The spring is here and the markets have started to show how they can drop at a moment’s notice. Did you panic? I hope not. I think it was a moment to rejoice that we had a buying opportunity. I personally did not make any transactions during that period. I just did not have money ready to invest. I also wasn’t worried about the drop since my portfolio is setup for compound growth return with my dividends and the DRIP programs.
I have been a dividend investor for 5 years now. In 2009, after the market drop, I changed my investment approach and started moving away from my financial advisor and the mutual funds. I had a solid enough understanding to tackle it on my on. I’ll be upfront that I did not know about index investing at the time either and although it has many good merits, I find that markets fluctuate too often and I would prefer to have consistent growing income through dividend investing.
Related: Why Dividend Investing?
The graph below is a representation of my dividend income growth versus the TSX index. It’s a reminder that my income can always be in an upward movement and I can avoid the market fluctuations. That means I don’t have to obsess over having so many bonds when I retire because I am afraid of the markets.
Related: Should Your Bond Allocations Match Your Age?
In April, I have 21 investments paying me dividends providing me with a monthly dividend income of $603.91. So far, with my annual estimation, I won’t reach $700 per month this year. Practically all my holdings have raised their dividends for the year already so all I can do is put some new money in or transfer money from my defined contribution RRSP plan (DCP). As it happens, I do plan to invest new money and transfer money from my DCP. Will it be on time to see my dividend income reach $700 per month?
I hope by now you have noticed that there isn’t any magic formula to get rich. I have stocks that doubled since I bought them and I am not rich. The formula is about having a plan, executing it and being diligent regardless of the income you make. You have to make more than you spend in order to be able to invest the rest.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.