to my dividend portfolio, bringing the projected forward annual dividend income to $419.32. I'll discuss a few reasons why I decided to add to my position in Abbvie.

Basic Description of the Company

Abbvie is a global pharmaceutical company that focuses on oncology and immunology. It is the developer and marketer of the blockbuster drug, Humira. Since Abbvie's spinoff from Abbott Laboratories (ABT) in 2013, it has raised its dividend every year without fail.

Massive Tailwinds

I'm an investor that subscribes to the keep it simple stupid (KISS) motto. It's much easier for a company to succeed in growing its business when there are advantageous long term trends in its industry. With that said, we can very easily observe that a large growth catalyst for the company going forward will be a global population that is growing older, larger in population, and more affluent. As healthcare spending becomes an ever expanding share of the global economy, this will tremendously benefit companies like Abbvie. The healthcare industry is also very inelastic, meaning that people won't be as deterred by a price increase for a medication that is vital to their everyday functioning as they would be if we were talking about a consumer cyclical industry, such as luxury goods. As a result of this, Abbvie is a more defensive pick when compared to a luxury goods company, meaning it likely won't be as negatively impacted by a downturn in the economy as a luxury goods company would be.

Massive Growth Runway

Having discussed that Abbvie will benefit from massive tailwinds, we can see that the investment research firm CRFA projects Abbvie will grow its earnings at an annual rate 22% over the next 3 years. When considering that Abbvie has grown their earnings at a rate of 21.6% since the spinoff in 2013, this doesn't seem entirely unreasonable. Obviously, the biggest concern and obstacle in achieving this growth is if Abbvie's revenues from other drugs in their promising pipeline don't grow at a rate sufficient enough to more than offset the eventual decline in Humira. Given that Humira biosimilars from Amgen and Mylan are off the US market until 2023, it's reasonable to believe that Humira will remain the top selling drug in the world for at least a couple more years. This gives Abbvie's fantastic management team adequate time to prepare for the eventual drop in revenue from its blockbuster drug, Humira.

Strong Dividend/Undervaluation

As Jason Fieber pointed out a few weeks back in his Undervalued Dividend Growth Stock of the Week series, Abbvie's dividend yield is significantly higher than its 5 year average yield. When the dividend yield is well above its 5 year average yield, this can mean one of two things. The company's fundamentals are deteriorating or the market is simply currently undervaluing Abbvie. Given that we've already discussed the strong fundamentals of the company, I don't believe that the dividend yield is well above its 5 year average simply because Abbvie's business is deteriorating. Similar to Jason, I believe the market is undervaluing this strong dividend payer by too strongly focusing on the risks of an investment in Abbvie. Yes, Humira does provide the majority of revenue for Abbvie. I understand the concern in the investor community about this, but it's not as if Abbvie doesn't have time to transition away from its reliance on Humira for the majority of its revenue. Abbvie is projecting for Imbruvica to reach annual sales of $5 billion by 2020. Another recently approved drug to treat endometriosis pain, Orilissa, has the potential to dominate that market and become a billion dollar drug. This doesn't even scratch the surface of other drugs that Abbvie has on the market or in its drug pipeline.


I view Abbvie as a quality dividend growth stock that doesn't even have to come close to matching past performance to be a strong long term holding. With the current dividend yield at almost 4% and earnings growth set to be in the double digits, I believe this is a company that is absolutely capable of double digit returns over the long term. As always, any purchases that I make are unique to my circumstances and my risk tolerance. Although I view it as unlikely that Humira's revenues won't be offset by Abbvie's other drugs such as Imbruvica and Orilissa, it is entirely possible that my investment thesis could prove to be wrong. After all, no investor has a perfect batting average. This is why I advocate a diversified portfolio, and to never invest more than you can afford to lose. Being a pharmaceutical company, there are numerous risks that Abbvie is exposed to including loss of exclusivity/patent expiration, regulatory risks, and legal risks.  Please be sure to factor these risks into your investment decision. Please use my recent stock purchases as idea generation, and conduct your own due diligence before making investment decisions.

What dividend stock(s) have you recently purchased? What are your thoughts on my recent purchase?

Tuesday, August 14, 2018

The #1 Reason Most Americans Can't Retire (Part 2)

Now that I've provided some insight from Part 1 of this 2 part post into the reason why many Americans find themselves in a situation where they have nothing saved for retirement and how many Americans couldn't cover a $400 unexpected expense without resorting to debt, we can delve into the possible solutions to address this pandemic that our country faces.


As I alluded to in part 1 of this 2 part series, I believe that simply spreading the message that this country faces a systemic crisis in regards to financial illiteracy and retirement is the most important part of the equation to work towards solving the above issues. Without knowing the origin of an issue, along with the severity, we can't effectively provide solutions to this problem. Trying to fix this problem without fully understanding the magnitude of it is comparable to a doctor trying to treat a patient for an illness they don't yet have a diagnosis for. It's not advisable to attempt to fix a problem without fully understanding it first.

