Most of the time when I hear about a friend’s grandfather pass away, I would hear that the grandfather had left behind shares worth hundreds of thousands or even in millions. From my understanding of their family, they do not belong to those very wealthy. The grandfather was probably just an unskilled worker, bringing home much lesser than what our jobs pay us.
Have you wondered where they gotten their money from? How they manage to accumulate so much wealth?
I have heard many complains from people of our generation saying that investing is so difficult and it is so much easier during our grandparents’ generation, thus they can accumulate so much wealth while we are still slogging at our work, just to make ends meet.
Although many have lost their hard-earned money in the stock market, I can assure you, it is easy to accumulate wealth through the stock market. Just follow the steps that I am going to name you and you will be on your way to wealth accumulation.
The first step is always the hardest. The fact that you are reading this article means you have already started investing and want to find out more on how to accumulate wealth like our grandfathers, congratulations. You are already one step closer.
However, while you are still pondering if you should put your money to invest, you are already losing money to inflation by putting them in the bank.
Wealth accumulation is not a get-rich-quick scheme. It takes time to accumulate. The earlier you start, the more wealth you accumulate.
Pay Yourself First
You may have seen this phrase many times but do you know what it means? I have heard of people saying that we must first repay all our debts, accumulate enough money for rainy days before we start investing.
I listened to these experts and failed terribly.
One fine day, I decided that maybe instead of putting all my spare cash in to repay all my debts, I allocated a portion of the money to repay the debts, a portion to save for rainy days and one final portion to invest. Very soon, I got myself out of debt faster and surprising, the savings and my investment account grew bigger n bigger.
Invest in Dividend Stocks
Dividend investing is considered one of the more conservative strategy compared to other investment strategy like growth investment and value investment. Though the capital gain may not be as attractive as growth and value investment strategies, the longer the investment, the more you will gain from dividend investing.
Of course, depending on what is the purpose of the investment, different strategy have to be applied.
Reinvest Your Dividends
As mentioned in my previous post, if you put in $6,000 annually investing in dividend stocks and reinvesting the dividends, by the end of 20 years, you will be collecting $37,496.87 in dividends annually. Imagine if you continue putting the dividends back, how much dividends will you collect annually in the 25th or 30th year?
|Year||Total Dividends||Dividend Yield|
What I have showed you is just the dividends portion. For simplicity, if the stock market did not make any gains after the end of the 20 years, your total invested amount will be have amounted to $120,000. But if the capital gain increased 5% annually, your capital would have been amounted to $208,315.51.
All it takes is to invest $6,000 annually, or $500 monthly.
The Bottom Line
Wealth accumulation through investing is not a complicated task. It just takes patience and discipline to taste the fruits of success. Would you want to accumulate enough wealth so that when you retire, you will have enough money to do what you want or leave your descendants a wealth that would give them a head start financially?
It ain’t complicated actually.