The Dividend Lifestyle - Key Takeaway
The Dividend Lifestyle is all about long-term, smart investments in well-capitalized U.S. businesses with a track record of distributing profits to shareholders in the form of dividends.
The expenses are awesome because it doesn’t cost you anything to own a share of stock. There’s no internal expense like with a mutual fund or other packaged product because there’s no middle man. It’s you. If you work with an advisor, the only expense you have is the advisory fee. However, it's essential to note that if you purchase stocks through a brokerage, there might be brokerage fees associated with the transaction. If you’re paying an advisor 1%, 1% is your all in cost. If you are using mutual funds, a mutual fund will have internal expenses on the fund. You’re going to have to pay the Fund Companies. They’re taking money out in terms of an expense ratio.
If you work with an advisor who has you in mutual funds, you also pay the advisor. There are multiple layers of expenses with mutual funds, ETFs, and annuities. With dividend-paying stocks, there’s no middle man, no internal expenses.
I would say, though, that aside from all those things, even more so than the cost benefit, the biggest advantage is the passive income. It’s the income that’s going to be produced, the dividends coming out from these stocks that, as you accumulate, you’re reinvesting, and you’re buying more shares of stock for free along the way. Doing this is exponentially growing your wealth over time because the more shares that you have, the bigger the dividends are. It’s this compound effect like a snowball. If you’re retired, you’re taking those dividends out and using the dividends to live on perpetually.
Disclosure: Investing involves risk and you may incur a profit or loss regardless of strategy selected. Dividends are not guaranteed and must be authorized by the company's board of directors. Investments mentioned may not be suitable for all investors. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.