Dividend investing can be a powerful way of increasing your money and saving up for retirement. In fact in many cases it can be even better than traditional retirement plans such as 401ks and IRAs.
For example, let’s say that you decided to invest $500 a month into a few dividend ETFs. Let us also say that these high yielding stocks pay out a yield ratio of 10% annually. Also let us assume that on average these stocks go up about 5% a year, (which is pretty low). If you were able to save up $500 a month into these plans after 40 years you would have $766,700. More importantly this would translate into $76,670 of passive cash flow every year.
All this comes from saving up some extra money each money. Also if you look at the extra income that it produces in those 40 years of savings it becomes an even bigger deal. After 8 years of setting aside $500 a month your investments would actually start paying you around $500, the same amount that you are putting into it. In other word after you have passed the 8 year mark your savings account would start paying you more then you are investing into it.
How many savings plans pay you? Even before retirement this investment strategy could start paying you hundreds and then thousands of dollars every month in passive cash flow.
Also if you reinvest the dividends it the potential is enormous stocks paying dividends. This can lead to an income in the six or even sevendigit annually at retirement. It is a little secret that has made a lot of people wealthy over the years.
It isn’t a get rich scheme, but it can work pretty well over the long term. Over the long term saving money into safe secure investments that pay a regular income can be extremely powerful. It can be a nice way to save up money and can even lead to early retirement and a decent lifestyle after retirement.