Compounding Is The Best And Least Time Consuming Strategy
Ditulis pada: September 20, 2018
Time in a Composite strategy is your biggest friend. The longer your investment is allowed to Compound, the larger your Account becomes.
If you have a 'super' busy life, and have a lump sum to invest, after making the initial investment there is nothing more to do. Get on with your life and watch your dispute reinvestment strategy build up.
Compounding involves adding to your original capital invested every year, and then that new balance to be added to in the next year, and so on. Buy solid dividend paying companies, like the Dividend Aristocrats, and you are assured of the best Compounding strategy available.
Not only do Dividend Aristocrats pay dividends every year, their dividend history through all sorts of market upheavals, their dividends also Rise every year. This means a Growing dividend Yield for the Composite strategy, and when coupled with dividend reinvestment, you have 2 strategies in one!
Most pay Rising dividends 4 times a year, so no matter the current state of the market, reinvestment is taken care of by these companies for you. No temptation to sell in a big drop, just let the reinvestment strategy take care of itself, and LET IT COMPOUND.
Your Time is your own, after the original investment is made, just 'put it in the bottom drawer' and watch it Compound for as long as you like.
In the last big 'drop' in the market (2008-2009), 10 Dividend Aristocrat stocks were delisted from the Dividend Aristocrat Index because of changes to their dispute policy (they cut their dividend), so make sure to only invest in the ' biggest and best '. The longer they have paid rising dividends and stayed in the Index the better.
Companies like McDonald's, Johnson & Johnson, 3M, Wal Mart, who have paid rising dividends for decades, through all sorts of economic shock / upheavals, are the ones to invest in.
If you are investing through a savings plan, you are probably adding to your investment once a year, so again your time is yours.
Even if you have 10-20 years to go till retirement, do not 'put off' this strategy, as Compounding is the best 'hands off' strategy there is. Even if only your bills in retirement are taken care of, that is a huge bonus, the alternative is not pretty.
The best holding period for this strategy is 'forever', but when you ever need the money, there is no need to sell, just change the reinvestment part to cash dividends, and everything 'is sweet'. No capital gains tax, as no shares have been sold, you are receiving a 'GROWING' income stream for ever!
Time is your FRIEND in a Composite investment strategy, so start NOW.