When it comes to investing and building wealth I am sure most adult parents could pass on to their spawn lots of wisdom. Well, could they really? What would you pass on to the next gen?
What have you learned about a lifetime of investing and what the markets can tell you and more importantly have taught you?
I mean really, where does one start.
Here is what I would pass on in random order;
Start Early
I know it's cliché to say but the earlier you start the more time your money has to compound and grow. Check out how a penny a day doubled can do for your net worth.
The problem is really us. We dip into our savings and start spending money we have saved for our future. Don't do that. Leave it the fuck alone. If you don't you will end up at 50 years old with nothing but a garage full of shit in storage. Invest and let it grow. Keep your hands off of your savings.
Open a Self-Directed Investment Account
No matter where the kids bank they should open up a self directed investment account. Go to the bank website search and follow account opening directions. It shouldn't take more than 48 hours for current customers and account holders. Open up a RRSP, TFSA and an open investment account. Kids should start with the TFSA.
Educate Them on Dividend Growth Strategies
This should be the easy part because you already believe that this is the best long term investment strategy. Pick a bank, telco, utility, railroad to get started. Read this for more ideas on products and services they may already be using.
- buy what you know and understand
- explain buying a piece of the company
- this is more than picking stocks
- this is forever long term investing
- only buy dividend paying growth stocks
Forget the market. It is just a vehicle that prices stocks. It doesn't matter to the company you just bought. If you are already using data and a cell phone then it's the business that matters and NOT the stock market.
What you buy today will be worth more in 10 years. We are aiming for 12% a year and not the market average. 12% is what most bank stocks average over a ten year period. By that time you will have collected more in dividends than you paid for the stock.
Canadian Utilities has increased it's dividend for 47 straight years. It yields 4.7% and has a 10yr. DG record of 8.6%.
That is a 10 year average total return of 13.1%
Why would you not want to participate in that type of growth?
Ignore Professionals and TV Gurus
Use them for entertainment nothing else. They get paid to trade stocks. I have been burned so many times it's actually embarrassing listening to the talking heads on TV. Never act on their advice. Keep your choices simple. Here's a good article on one man's investment strategy. Copy and paste into your browser. It might be behind a paywall. I am a G&M subscriber.
https://www.theglobeandmail.com/globe-investor/investment-ideas/the-blazingly-simple-must-have-portfolio/article4391968/
What to Buy and What not to Buy
Quality companies. I can't stress that enough. Always go for big quality dividend paying companies. Avoid high yield, preferred shares and bonds. They are not safe and there is no growth. The longer you hold quality dividend growth companies the safer they become.
How do they do this? They will return to you as much in dividends as you paid. You have to wait patiently. This is something advisors and traders don't do. Never gamble with your long term retirement accounts.
This is what I would pass on to my kids when I have the investment talk. What will you tell them?
No comments:
Post a Comment