2854: Dividend Investing Will Always Beat a Side Hustle by Millionaire Mob with ESI Money on Financial Freedom

[00:00:00] [SPEAKER_00]: Have you ever noticed how a calm mind can really set the stage for a good night's sleep?

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[00:00:09] [SPEAKER_00]: Greg, our host from Optimal Relationships Daily, is here to help ease you into a peaceful night's rest with some positive affirmations.

[00:00:17] [SPEAKER_00]: And these affirmations aren't just comforting. They can help ease anxiety and nurture positive thoughts, setting you up for true, good sleep.

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[00:00:40] [SPEAKER_00]: This is Optimal Finance Daily.

[00:00:42] [SPEAKER_00]: Dividend Investing Will Always Beat a Side Hustle by Millionaire Mob with ESI Money.com, and I'm your host and personal finance enthusiast, Dianomarium.

[00:00:55] [SPEAKER_00]: Now let's jump right into our next post and start optimizing your life.

[00:01:04] [SPEAKER_00]: Dividend Investing Will Always Beat a Side Hustle by Millionaire Mob with ESI Money.com.

[00:01:11] [SPEAKER_00]: What if I told you there's a way to make money without working and make progress towards your retirement goals? Does this sound too good to be true?

[00:01:20] [SPEAKER_00]: Well, it isn't. With dividend investing, you position yourself to increase your income and get closer to your retirement goals.

[00:01:29] [SPEAKER_00]: Why dividend investing is right for you?

[00:01:33] [SPEAKER_00]: Historically, dividend investing has been viewed as a risk adverse way for retired investors to be involved in the stock market. Not anymore.

[00:01:43] [SPEAKER_00]: With the speed of news and information, dividend investing is by far the easiest, most efficient way to make additional income from the stock market.

[00:01:53] [SPEAKER_00]: I've been enamored with the number of cool online tools associated with investing, whether that be zero commission brokerages, real time information, automated trading, etc.

[00:02:07] [SPEAKER_00]: The list goes on. But in the case of dividend investing, this couldn't be better suited for today's generation of investors.

[00:02:16] [SPEAKER_00]: Building a dividend growth portfolio should be fun, simple and stress free.

[00:02:22] [SPEAKER_00]: If you set up your goals the right way from the start, you should have a new side hustle income without the hustle part.

[00:02:30] [SPEAKER_00]: How dividend investing beats a side hustle?

[00:02:34] [SPEAKER_00]: A number of personal finance enthusiasts like me, strive for income appreciation.

[00:02:39] [SPEAKER_00]: You should, too. However, there are several reasons why dividend investing will always take priority over side hustles.

[00:02:49] [SPEAKER_00]: Number 1. The ability to kill two birds with one stone.

[00:02:54] [SPEAKER_00]: Dividend investing is the only way that I know of to both earn income and get closer to your retirement goals.

[00:03:02] [SPEAKER_00]: If you know of any other way, I'd love to hear it in the comments.

[00:03:06] [SPEAKER_00]: When I reference your retirement goals, I mean that for every dollar contributed to your dividend portfolio, you should be that much closer to retirement.

[00:03:16] [SPEAKER_00]: Dividend stocks will have a residual component outside of your income, so you can convert to cash value in a very liquid manner.

[00:03:26] [SPEAKER_00]: Number 2. Unlimited residual value potential.

[00:03:30] [SPEAKER_00]: To expand on my first point as you invest in a stock, you're investing in the future value of earnings at a price discounted today.

[00:03:40] [SPEAKER_00]: Hopefully, if you set out a specific plan up front, you'll be in great shape to recognize significant earnings appreciation.

[00:03:48] [SPEAKER_00]: Thus, leading to an increase in the stock price and dividends, too.

[00:03:53] [SPEAKER_00]: Let's look at one of my favorite examples.

[00:03:56] [SPEAKER_00]: Nearly 70 years ago, Russ Grimmel of Chicago invested $1,000 worth of stock in Walgreens.

[00:04:03] [SPEAKER_00]: He had a simple mantra.

[00:04:05] [SPEAKER_00]: People will always need medicine and women will always buy makeup.

[00:04:10] [SPEAKER_00]: Russ went into it knowing that he would own the stock for a very long time.

