We’re sharing this Total Wealth with you today because, although the markets are closed, that’s likely only a temporary break from the heavy selling that’s pushing stocks down right now. But you can use the tactic I am about to show you as soon as the markets open tomorrow to get set up for superior returns.
‘d love to be able to tell you that the selling plaguing global markets will be over soon, but I can’t do that. The panic “around the edges” that I wrote to you about a few weeks back has now come front and center.
For millions of investors, this will be catastrophic. They have no idea what to buy or sell and, worse, no idea how to do it. Fortunately, you are not among them.
We talk regularly about what to buy and sell.
Anybody who’s followed along has had the opportunity to bank a string of double-digit returns that positively crush the markets.
On the long side – the stocks you buy – that includes companies like Gilead Sciences Inc. (Nasdaq: GILD), which subscribers in our paid sister services had the opportunity to follow to 500%-plus gains. More recently, on the short side – stocks you bet will go down – that’s included Shake Shack Inc. (NYSE: SHAK), Twitter Inc. (NYSE: TWTR), and GoPro Inc. (Nasdaq: GPRO). Anybody following along should have a huge smile considering those stocks have returned 63%, 62%, and 64%, respectively.
We also talk about “how.”
Most newsletter advisory services gloss right over that, mainly because they’re written by people who have never traded a day in their lives. So their readers are left high and dry and without a clue what tactics to use for maximum profitability when the going gets tough.
If you can’t change up your game, don’t step on the field.
Just $2,000 Can Build $126 Million Over Time
One of the most common complaints I hear from investors is that it takes money to make money. Somehow they have the perception that you have to be obscenely wealthy to be a successful investor.
What you have to have is discipline.
I know plenty of investors who can’t rub two nickels together yet who are enjoying great success in the markets right now. Okay… perhaps not literally two nickels, but you get my point.
You don’t have to be a billionaire to bank the big profits.
Ever heard of a “DRIP”?
That’s what they call “Dividend Reinvestment Plans” for short.
Most people find these about as exciting as watching paint dry, but I think they’re one of the most powerful Total Wealth tactics out there, especially now.
DRIPs offer three big advantages:
- Advantage No. 1 – They’re great for focused investors, especially when you pick the best companies.
- Advantage No. 2 – They allow you to buy more stock with little or no cost; even small amounts can result in very, very large returns over time.
- Advantage No. 3 – They help you tap into growth, even during rocky markets.
Dividend reinvestment programs are pretty simple.
When you sign up with a company that offers one, instead of receiving a cash dividend payout, your dividend is used to automatically buy additional shares in that company. You won’t receive the cash in your brokerage account or via the mail any longer.
If you’re interested in a dividend-paying company that doesn’t have a DRIP option, most brokers make the process pretty simple by helping you buy shares through a third party like Scottrade’s “Flexible Reinvestment Program” or American Stock Transfer & Trust Co.
This is about as close to autopilot as you can get. Most plans are almost entirely automated. You can even tie your plan to your checking or savings account and have money deducted monthly to complement additional purchases.
And, finally, DRIPs are generally dirt cheap. Many DRIP plans are free or available at a nominal fee, which means you’ll keep more of the money you’re investing instead of handing it over to the Armani Army via high commissions.
I also like the fact that DRIPs ensure that you are constantly rebalancing and dollar-cost averaging into new investments. You’ll never pay too much or too little for a stock again.
Over time this really adds up, and the performance boost is impressive.
Imagine investing $2,000 in 1,408 shares of PepsiCo Inc. (NYSE: PEP) in 1980. As of yesterday, that would have been worth a stunning $240,476, for a gain of more than 11,900%.
A $2,000 investment in Altria Group Inc. (NYSE: MO) in 1980 would be worth more than $126 million today, and you’d be enjoying a yearly payout of $4.3 million in dividends!
Right now there are more than 1,000 companies offering DRIP programs, according to Dripdatabase.com, so you’ve got a wide variety of choices.
So how do you get started?
The same way you pick any of the other companies essential for accumulating wealth:
First, make sure your choice is backed by one or more Unstoppable Trends.
Second, verify that it’s making “must-have” products or services, as is the case with Piedmont Natural Gas Co. Inc. (NYSE: PNY) and Aqua America Inc. (NYSE: WTR). Leave the “nice to haves” for the punters.
And, third, focus on longevity and stability. If that’s a tough decision or one you think you’re not qualified to make, consider starting with the Dividend Aristocrats as a short cut. This is a very select group of companies that have paid steadily increasing dividends every year for at least the last 25 years.
In closing, let me leave you with a thought.
Any time I mention DRIPs in presentations around the world, there’s a hand that goes up somewhere in the back of the room and a comment that comes with it… something like… “That’s nice, but I don’t have the time needed to build my fortune with DRIPs.”
I don’t have an intimate understanding of your personal situation so I don’t know if that’s true in your case as you read today’s column. But I do know that running out of time is NOT an excuse to chase risky short-term gains.
Capital markets have an upward bias over time, which is why going with the trend is always better and more profitable.