Yes, you read that right. It is possible for you to increase your wealth by doing Nothing at all!
How To Get Ready To Do Nothing
First, let’s tell the truth. Doing Nothing is not easy. Doing Nothing takes preparation.
Once you have set yourself on the right path, doing Nothing follows effortlessly. But getting on the right path requires effort.
Preparation
We have been writing on this blog about dividend investing. This is the process of buying shares in good stable companies that pay dividends. Once you own at least one share, dividends start coming your way.
The method of increasing wealth that I use is to set my shares to “dividend reinvestment.” This means that each time a dividend is issued, the dividend buys more shares in the company. This allows my wealth to increase. Automatically.
Doing Nothing
Once I have some shares and they are set to allow dividend reinvestment, then the number of shares I own increases upon each and every dividend issued. That is the easy part.
What’s So Hard About Doing Nothing?
The easy part is letting dividends reinvest. The hard part is Doing Nothing. Humans are hard-wired to Do Something. We see the prices of stocks on stock exchanges go up and down, sometimes dramatically. We think we need to Do Something.
Since prices vary, sometimes it may seem that our investment is increasing in value and sometimes it may seem that our investment is decreasing in value and sometimes it may seem that our investment is going nowhere. Yes, these are all observations on the state of the volatility of prices. But price volatility is not the only important thing, in my view. Yes, we need to be aware of prices and the state of our investment, but for me a significantly more important condition is the value of the ongoing dividends I am receiving.
For me, stock market volatility is a secondary condition. I would say that 99.99% I do nothing. And then there are times when stocks decline, I will buy more.
Unfortunately
It is unfortunate that upon stock market declines, some people panic sell. Perhaps they are afraid of “losing” even more. Of course, they have not lost anything if they haven’t sold. There are only two dates to know about: the day you buy and the day you sell (assuming one does sell). Everything in between is just noise.
I cannot say what the market will do tomorrow. Maybe everything will go to hell. One never knows. But in the normal course of events, when people panic and sell, they have locked in their losses.
I don’t want to lock in my losses. I want to grow my wealth.
What do you do? Let me know here.
The Mice Are Burying the Cat, “Myshi kota pogrebaiut (graviura na dereve)” , from 1760, a carnivalesque scene making fun of Russia’s emperors and empresses, is one of many Russian woodblock prints of the era. The caption above the cat reads: “The Cat of Kazan, the Mind of Astrakhan, the Wisdom of Siberia” (parodying the elaborate title of the Russian leader). Courtesy New York Public Library.
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