7 Dividend Stocks For A Confident And Secure Future

Are you confident and secure in your investing process? It is my firm belief that most investors will lose money in the stock market over their lifetime. It is not that the market is a bad place to invest your money, but left unchecked the psychology of the market will lead you to do just the opposite of what you should to be doing.

The great investors know this. Consider Warren Buffett's famous quote, 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful'. How do we overcome our natural instincts to sell when we should be buying?

Confidence

First, we must follow a process we are 100% confident in. Doubt is the gateway to destructive behavior. Many approaches have proven successful over time. I have chosen income investing, primarily through individual Dividend Growth Stocks. How do we become so confident in a process that we are willing to trust our life's savings to as the world crumbles around us?

Experience

Confidence comes from knowledge and experience. We must study our approach and understand the process. It is easy for me to watch stock prices crater knowing that it is not only providing an excellent entry point for future capital appreciation, but also higher current yields that will grow each year as the companies continue to raise their dividends. Knowing how it works is good, but comfort in the process comes from having been there before and experiencing the gains after coming out of a downturn.

Quality

Finally, the most important step is selecting great investments. For me, those are good solid dividend companies that have a proven track record of increasing their dividends and the financial ability to continue doing so in the future. 

Below are seven companies that are leaders in their industry and have increased dividends for more than 30 consecutive years for your consideration:

Lowe's Companies, Inc. (LOW) sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada. The company has paid a cash dividend to shareholders every year since 1961 and has increased its dividend payments for 50 consecutive years. Yield: 2.3%

Wal-Mart Stores, Inc. (WMT) is the largest retailer in North America,Wal-Mart operates a chain of discount department stores, wholesale clubs, and combination discount stores and supermarkets. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 38 consecutive years. Yield: 2.3%

Three Simple Retirement Planning Guide

Best Time to Start

Now is as a good time as any. The earlier you start, the bigger the nest egg you’ll have on retirement. But as we know, it is difficult to start in our twenties, as at that age we save for a car and then a house. And soon after, there will be educational expenses for kids.

But you cannot afford to keep postponing your financial planning for retirement. In order to have sufficient income to cover all those non-working years, you cannot leave the plan to the very last moment. If you decide to retire at 55, you need a nest egg that can generate an income for another 25 to 35 years.

Three Simple Retirement Planning Guide

The amount you need to save will depend on the retirement lifestyle you have in mind and the income that you are earning currently. There are three steps in retirement planning guide,

Step One: What’s your monthly retirement income?

First decide how much you think you will need every month to retire comfortably. For example, you may think that if you were to retire today you would need $2,500 per month. But you are only 45 years old and your retirement is still another 20 years away. Because of inflation, you will need more than $2,500 a month in 20 years time to spend on the same things you are used today. 

Assuming an average inflation rate of four per cent per annum, you will need $5,477 per month in 20 years time, so that you still have the same purchasing power as $2,500 today. The higher the rate of inflation, the greater the sum needed per month to give you the same purchasing power as today.

Step Two: Required lump sum

From previous assumption of four per cent inflation rate, you will need $5,477 per month or $65,733 per year. The next stage is to calculate the lump sum required to generate $65,733 for the rest of your life. The interest or return on your investment will determine the lump sum required to earn you a regular income of $65,733 a year.

The higher the rate of return, the smaller lump sum needed and vice versa. For example, if the average interest on your investment is 10 per cent per annum, then the lump sum needed to generate that income is $657,337. But if you managed to find investment with 20% potential return, $328,668 is enough for your retirement planning.

Step Three: How much to save?

Along the way, let say you can earn ten per cent interest per annum, you will have to save $11,128 a year or $927 every month for 20 years to get lump sum of $657,337. How do I get that? You can derive the annual or monthly savings required by multiplying the lump sum figure with the respective figure in the table. In my case, I multiply $657,337 with 0.01693.

However, if the rate of return or your interest earnings is 15 per cent per annum, then you would only need to save $5129 a year. Same if you start a bit earlier, you only need to save $5826 a year for ten per cent interest rate but 25 years of savings. 

Some Precaution Though

With retirement planning, you are looking into the future. So you will be making a lot of assumptions. Though how much you need to save depends on the assumptions made, working through the three steps will give you some better picture of what is expected and whether you are on the right track to a retirement lifestyle that you want.

From stock-investment-made-easy.com

Related Books

How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won't Get from Your Financial Advisor

Can I Retire?: How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less

5 Easy Passive Income Method

Passive Income is the income that we earn with little effort involved. Having a multiple passive income will help you to create wealth and also let you to have more freedom in your life. Nowadays, many people are talking about financial freedom and one way to achieve it is to have multiple passive incomes which can cover the monthly expenses. For those people who still don't have any passive income, I think is time for you and your family to sit down and think about it. 

Please don't think that creating passive income is a difficult task and require a large amount of money. Actually it is fun and easy... even kids also can do it. Let me share with you 5 easy passive income methods you can start with... 

1. High Yield Saving Account 

Sometimes we might not notice what is our saving account interest rate because is it relative low. However, a 0.1% differences in long run will be a huge amount. Normally bank will give 0.1% - 0.3%. Let said, if you have 100,000 dollar in bank A with interest rate 0.1% and 100,000 dollar in bank B with interest rate 0.2%. If after 1 year you check at your account in bank A the amount will be 100,100 dollar and bank B the amount will be 100,200 dollar so we can see the difference is 100 dollar. With 100 dollar we can use it to buy stationary for our kids. 

2. Fix Deposit 

This is an investment tools created by bank, where customer agree to save some amount of money in the bank with a locking period and then customer will get a guarantee return. The return is normally between 2% - 4% per annual. No service and annual fee charge required. For example, just put 1000 dollar to fix deposit with a 1 year locking period and 3% return then after 1 year when your fix deposit maturity you will receive 1030 dollar which mean that you have a 30 dollar passive income. 

3. Unit Trust Fund Investment 

If you think Fix Deposit return is low maybe you can invest in some trust fund which give better return. These kinds of trust fund normally provide 6% - 20% return. However please carefully select the fund you going to invest because normally trust fund will have a annual fee charge. 

4. Stock Investment 

Stock investment is always treating as a favorite tool for passive income. The reason is because the access is easy and also the return can come from capital appreciation and dividend. However some might think stock investment is very risky. Well, with proper planning and analysis I think we can reduce the risk. One of the way to reduce the risk is to invest in dividend stock. This kind of stock can give 4% - 10% dividend. Normally dividend stock will have a good fundamental and strong management so if any market crash they still can withstand it. Examples of dividend stock in Malaysia are BAT, Dutch Lady, Digi, Public Bank, Nestle, Guinness, Carlsberg and Telekom Malaysia. 

5. Pension Fund 

Pension Fund is also one of the passive income that for longer term. The objective of Pension fund is to provide a measure of security for the retirement to its member. In some country pension fund is a compulsory saving scheme for all employees. Normally they can withdraw their pension fund after 55 years old. In Malaysia, we call it EPF (Employee Provident Fund). Pension fund will also use the fund to invest in stock equity and the profit they get will be share to members as a dividend. 

The above are some easy passive income method which require very little amount of money and time. Please start early and enjoy the passive income you earn.