Buying shares of companies that pay a dividend is like purchasing an income stream. Investing in companies that regularly boost their dividends is like getting a raise on a consistent basis. Of course, it comes with risks. Those dividends need to be backed by expanding free cash flow and a company shouldn’t pay too much of its free cash flow out in dividends. Personally, I prefer that a company that pays out less than 50% of its annual free cash flow out in dividends.
Sometimes you need to save for a rainy year. You need an emergency fund to cover at least a year or more of expenses.
Part of the motive behind negative interest rates is to get people to spend more money. When people spend money it disempowers them. Perhaps this is what central banks and governments want?
There are three ways to save: 1) Spend less than you earn 2) Make more than you spend 3) The combination of No. 1 and No. 2. Understandably, it’s more difficult for some people to do this than others. However, if you want to accumulate wealth you should strive to do these things.
Always be prepared for unexpected life events such as a job loss or cut in benefits. Always have enough cash on hand to pay for 1-2 years of life expenses.
A share of common stock represents an ownership interest of a business.
Greed can cause you to make bad investing decisions. Seeing a popular stock go up in value may make you feel like you are missing out on great riches when you may be buying at the top. Make sure you hit the pause button and research a particular investment before taking the plunge.
Long-term investors should look at stock market corrections in the same way that a shopper looks at discounted merchandise.
|
Author
William Bias has been researching stocks since 1992 and has been a freelance writer since 2012. He employs a strategic business oriented approach to stock market investing. Archives
September 2016
Categories
|