I find that people are dull when it comes to compounding. I am. It’s difficult to grasp. I just last wrote that at the rate that my dividend increase “pay raises” are coming to me and my wife within our stock portfolio, it would result in at least a doubling of our portfolio dividend income in fewer than 5 years. Stop! Let’s think on this together.
If our current portfolio dividend income were to double in 5 years… I can easily take that figure right now, and multiply it by 2, and have some idea as to how much we might be able to receive from the very holdings we have now… in 2022. But, in order to get a handle on what this could mean to us further out… say, 10 years from now. I can take that 5-year out figure, and multiply it by 2 again, as well, so as to have some idea as to what might be possible 10 years from now. That number is how many times more than what I am receiving at this time? It is 4-times greater! If I were already receiving $6,000 in income from our stocks annually… might I be able to receive $24,000 from them 10 years from now?!?!? And, that could be so, if I were to do nothing more, from this day forward.
But, and this is where it starts to get cRaZy! If I do not take my income now, but let it accrue as cash in our account, and, if I were to continue adding still more cash to our account, as I am able, until that time that we do want to start taking our income… and, then added still more shares at those times when it would appear that we are at a place of low-risk market entry opportunity. I am literally super-charging our results, and far more rapidly increasing the rate at which our portfolio dividend income grows for us.
I am harnessing compounding, hitching our portfolio ‘wagon’ to the compounding growth ‘horse-team,’ and letting it pull us toward our retirement income goal at, get this now, an ever-increasing rate of speed. The rate at which our portfolio dividend income stream will grow, will continually accelerate. It is not linear. It grows exponentially!!!
You MUST grasps this! By harnessing compounding, and causing your income to grow exponentially, you are racing toward your retirement income goal at an ever-increasing rate of speed. This means that my hypothetical $6,000 in income now, could become my $24,000 income in as few as just 6 or 7 years!!!
And… if that were the income goal or target we had set for ourselves, and had attained, by the time we wanted to start our retirement, and cease growing our income… it would STILL continue to grow, all by itself, outside of any efforts on our part to add any more shares, (as we would no longer be doing so), because our companies would still continue to be giving us annual dividend increase “pay raises” far beyond the rate of inflation! Our income would grow comfortably faster than that rate at which the cost of goods and services was rising.
And, we’d be able to do all of that, without necessarily selling so much as one share of stock off to continue to support our lifestyle in retirement… and, why would we want to? Would we want to be killing our ‘goose’ that keeps laying for us ever-larger ‘golden eggs’?!?!?
Think, my friends, think on these things! Think from the words you can read right here: http://www.mhinvest.com/files/pdf/SBI_Single_Best_Investment_Miller.pdf
It’s a virtuous cycle! Here’s to your successful investing!
Harold F Crowell