[00:04:15] [SPEAKER_00]: In 2017, Russ turned 98 years old and realized that his Walgreens stock was now worth more than $2 million.

[00:04:24] [SPEAKER_00]: He donated all of his stock to the Illinois Auto-Bon Society.

[00:04:29] [SPEAKER_00]: Be like Russ.

[00:04:30] [SPEAKER_00]: Number 3. Side hustles take a lot of time. They aren't called hustles for nothing.

[00:04:37] [SPEAKER_00]: With dividend investing, you really don't need to devote a significant amount of time to monitoring your portfolio.

[00:04:45] [SPEAKER_00]: Back to my point of technology capabilities in the information age.

[00:04:49] [SPEAKER_00]: We have a real-time information coming directly to our hands via our iPhones at any given moment.

[00:04:55] [SPEAKER_00]: There is limited need to go scouring the web.

[00:05:00] [SPEAKER_00]: With a side hustle, I've seen countless individuals think they're on the brink of achieving greatness with their new side hustle,

[00:05:07] [SPEAKER_00]: but end up achieving marginal return for maximum effort.

[00:05:11] [SPEAKER_00]: Don't get me wrong. I love side hustles.

[00:05:14] [SPEAKER_00]: However, our time is precious. Spend it wisely. Just like your money.

[00:05:19] [SPEAKER_00]: Our single goal in achieving financial freedom is to increase our earnings on a per hour basis.

[00:05:26] [SPEAKER_00]: And dividend investing has some of the best earnings per hour spent out there.

[00:05:32] [SPEAKER_00]: Based on my most recent dividend portfolio statement, I should earn $728 per year for doing absolutely nothing.

[00:05:41] [SPEAKER_00]: I don't even need to invest more money to earn that income.

[00:05:44] [SPEAKER_00]: I like to invest in dividend growth stocks, which means I should see that income increase over time.

[00:05:52] [SPEAKER_00]: What happens if I continue to recycle my income and contribute to the dividend portfolio over time?

[00:05:59] [SPEAKER_00]: Number 4. Compound interest is the eighth wonder of the world.

[00:06:04] [SPEAKER_00]: Oh, hey, compound interest. As Albert Einstein once said,

[00:06:08] [SPEAKER_00]: quote, compound interest is the eighth wonder of the world. And quote,

[00:06:15] [SPEAKER_00]: Side hustles have limited ability to generate compound interest.

[00:06:19] [SPEAKER_00]: Yes, you can increase your clients or sell more products over time.

[00:06:23] [SPEAKER_00]: As an established business, you can make the argument that you can reinvest that profit into your own business

[00:06:29] [SPEAKER_00]: and generate amazing compound interest.

[00:06:32] [SPEAKER_00]: Holding that aside, dividend growth investing with reinvestment is the single best way to maximize your total return over the long term.

[00:06:42] [SPEAKER_00]: And number 5. As side hustle can go away.

[00:06:46] [SPEAKER_00]: If you're going to retire early or for a matter of fact just retire in general,

[00:06:52] [SPEAKER_00]: you'll need additional income beyond what is being inherently generated from your retirement accounts,

[00:06:58] [SPEAKER_00]: even more so if you like to retire early.

[00:07:01] [SPEAKER_00]: Side hustles should make up a substantial amount of your post early retirement income,

[00:07:06] [SPEAKER_00]: but it can be the only income. You must diversify yourself with income that will go on forever.

[00:07:12] [SPEAKER_00]: Dividents can do that. I like to think of my retirement accounts as slush funds.

[00:07:18] [SPEAKER_00]: They are true assets, but I can't rely only on them. I must build my income and assets now with the utmost urgency possible.

[00:07:28] [SPEAKER_00]: Why dividend investing is suitable for anyone.

[00:07:32] [SPEAKER_00]: Dividend growth investing can be done by anyone,

[00:07:35] [SPEAKER_00]: in fact you may be a lot better at it than you think.

[00:07:38] [SPEAKER_00]: I'm a firm believer that investors that keep their strategy the simplest will eventually win the race.

[00:07:45] [SPEAKER_00]: Here are a few pointers I learned during my days as an investor, investment banker and finance monkey.

[00:07:53] [SPEAKER_00]: Number one, stick with what you know. Why would you invest in the next dog walking app when you can't get enough Coca-Cola?

