Shouldn't your money make you more money?
Absolutely, your money should be working for you and making you more money. But, what's the easiest way to grow your net worth?
Lots of investing options
There are a number of ways to have your money make more money for you, but not all of these methods are ideal or easy:
- Investing in real estate
- Investing in a franchise
- Investing in Term Deposits, Government Bonds
- Investing in Mutual Funds
- Investing in Index Funds, or ETFs
- Investing in dividend-paying quality stocks
Investing in real estate
Real estate investing requires a lot of money, you can't buy a property for $500 or $1000. Real estate investing requires researching properties, agents, locations, and requires a tremendous amount of time commitment on your part. After you've purchased a property you could hire a property manager (which costs money), or manage the property yourself which will require ongoing time and effort on your part.
Investing in a franchise
You can't start a franchise with $500 or $1000. It requires market research, researching the right franchise for you, and large amounts of capital. The return on your investment can take years, requires you to hire and manage staff, there's ongoing time and effort on your part to always be marketing, and selling your services.
Investing in Term Deposits, Government Bonds
These days the returns on these types of investments range from 0.5% to 2%. The interest rates are so low that you will actually be losing money when you take into account inflation.
Investing in Mutual Funds
$1000 invested in the stock market 50 years ago would be worth $514,000 today. However with fees of 2.2% the investor would only be left with $193,000 today. $321,000 would have been lost to fees. The average mutual fund fee is 2.2%. This fee covers the cost of hiring a fund manager, office space, and staff for the mutual fund company. The mutual fund fee almost guarantees poor results for you.
Investing in Index Funds, or ETFs
If you have absolutely no interest or desire to invest on your own then you should consider investing in low-cost Index Funds or ETFs. However, there are 4 things wrong with Index Funds and ETFs because you are buying a bulk set of stocks (those in the index):
- you inadvertently end up buying stocks that are overvalued (priced high), here I show you how to select undervalued (priced low) stocks
- you inadvertently end up buying stocks that are not quality stocks, only stocks that pass my 12 Rules of Simply Investing are quality stocks
- you inadvertently end up buying stocks that don't pay dividends, without dividends you are only hoping for the stock price to go up
- you are still paying fees, even though Index Funds have low fees, the fees will add up as you start investing more of your money over time
Investing in dividend-paying stocks
Investing on your own saves you from paying ongoing fees, and allows you to start generating for yourself a passive stream of growing income from dividends. Just follow the 12 Rules of Simply Investing to easily select the right stocks. If you don't have time to apply the 12 Rules, you can use the Simply Investing Report where I apply for you the 12 Rules of Simply Investing to over 210 stocks every month, so you know exactly which stocks to focus on and which ones to avoid.
Since September 2017, our Top Five stocks (from the SI Report) have returned over 30%.
Here's another example of some stocks that I currently own:
|Year Purchased||Company||Total Return Including Dividends||Dividend Yield based on Purchase Price|
|2007||National Bank (NA)||167%||8%|
|2005||Power Corporation (POW)||52%||5%|
|2005||Sun Life Financial (SLF)||84%||5%|
Don't waste your hard-earned money investing in companies or in mutual funds that invest in companies that are not profitable, don't pay dividends, have high debt, and aren't recession proof.
It's easier than you think
Your mission is to build yourself an income producing machine, and you build your income producing machine by investing in quality dividend-paying stocks when they are priced low (undervalued). Start today, and your future self will thank you for more money coming into your pocket.
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One tangible way that I do this is by keeping my savings account money in a high yield savings account. Online banks today pay like 10x interest what my local bank does. Why earn less?
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