Certainly many people dream of getting rich by investing in stocks. But what exactly does it take? There are probably as many pundits out there as there are stock investors. Recently, this question was addressed in an article by Dividend Sensei. Let’s look at what he has to say:
You Only Need To Do One Thing
According to seekingalpha.com, Dividend Sensei’s thesis it that in order to get rich with stocks only one thing is required: Strive for “Realistic” returns. He enumerates several points on this theme:
- Maximize Returns. The author states that most people want to maximize their return with stock. At face value this sounds great.
- Maximize “Realistic” Returns.Unwittingly, however, many investors frequently try to achieve unrealistically high returns. In doing so take on too much risk. Instead, one should focus on maximizing “Realistic” returns as opposed to “Swinging for the fences.”
- In Harmony With Your Own Personal Situation. Your specific stock market strategy should be tailored to your own personal financial situation, investment goals, risk tolerance, stage in life and personality. This likely to be different for each indivual.
- Stick with Your Plan Finally, stick with your plan. It should be durable enough that you can maintain it during up, down and sideways markets.
Dividend Sensei’s Current Portfolio
The author is a dividend-stock investor who, although retired, is not planning on tapping into this particular portfolio for 20-25 years. His current portfolio is highly diversified, containing over 50 stocks in a wide variety of sectors including real estate, technology, tobacco, telecom, utilities, retail and master limited partnerships. No one issue is more than 4.06% of the total portfolio. The bulk of these stock he invests in are low-risk companies with stable prospects going forward. The portfolio has a current dividend yield of 6.1% His five-year dividend growth rate is 9.4%.
His bottomline: Get rich over time by crafting a realistic plan that fits your situation like a glove.