Why I chose Dividend Growth Strategy as the right for me!

When you read my section About Me then you will learn that I’ve firstly traded in 2003. As I started to trade I bought some “good-sounding” stocks, and sold them very fast with few percents. But I never noticed broker commissions, so I was out with a loss of few Euros. I was visiting some websites and learned more about chart analyzing to trade Forex, Options and all that kind of stuff you’ll probably lose your money. I’ve no doubt there are a few daytrader out there making a lot of money.

I opened some demo accounts to learn handling and trading a forex strategy based on chart analyzing – especially based on some indicator. I guess it was purely luck to make some euros with less capital by trading forex on demo account. So I opened a real account to make it in real – real capital and real money. I thought the money is just waiting for me. Coming and pick up the money from the street. I started to trade and after few weeks I had my capital doubled. Honestly speaking it was from 500 € to 1000 €. Then I did the – I would say the most – mistake by beginner. I was trading a higher ratio. And at this time the chart did not what I wanted to have. I was short and the USD/EUR was getting higher and higher. Without having a stop loss I was probably thinking the chart will change into my direction. It wasn’t! After closing the position I had a loss of round about 700 €. Easy Math: 500 € + 500 € – 700 € = 300 €! I lost with one trade more than 700 € and 200 € of my investment. I was out!

Then, I left the stock exchange and all what have to do with it, and just read some blogs about technical and fundamental analyzing but without being invested in anything furthermore.

Middle of last year my interest in finance grown again and again. I just read an article about somebody at my age and how the future looks like. In Germany we do have a pension scheme where we are paying for while we are working. Additional we have some other systems where we can pay in by individual. Due to the fact pensioner are getting older and older, and less childs were/are/will born the system will collapse. Frankly, I don’t know if I will see something from my pension, and if so, it will be less. I was dreaming of financial independent by an age earlier than 65 or 67!

My start into the world of dividend growth strategy

As mentioned I read some blogs after my little disaster in trading forex and other stuff. And I read a very interesting about dividend income by investing in companies. I informed me more and more. As I realized from my previous trading that I was not that kind of guy who is mentally strong enough to trade the whole day. Also not mentally enough to trade in stocks by technical indicator. Acting as an investor was much more different as acting as a daytrader or active trader. The chart was not interesting anymore, it was the company behind the stock price. How is the development of the company? What are their earnings? What is the payout and the payout rate? Can I understand what they are doing? What do they sell or produce? It’s easy to make the difference between investor and trader!

Sleep well

Another reason why I chosen the dividend strategy was to sleep well. Yes, if you want to be a trader, you have will look to the screen to find entries and sometimes you’ll hold a position overnight without knowing how the market will develop. Of course, if you are trading as professional then you’ll have your money management and your risk management as well. Next day you will look to the chart again and then you’ll see if you have win or lose. As an investor you will be invested into a company and you don’t take care about the chart. You will have your income by dividend – they pay you one time, two times or four times a year. Good, you have to re-check your investments from time to time, if fundamentals have changed and maybe it seems to be better to sell. The frequency of buying/selling will be less than a trader. That makes me sleep very well as I know that my capital is invested into a solid company with earning and payouts. It doesn’t make me crazy anymore to see if a stock price has fall down by 10 percent.

Investing into solid companies and be paid by dividends is also nice to see a portfolio grow up. Mostly you have a small portfolio and small dividends. From year to year, your portfolio will grow, the income by dividend will increase. And decades after you will have an income by dividend which is a nice extra or will pay your total expenses.

Making my own decisions

As you can see in my Portfolio section, currently my portfolio is very small. I own only a portfolio of 3 figures while I’m writing this article. Some of you would probably recommend to put this money into a managed fund or buying a bond or doing other things with that. The best I’ve ever heard its better to save more money and then going to invest. What? In my opinion my money need to work. More savings will come and my portfolio will grow and grow. If I add my current cash in a managed fund the fund manager will decide where I will be invested. But I will never understand which companies he will choose and why he will choose them. But I want to be free – free of work in 20 years, free of somebody who will tell me what’s right or bad. My broker commissions are minimum $0.60 what means I can put every dollar I made into new stocks. A purchase of only $100 would mean only 0,6% will be downgrade my yield based on the commission fee in the first year.

Conclusion 

I was never that kind of comfortable as I am since three months. Since I started to have a plan, since I can sleep very well and know that the financially future will be fine. All calculations are made and the strategy makes me free. Well, it’s only three months ago but I feel happy. I can’t wait to receive my first dividend payment, to add the next free capital into my portfolio and see my portfolio growth. I’m looking forward to harvest what I sow. And I’m looking forward to challenge all the things I will be fronted.

Why did you choose dividend growth strategy? Or what is your strategy?

Thanks for reading and take care!!!

 

Comments

  1. says

    Patrick,

    Big things come from small beginnings. I started with only a few thousand, but the portfolio is now coming up on $200k just five years later. Just keep saving, keep investing, and keep reinvesting those dividends. You’ll be surprised at how the income come snowball. 🙂

    Best wishes!

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