financial goals for dividend investing strategies

Financial Goals of Dividend Investing

When you decide that you want to become an investor, one of the first things you must do is map out your goals.  Figuring out what goals you want to achieve with your investments will help you determine what type of investing you should do and what strategy you may want to use.

Your Goals are your Investing Guide Map

Your goal in investing is going to be your mission statement.  The goals you set will help be a guideline for your investment decisions that you make in the future.  When setting your goals, make sure not to be vague.  Most people that are investing are obviously out to make money.  The question is why are you trying to make money through investing.  Maybe you want to invest in order to gain a higher return on your money so that you may be able to afford something in the future.  Possibly you are investing so that you can build up a passive income from rents, interest and dividends to spend now or/and in the future.  Whatever you decide, be sure to write out a clear goal statement and focus on it frequently as you advance through your investing career.  Modify your goal if and when things change.  Remember that it is OK if what was once your goal has now changed and you find yourself trying to achieve something different.  Just make sure to formulate your investing plan with your goals in mind.

Dividend Growth Stock Investing Goals

There are a few different goals you may be interested in pursuing where a dividend growth stock investing strategy is a suitable approach.

Building a passive income from dividends for current needs

Rather then spend all your money from your paycheck, you may be interested in investing some money each month in dividend paying stocks.  This will allow you to build up an investment portfolio over time and provide some supplemental income if you decide to take the dividends in cash to spend as the companies pay out.

Building a passive income from dividends for future needs

You may decide that you don’t need more of a current income to meet your current needs and wants.  However, you don’t plan on working forever and someday that paycheck will quit coming in if you quit working.  Building a portfolio of dividend growth stocks is a good way to build an income for the future.  You can grow your portfolio quicker by reinvesting your current dividends and eventually the annual dividend income may be enough to cover your living expenses.  At this time you can afford to not have to work for a paycheck and just live off of your dividend income.  This is a good strategy for retirement.

Preserve investment capital

When you are looking for a safe investment to keep your money safe most people will thing of bonds.  While bonds will help keep your principal safe, they don’t offer much in the way of investment returns.  Another option if you are willing to take on a little more risk is dividend paying stocks.  Stocks are definitely a riskier asset class then bonds.  However, dividend paying stocks have typically been less volatile compared to other stocks.  Dividend paying stocks offer a decent income component and if you select your investments wisely will give you better preservation of your capital then non dividend paying stocks.  Compared to bonds, dividend paying stocks may be a little more risky in that you can lose some or all of your investment.  However they also typically offer greater returns then you would receive by investing in bonds.

Good returns

Financial Risk Tolerance vs. Emotional Risk Tolerance

There have been studies that have shown that dividend paying stocks tend to outperform over time non dividend paying stocks.  Also companies that annually increase their dividend payments tend to outperform companies that do not increase their dividend payments.  So over the long run, we can hope that we will be getting the best return in the market from our dividend paying stocks of solid well known companies.  You will probably be less likely to lose your money and earn a decent return from a Coca Cola type company compared to a company that you have never heard of and don’t understand how they make money.  Dividend growth investors pick solid stable companies that have a history of increasing earnings and paying out increasing dividends.  These companies perform well over the long run.

My Dividend Growth Stock Investing Goals

Personally, I am investing in dividend growth stocks for all the reasons I’ve listed above.  I believe that dividend growth stocks will over time give me a great return with less risk to my investing portfolio.  I understand that dividend growth stocks will pay me out an income this year that I can use for expenses if needed.  My main goal when investing in dividend growth stocks is to build up a portfolio that will provide me with a sizable income later in life.  I am 30 years old and have at least another 30 years of working for a paycheck.  However, I’d like to build up a portfolio of dividend stocks that eventually will pay me enough income that I can retire if I want.  I will be able to use the income from my portfolio to pay my expenses without ever having to sell any of my stock assets and decrease my portfolio.

So for my goal I have a long journey ahead of me.  Short term I measure my success by tracking my dividend income on a monthly and annual basis.  I expect to see these income numbers rising as time passes and if this is happening I will know I am on the right track towards achieving my investing goals.

In Conclusion

Before you get started investing, make sure to take a moment and think about what you are really trying to achieve.  Figure out your goals and use them as a guide map for your investing decisions in the future.

What Do Investment Bankers Do

What Do Investment Bankers Do?

