Sounds like a trick statement, no?
How
Well, how does one do nothing and do something, even at the same time?
Every quarter, dividends are paid. Once I have purchased the shares I own, I need to do nothing else to receive the dividends. So, once I have done something, after that there is nothing to do but sit back and enjoy the dividend results.
Since I own some stock in various companies, I receive dividends relatively frequently–four times a year from each company in most cases. And since all companies issue dividends on their own schedule, each month is a nice set of dividends.
The Reality
Of course, the details of what “do nothing” or “do something” are is what is important. So what is meant by these phrases?
In reality, to start one must do something. And that something is to acquire shares. To acquire shares, one buys them. So to buy shares, one needs money. And to get money, in most cases, one must work.
So that chain of do something events: work -> get money -> buy shares; is the hard part. But once done, it turns into do nothing. Because once purchased, shares that issue dividends usually continue forever without any further doing from me. I receive dividends just for having purchased the shares months or many years ago.
The transition from doing something to doing nothing is a simple and easy one. It allows my net worth to grow without any further doing on my part. What could be bad?
A little more doing
There is a further doing once dividends start. One usually needs to pay taxes on the dividends received. Yes, it is true, there is no such thing as a completely free lunch. However, I see taxes as a small matter compared to growing my net worth.
A further ado
The method I use is to use dividend reinvestment. By setting my dividends to automatically buy additional shares in the company that issued the dividends, I get more shares simply and easily. This is is sure-fire way to increase the number of shares I own without needing to use furher cash on my part (unless I want to).
At the beginning, dividend reinvestment provides for only a very small number of shares, often less than a full share. This is not a problem, for I know that over time, I will accumulate many more shares. The key is to start, and not stop.
How well do you do nothing? Let me know here.
The illustrations is from “Millions of Cats,” 1928, by Wanda Hazel Gág, and is considered the oldest American children’s book still in print. Upon publication, The Nation placed it on its list of distinguished titles, and it won a Newbery Award the following year, a rare award for a picture book.
The post Doing Nothing Is Doing Something appeared first in Smile If You Dare.