Education System Reform

The first course of action now that we know the scope of this problem is to prepare the younger generations such as myself on finances while they are still in middle school and high school. Of course, there are two obstacles to this plan of action succeeding. The first is that many of the teachers that would teach these courses probably don't know much about personal finance themselves, and the good intentions of this program could be somewhat negated in that regard. The second issue to this is determining how we can actually make personal finance an interesting topic to teenagers. There are even many adults whose eyes glaze over when talking personal finance. However, the good news is that teenagers are still highly impressionable if the ideas originate from someone they respect or view as "cool." If it was required in a personal finance class that everyone read a blog such as MrFreeAt33 or Mr Money Mustache, that could perhaps appeal to youth as it did for me. Who could object to being able to live on their terms? I believe even kids could put 2 and 2 together and realize that if they were financially independent, then every day would be like a "summer vacation" in a sense. Even if there are objections to the above sites, I believe that everyone can take away from the sites that there may come a day that you may be unable to work for whatever reason. This could be because you are physically or mentally unable to hold employment or you are fired from your job because of downsizing. If this does occur, wouldn't it be more favorable to have assets that could help you through those tough times? Asking these questions of students that are basically impossible to refute could be useful in transforming their mindset from the spender mindset to the saver/investor mindset. Driptilrich also referenced a great idea in this post. We are taught in school the effects of compound interest in abstract terms, but we are never really taught about the benefits of investing or the drawbacks to being in debt. I would expand curriculum to teach the youth the true power of compounding in the world of personal finance.

Public Policy Reform

Lastly, as much as I believe in the personal responsibility aspect of addressing this issue, I do believe that because there will be some Americans that aren't able to save enough for retirement or simply choose not to, it is important that our political leaders address the issues facing Social Security Retirement benefits. The Social Security trust fund is expected to be depleted by the year 2034 according to this article by Forbes. As the Baby Boomer population ages with 10,000 Americans retiring everyday, the expenditures for Medicare and Social Security will continue to consume more of the budget each year. This presents major problems for the tens of millions of Boomers that are relying upon these benefits because either benefits will have to be cut in a significant way, FICA taxes will need to be increased, or both will need to occur to preserve the benefits that our aging population is dependent upon. I'm split on whether our politicians will do what needs to be done to address this problem in a timely manner as they continue to "kick the can down the road" on this issue as they seem to do with almost everything, although I do believe they will be forced into both raising FICA taxes and decreasing benefits because of their procrastination at some point.


In summary, I don't have any one suggestion that will solve the financial illiteracy and retirement crisis completely on its own. Rather, I am offering the above suggestions to hopefully begin a meaningful conversation. 

What are your thoughts on my suggestions to remedy this dire situation that most Americans find themselves in? Are there any possible solutions that I may have missed?

Saturday, August 11, 2018

The #1 Reason Most Americans Can't Retire (Part 1)

If you've paid attention at all over the past few decades, it is pretty evident that America is facing a pandemic of financial illiteracy. We'll discuss in further detail the unfortunate reality that most Americans face regarding their financial future and what led us to this point. In part 2 of our conversation, we will discuss possible solutions to remedy this situation. The goal of this post, and the second post that will be published on Tuesday, August 14, is to raise attention to this matter and start a thorough discussion in the community what needs to be done to address this matter. After all, we can't fix a problem that 1) we aren't fully aware of and 2) that we don't fully understand the severity of.

In looking at the above quiz that I took here, let's just analyze this a bit. I got 6 out of 6 correct as anyone in this community would. What I find unsettling is that the average American only answered 3 of 6 correctly. Next, let's go over some of the grim statistics concerning the grave financial situation of many Americans because of the financial illiteracy.

Forbes does an excellent job of outlining statistics that describe the financial plight many of our fellow Americans face if you would like more commentary. The basic points that they cover are as follows:
1) 44% of Americans can't cover a $400 emergency without having to resort to debt.
2) 43% of student loan borrowers aren't making payments
3) 38% of households have credit card debt
4) 33% of Americans have $0 saved for retirement, absolutely nothing

Obviously, it doesn't take a personal finance expert to know that these are absolutely frightening statistics, and speak to the financial illiteracy that is ubiquitous in America. One could argue that these stats only apply to those that make below average salaries, but that simply isn't the case. What makes this issue a true pandemic is that it affects every demographic. Financial illiteracy doesn't care about your race, gender, sexual orientation, or income level. Without adequate financial knowledge, ANYONE is more prone to making silly decisions.

What got us here?

