For the vast majority of events, wealth building can continue once you set it in motion. The hardest thing is to start.
Warren Buffett: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” This is the best admonition to avoid speculating. My take is that buy and hold is a simple and effective way to build wealth.
Am I suggesting that everything will increase, even given ten years? No of course not. But in my investing, since I focus on dividends, I rarely see any loss. Dividends usually just keep on keeping on.
No Wipeout Expected
What are the chances of a wipeout? What are the chances of The Great Depression 2.0? It is impossible to say “no chance.” But most likely there will be no complete wipeout. Short of such a major catastrophe, things simply plug along. Yes, of course, there are always the unexpected events, the black swans and the surprising winners.
“Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds” used to be the informal motto of the U.S. Postal Service. Unfortunately, events by politicians (ie, like Louis DeJoy and Donald Trump) have sullied that motto with the attempt to sabotage the postal service. While normally we expect things that work to continue to work, the possibility of a negative event is always present, even if the possibilities of such events are small.
Prior to Covid, no one could have predicted that a new pandemic would emerge as a major threat to life and the world economy. There has always been the threat of new pandemics, and history shows there have been numerous pandemics over the centuries, which have killed hundreds of millions of people.
So What?
Financial crises come and go. If we keep to our goals, we can survive. For me, maintaining dividend reinvesting, some dollar cost averaging. When I look back, I see my investments are now worth about twice as much as what I paid for them. My dividend income covers about 50% of my monthly expenses. All that from just 25 years of investing. If I had invested more years by starting earlier, I would have even substantially more results. But I am supremely happy what I have accomplished.
Not that I plan to sell, either. My goal always has been to increase my dividend income. There are three simple ways this happens. First, by holding stock in companies that increase their dividends over time. Secondly, by reinvesting dividends my share count increases automatically. Thirdly, dollar cost averaging means purchasing additional shares over time.
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