So, what do investment bankers do exactly?  The simplest explanation is that investment bankers are the world’s deal makers, usually acting as a type of broker. Basically, they match projects with money. Investment Bankers find projects, analyze them, cherry-pick the best, then structure them as investments and, lastly, find the investors (or in the case of an in-house investment banker present the project to the firm’s investment committee.) Most investment bankers will review over one hundred projects per year and eventually reject 99% of them. It’s a really difficult job. A great investment banker is literally worth more than his or her weight in gold. There are few great investment bankers… and even fewer after the 2008 financial crisis.

My Background In Investment Banking

To better understand what do investment bankers do I’m going to provide my background.  I have been an investment banker for the past thirty-eight years. I started at the ripe old age of eighteen with the purchase and syndication of two apartment buildings in Northern California, then went on to start one of the first video store chains in the United States. On my first group of syndications, I tripled my investors’ money within three years. Honestly, it was luck and timing.

Somewhere along the line, I developed a reputation and I managed to pick up hundreds of clients that I helped raise money for and manage their investor relations. Some of those clients you

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might recognize: IBM, AT&T, Chevron, ADP, FMC, Motorola, Lockheed Martin, Intel, State Farm, Allstate, and 19 other Fortune 500 companies. I have personally syndicated over 100 investments in my career and helped raise billions of dollars in equity for my clients.

I also worked in the entertainment industry writing, directing and executive producing motion pictures. There are 7 motion pictures based on my screenplays, two of which I also directed. I personally invested in or helped finance over 100 independent movies and I founded several successful media services companies in Southern California. Those are my credentials.

I have had my ups and downs–2008 was particularly tough–but I have survived and even prospered. Over the years, I have learned a few secrets about investing that I would like to share with you. If you are not already wealthy, I hope this information makes you become wealthy… like REALLY WEALTHY!

And if you are lucky enough to already be in the top 1%, then I hope this information helps you stay there and sleep better at night knowing your nest egg is safe.

They Usually Specialize

Investment bankers usually specialize in industry sectors such as energy, real estate, technology, consumer goods, minerals, communications, transportation, media, etc. They also specialize in the types of deals that they put together. Some work in mergers and acquisitions (M&A), while other develop IPOs. Many work in equity placement or financing. Some investment bankers specialize in financing startups and growing companies, while others only handle mature companies. Still others stay away from corporate finance and instead specialize in project financing (my personal favorite) like commercial real estate development or acquisition financing.

Their Education

To answer What do investment bankers do?  We need to understand more about their education. Most investment bankers start off graduating from a prestigious university, then working for a number of years at one of the big investment banks; Goldman Sachs, , Morgan Stanley, JP Morgan, Deutsche Bank, Credit Suisse, etc. Once they gain their confidence and develop their contacts many leave to launch their own firms and develop their own projects. Some end up running investment funds, while others remain independent putting deals together for sponsors in need of capital.

Those Rolodexes

Investment bankers keep massive Rolodexes or databases of investor contacts. My personal database has over 8,000 investor contacts all of which have over $100 million in assets. Investment bankers are similar to sports or entertainment agent in that their power comes from who they know and who will take their call on short notice.

Keen Eyes

An investment banker must always understand current capital market conditions, so they know which projects will get funded and which are a waste of time. They must have a keen eye and are always on the lookout for quality projects and sponsors. An investment banker must know how to structure an investment deal so that it is marketable to investors, while still leaving enough meat on the bone to incentivize the performance of the investment sponsor.

Now you should be able to answer what do investment bankers do!  Most successful investments over $10 million have an investment banker behind them. The new arena for investment bankers is crowdfunding. It is the ultimate free market system for raising capital and very well could change the way American business are financed. But more about that in posts to follow….

Is a financial advisor worth it

Are Fund Advisors Worth It? – Index Investing

You might be asking yourself if fund advisors are worth it. On the floor, index investing looks like an ideal match for do-it-your self buyers. The simplistic purchase maintain re-balance mantra of index fund proponents mixed with the abundance of assist from investing authors and on-line boards leads scores of knowledgeable buyers to tackle the duty of private portfolio administration annually. Many DIY buyers by no means look again; they treasure their newfound fiscal autonomy and the problem of overcoming future monetary hurdles. Others, nevertheless, uncover that they lack the time, curiosity, information or self-discipline to efficiently negotiate the damaging DIY terrain, they usually finally search assist from fund advisors. The function of this text is to obviously current the rationale for every strategy in order that index buyers can determine which tactic most accurately fits their wants and skills.

