What is the second easiest way to make money? And what is the easiest?
Work for it, then no need to work for it
Receiving dividends is, in my view, a very simple and easy way to earn income. Nowadays, I probably spend more time keeping track of the dividends I am receiving than I am spending time researching companies. This is because I enter all dividends in a spreadsheet. This way, I always know my income for the year, for the quarter, for the month.
The key number for me is monthly income. I measure this against my month expenditures. In an ideal world, my monthly income would surpass my monthly expenditures. But alas, this will not happen for me, as I accumulated a nice portfolio of dividend-producing companies but later in life. Nowadays, dividends cover about 50% of my expenditures.
I do see my progress as a great success. Hopefully you will consider how dividend income can make an enormous difference in your llfe. The lesson I wish everyone could understand is that the earlier one starts, the more one can benefit from the compounding and growth aspects of dividends.
To accumulate enough savings to invest is the primary challenge. Scratching out a living from low paying work is not conducive to accumulating enough to invest. So lowering one’s expenses, and increasing income are the two forces that allow for saving enough to start. Once one has saved enough to invest, then working more to accumulate more is easy. It is the first challenge in the hardest.
But once one gets a foothold in investing and has enough to accumulate some dividends, several things happen. Firstly, it becomes easier to save and invest more. I believe this is because one sees the beginnings of the fruits of one’s labors, and enthusiasm and motivation grow. Secondly, confidence in one’s abilities to manage one’s future increases. And thirdly, should one do dividend reinvestment (which I recommend), one can see this initial growth taking off.
In Sum
The conclusion I come to is that once dividends start to increase, it becomes obvious that this is a simple and easy way to get income. There is the beginning stage which requires getting enough to invest. Getting this initial “enough” usually requires labor, trading hours for money. but once this happens, the easy part if just sitting back and collecting.
I consider collecting dividends the second easiest way to get income.
The easiest way is something I have not had enough experience with. That would be though an large inheritance. This takes special and fortunate familial connections, which is the not the case in my situation. Nice luck if you can get it.
For things within my control, getting dividends is then becomes the easiest. Number One in my book.
Do you enjoy collecting dividends? Let me know here.
The illustration is from Kräuterbuch (“Book of Herbs”), published in 1462, by Johannes Hartlieb, in German. Courtesy Library of Congress.
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