[00:08:01] [SPEAKER_00]: Number two, invest in businesses you understand.

[00:08:05] [SPEAKER_00]: If you don't know how it makes money, it's not worth being in your portfolio.

[00:08:10] [SPEAKER_00]: Number three, avoid the herd.

[00:08:13] [SPEAKER_00]: Just because everyone loves Netflix doesn't mean you need to invest in it.

[00:08:18] [SPEAKER_00]: Number four, if it's too good to be true, it probably is.

[00:08:22] [SPEAKER_00]: Someone promising that a stock is guaranteed to return 123% or the next cryptocurrency is about to take off, pass on it.

[00:08:33] [SPEAKER_00]: Number five, do the opposite of financial pundits on TV.

[00:08:38] [SPEAKER_00]: Remember people on TV are often not inclined to give the best advice.

[00:08:43] [SPEAKER_00]: Number six, only you know your risk tolerance and your investment comforts.

[00:08:50] [SPEAKER_00]: Stick with your gut. Do your own homework. You will end up in great shape.

[00:08:56] [SPEAKER_00]: I love investing. So dividend investing gives me another hobby.

[00:09:01] [SPEAKER_00]: It also helps me achieve a number of goals without being a significant time suck.

[00:09:05] [SPEAKER_00]: To build your first and only dividend portfolio, find 20 to 30 stocks that you'd like to invest in.

[00:09:13] [SPEAKER_00]: Scale into your investment over time. You don't need to be invested in all 25 stocks from the get go.

[00:09:20] [SPEAKER_00]: Next, set aside money to automatically be contributed to your portfolio and continue to reinvest all income and contributions into your portfolio.

[00:09:30] [SPEAKER_00]: Preferably on small dips in the share price.

[00:09:33] [SPEAKER_00]: Dividend growth investing is a marathon, not a sprint. Be patient and have a plan.

[00:09:40] [SPEAKER_00]: Finally, go out and enjoy your life, learn something new, travel the world.

[00:09:45] [SPEAKER_00]: There's a lot to learn and a lot to explore.

[00:09:52] [SPEAKER_00]: You just listen to the post titled, dividend investing will always be to side hustle by millionaire mob with ESIMoney.com

[00:10:01] [SPEAKER_00]: And I'll be right back with my commentary.

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[00:11:06] [SPEAKER_00]: While I'm all about passive investing in the stock market and growing my money through the power of compound interest,

[00:11:13] [SPEAKER_00]: I'm not all that interested in dividend investing.

[00:11:16] [SPEAKER_00]: I invest in total market low fee index funds, which still pay dividends that I reinvest.

[00:11:23] [SPEAKER_00]: But dividend investing is a kind of stock picking that focuses on companies that pay larger dividends and tend to increase over time.

[00:11:33] [SPEAKER_00]: Companies have several options for using their profits.

[00:11:37] [SPEAKER_00]: Pay them out as dividends, reinvest them in the company, buy back shares, or acquire other companies.

[00:11:45] [SPEAKER_00]: While paying out dividends benefit shareholders in the short term, it comes with an opportunity cost because that money is no longer a

[00:11:53] [SPEAKER_00]: available for company growth.

[00:11:56] [SPEAKER_00]: Focusing on dividend stocks can be seen as sacrificing growth for income and as a long term investor, I'm focused on growth.

[00:12:05] [SPEAKER_00]: Additionally, when investing in a taxable brokerage account, you'll be taxed on those dividends every year even if you reinvest them.

[00:12:13] [SPEAKER_00]: Qualified dividends are taxed at 0% for those in the 15% or lower tax brackets,

[00:12:19] [SPEAKER_00]: but for those in the 25% and higher brackets, tax is still apply.

[00:12:25] [SPEAKER_00]: This can make dividend investing less advantageous for people with higher incomes due to the tax implications.

[00:12:32] [SPEAKER_00]: From what I've seen, many buy and hold investors don't prefer dividend-focused investments because it's more beneficial to control income for tax purposes when drawing down on a portfolio.

[00:12:44] [SPEAKER_00]: When you receive a dividend, you have no control over the size or timing of the payment and 100% of the money received is considered income.

[00:12:54] [SPEAKER_00]: That brings us to the end for today though thanks so much for listening all the way through and I'll see you tomorrow as usual where optimal life awaits.