How To Invest For Income For Retirement
If you want to invest for income and have plenty for retirement, you need to follow the advice of millionaires who grew their stock holdings through the power of dividend compounding.
Dr. David Eifrig Jr., MD MBA, editor of the Retirement Millionaire newsletter, revealed, in his August 2011 issue, three secrets to grow your wealth.
- Grow your wealth through compounding dividends
- Start early
- Invest in Dividend Reinvestment Plans (DRIPS)
Dr. David Eifrig is a millionaire. So is his sister who followed his advice from an early age. Even though she didn't have much money, she turned $2,000 into over 1 million dollars.
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."— Albert Einstein
Dr. Eifrig's sister learned the power of compounding dividends. She started at age 20 with a small amount of money ($2,000) which she invested into a retirement account. Each year she added $300. By age 54, she was a millionaire.
The key to becoming a millionaire, is to pick strong blue chip companies that grow their dividends every year. These companies are world dominators, that is, they are number one in their business. They leave their competition in the dust.
Buy these companies when their stock price is down and then reinvest their dividends. You can do this easily by checking a box on your brokerage account. Every time a dividend is paid, you reinvest that dividend into new shares instead of being paid in cash.
Each time a new dividend is paid, your previous dividends plus your initial investment earn additional dividends. This is called compounding. It truly is the eight wonder of the world.
Let us say you are 40 years old. You have $10,000 in your retirement investment account. If you earn 18% annually, add $3,000 to your account annually, and reinvest your dividends, you will have $1,654,496.73 in your account by age 65.
Like to know how to earn 18% annually on your retirement investments? Subscribe to Dr. David Eifrig Jr.'s Retirement Millionaire newsletter. It is available at (www.stansberryresearch.com).
Dividend Reinvestment Plans (DRIPS)
Another way to invest for income is to invest in Dividend Reinvestment Plans (DRIPS). Dividend Reinvestment Plans allow you to buy stock directly from the company without paying brokerage fees.
You can start small with as little as $250. Your dividends are automatically reinvested so you can compound your investment. If you pick stocks that grow their dividends, your investment will compound even better.
Dr. Eifrig reports that McDonald's (MCD), Wal-Mart (WMT), and Exxon Mobil (XOM) will even allow you to set up a DRIP in your IRA. These companies have a history of growing their dividends 9% to 28%.
If you are investing in an IRA, you need to ask for the IRA DRIP plan, not the regular DRIP plan. Here are the telephone numbers to find out more information.
- Exxon - (800)564-6253
- McDonald's - (800)621-7825
- Wal-Mart - (800)438-6278
The transfer agent will send you the required documents through the mail. You can also download them online. You will need to send them a check or transfer some money to them electronically.
Invest for income by compounding your dividends in safe world dominating companies that grow their dividends annually. Start early and add some money annually. You will be glad you did.
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