Dear DTA,
I recently started investing. But I’m not sure how much I need to invest. How much should I be investing? When should I see results? Thanks.
-Brett D.
Hi, Brett.
Thanks for writing in.
Congratulations on this life-changing decision you’ve made.
The decision to start investing is going to radically alter your life path.
I started investing in earnest back in early 2010, upon the realization that I was without money, options, or freedom.
It took being laid off during the Great Recession to finally wake up and gain control over my life.
By living below my means and intelligently investing my capital, I went from below broke at 27 years old to financially free and retired at 33.
I share exactly how I did that in my Early Retirement Blueprint.
The investing strategy I adopted is a major part of the Blueprint.
That strategy is dividend growth investing.
If you’re not already following this strategy, Brett, I’d implore you to reconsider.
This strategy advocates buying and holding shares in world-class enterprises that pay reliable and rising dividends.
Fellow contributor Dave Van Knapp lays out in his Dividend Growth Investing Lessons what this strategy is, why it’s so powerful, and how to successfully execute it.
The companies that pay these growing dividends are often household names, as you can see by perusing the Dividend Champions, Contenders, and Challengers list.
Think Apple Inc. (AAPL). McDonald’s Corp. (MCD). And Colgate-Palmolive Company (CL).
Just three examples of many.
Smartphones, food, and toothpaste.
All are things people practically cannot live without in our society.
More people are buying more of these products at higher prices.
That translates to greater profits and… bigger dividends!
It’s very simple logic.
And I built my FIRE Fund on this logic.
That’s my real-money dividend growth stock portfolio, which generates the five-figure passive dividend income I live off of.
By the way, Brett, I built the FIRE Fund with modest means.
I had a car dealership job. I made about $40,000 per year when I started investing.
So it doesn’t require vast sums of money to see results.
But you do need to give it time.
If you have patience, you will see the fruits of your labor.
The money will stack up. And money will start to make more money. Money is a cloning machine that works 24/7, with no sleep or food.
That happens through compounding.
Compounding is a force of nature.
This is where interest earns interest. Money works for you, rather than the other way around.
Even a little bit of money can become a rather significant amount of money through the power of compounding.
For instance, saving and investing just $1/day for 45 years, earning a 10% compound annual rate of return, adds up to just over $288,000.
Someone who starts putting away just a dollar a day at age 18 could have thousands of dollars in their early 60s.
Now imagine what you might be able to do if you’re able to put away hundreds – or thousands – of dollars per month.
You could be looking at a substantial sum of wealth and passive income.
This is evidence of how critical it is to be consistent.
Brett, set up a financial plan that works for you.
Be it $200 per month or $2,000 per month.
Do what you can, then stick with the plan through thick and thin. A future version of yourself will thank you.
The next time you’re ready to invest some money, make sure to read my Undervalued Dividend Growth Stock of the Week series.
Every Sunday, I highlight a high-quality dividend growth stock that appears to be undervalued at the time of publication.
These are vetted opportunities that I provide to the investment community after I thoroughly investigate fundamentals, competitive advantages, risks, and valuation.
It’s not so important to put away a certain amount of money that is arbitrarily determined.
Instead, save and invest as much as you can, as often as you can.
Give it your maximum effort. Be patient. And remain consistent.
Most importantly, start today.
I wish you luck and success.
Jason Fieber
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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.