Why Investors Do it Themselves

Fund Advisors DIY Index

According to a 2019 research by the Investment Company Institute, the first purpose that DIY buyers handle their very own portfolios is that they need to be in management. There is a way of empowerment that comes with making your personal funding selections, and DIY buyers, particularly males, like holding the reigns. The research additionally discovered that almost all of DIY buyers consider that they’ve the required info and mental capacity to make nicely-knowledgeable, prudent monetary selections with out the assistance of knowledgeable. In the minds of those assured buyers, advisory charges are an pointless expense. Finally, many people discover private finance to be a rewarding pastime. According to the research, nearly all of DIY buyers take pleasure in conducting their very own monetary analysis, crunching numbers and intently);

Others select the DIY path not as a result of they love the thought of managing their very own investments, however as a result of they dislike the thought of hiring fund advisors. You might fall into this class in case you place a excessive worth in your monetary privateness, consider that the majority monetary advisors are incompetent or untrustworthy, or just need to get monetary savings by not paying advisory charges. The reality that fund advisors aren’t created equal supplies little solace to these whose opinions have been formed by the quite a few investor scandals of the previous yr or by a poor previous expertise with an advisor.

Finally, there’s a group of buyers who acknowledge that they might profit from skilled assist however lack an funding account giant sufficient to seize the eye of an advisor. First-time buyers typically fall into this class and have a tendency to hunt recommendation from public sources, family members or associates.

Why Would an Investor Hire Fund Advisors?

A good financial advisor can add worth to your portfolio in numerous methods. First, he acts as a gatekeeper, stopping you from making widespread return-decreasing errors. Numerous research have proven that particular person buyers routinely surrender as a lot as S% in annual returns on account of frequent buying and selling, trying to time the market and chasing previous efficiency. Even probably the most seasoned index investor wants the occasional reminder to keep away from distractions and stick together with his funding plan.

Good fund advisors offer entry to analysis, methods and funding decisions which have the potential to spice up returns. By understanding complicated points like tax administration, property planning and retirement forecasting, an advisor will help you higher perceive the probability of reaching your retirement objectives and recommend steps you could take to tilt the equation in your favor. Additionally, he could possibly increase your funding decisions by offering entry to unique fund households or share courses.

Finally, a great advisor performs laborious duties like portfolio monitoring and portfolio re-balancing so as to dedicate your time to different pursuits. An advisor who screens your portfolio incessantly can guarantee consistency together with your danger profile whereas probably squeezing extra returns from re-balancing exercise.

Closing Thoughts on Fund Advisors

Many buyers need a quantitative reply to the query of whether or not to rent an advisor; they need to know definitively whether or not an advisor would offer them with greater funding returns

after charges. In order to reply this query, you need to first ask your self whether or not you will have been capable of develop and persistently implement a low-value, disciplined funding plan by yourself. Many buyers do not have sufficient curiosity, information or potential to develop a wise plan; much more lack the required self-discipline to comply with one. If you end up veering off the trail to chase a scorching new sector or time the market, there is a good probability that an advisor would deliver some return-boosting self-discipline and objectivity to your funding selections);

If you do possess the psychological and bodily fortitude to develop a sound plan and persistently keep the course, you must in all probability look to qualitative elements to make your choice. For occasion, would you moderately spend the time that you simply dedicate to funding administration on different issues, like visiting household or pursuing different pursuits? For many buyers, the reply to this query modifications later in life as monetary conditions turn into extra complicated, the results of poor selections grow to be extra extreme, and time with household turns into a much bigger precedence.

Conclusion on Fund Advisors

The backside line is that managing your personal index portfolio could also be easy, nevertheless it’s not straightforward. If you determine to supervise your personal investments, defend your self towards the tendency to stray out of your funding plan by drafting an Investment Policy Statement. If you determine to rent knowledgeable, select a payment-solely advisor who agrees together with your passive investing philosophy, embraces his fiduciary duty to behave in your greatest pursuits, and is prepared and in a position so as to add worth within the methods described above. Whichever path you select, you’ll be able to maximize your probabilities of investing success by precisely assessing your danger angle and capability, designing a diversified, low-value portfolio, and sticking together with your plan.