The easiest explanation of what got us here is likely the transition that America is undergoing from employers funding their retirement to employees bearing the burden to ensure a prosperous retirement. According to this article by Motley Fool, roughly 38% of Americans in the private sector had a pension plan in 1980; whereas that number has been more than halved at 18% as recently as 2017. Without going into much detail, this is also a contributing factor in the high turnover rate of the American workforce with 40% turnover per year. Perhaps part of the reason that Americans aren't financially literate is because they haven't really had to be up until the past couple decades because simply contributing to one's pension plan for 40+ years was about all they needed to do to retire with Social Security Retirement benefits kicking in around the time they retired. As the numbers show, this simply isn't the case. We need to emphasize to others that times have changed and the burden has shifted from the employer to the employee to fund an employee's retirement. You are in charge of your financial future from this point forward, not your employer.


Having brought these issues to light, were you surprised by any of the data above? Are there any other causes to the retirement crisis facing Americans besides the shift of responsibility from the employer to the employee, and a lack of financial education? Lastly, what solutions do you offer to remedy this situation as part 2 of our 2 part guide?

Tuesday, August 7, 2018

Why to Pursue Financial Independence

I wanted to take a moment today to explain my rationale for pursuing financial independence and to convince you or remind you why you should pursue financial independence. I'm not sure if anyone else in the community has so called "tunnel vision," but I know that I do at times. I can become so fixed and determined to achieve something that I forget why I was even striving to achieve it to begin with. With that said, I've found that it's much easier to fully commit to something when you have clear and concise reason(s) for pursuing a goal. When life gets tough and when your goal seems elusive, it is the reasons you're striving to accomplish that goal that will guide you through the challenges you will inevitably encounter.

1. The primary reason that I am pursuing financial independence is because when you are financially independent, you are free to live on your own terms. This can mean waking up whenever you'd like, working whenever you choose, on whatever you choose. It almost goes without saying that when you are financially independent, you are able to live however you choose. This leads us into the next reason that closely relates to the above reason.

2.  As a byproduct of being financially independent and being able to live on your own terms, it is almost an absolute certainty that you will be less stressed as a result of the first reason. I've never really had to endure a toxic work environment to this point in my career, but I know of many that deal with unreasonable bosses or clients. I don't want anyone to misconstrue this reason as me condoning the idea that all stress is bad or unhealthy because stress can actually be beneficial in optimizing our performance (i.e. deadlines). Having said that, I believe that many of us can be too stressed at times, and this could have a detrimental impact from both a mental and physical health standpoint. This leads us into our third and final reason.

3. When we are working 40+ hours a week on top of any additional responsibilities we have, it becomes clear that we don't have as much time as we would like to better ourselves through exercise, education, entrepreneurial endeavors, philanthropy, etcetera. Tying this into the first reason, it is financial independence that allows us to focus on improving ourselves, which can in turn be used to better the lives of others.

Having discussed my 3 reasons that I am pursuing financial independence and why you should, these 3 reasons could all be summarized in a couple sentences. Financial independence provides you with the flexibility that others do not have! You are free to do as you choose, and as a result, you can improve yourself and the lives of others.

What are your reasons for pursuing financial independence? Are there any major reasons for you that I missed?

Saturday, August 4, 2018

July 2018 Dividend Income

Between work, school, the blog, and sports, this summer is passing me by at an incredible rate. It's inconceivable that another month has passed us by, and that means that another month of dividends have arrived in my brokerage account. With that being said, it's time to examine my dividend income for the month of July.

The trend of the first month of the quarter being my slowest in terms of total dividends received continues. Overall, I received $16.83 in dividends from 7 companies in the month of July. Compared to a quarter ago, I received $10.69 in April of this year from 5 companies. That's a quarter over quarter (QOQ) growth rate of 57.4%! Besides the additions of PPL (PPL) and Ventas (VTR) that contributed $6.03 in additional income, I received a total quarterly dividend raise of $0.10 from Leggett and Platt (LEG) and a token $0.01 raise from WP Carey (WPC). Also, the diversification of the portfolio can be observed by noting that I didn't receive any hefty dividends from any one company this month, as I will be in the month of August from a few companies.

Although I won't be able to increase my dividend income at a clip near 57.4% again for the next year due to paying my way through the last year of undergrad to graduate with no debt, I do believe that my dividend income will continue to see impressive growth simply through the impact of dividend increases and dividend reinvestment. My dividend income should continue to see incredible growth in the end months of quarters (i.e. March, June, September, and December) because I'm still able to contribute 7% of my gross pay to my Simple IRA retirement plan through work, in addition to a 3% match from my employer.

How was your July? How many companies paid dividends to you? What impact did your new additions to the portfolio have on your dividend income when compared to April?