I’m far from the richest guy around.
But I am financially independent and retired in my 30s.
I was able to quit my job at 32 years old, which allowed me freedom to start crafting the life of my dreams.
I now do precisely what I like to do, every single day. It’s a dream.
And it’s a dream that I think almost anyone else can experience, as I lay out in 5 Steps To Retire In 5 Years.
Of course, I’m able to live this dream life because I collect the passive income necessary to pay my bills and cover my essential expenses without needing a job.
The five-figure passive income I live off of is generated by the FIRE Fund.
That’s my real-money early retirement stock portfolio.
I built the Fund by routinely investing my hard-earned savings into undervalued high-quality dividend growth stocks.
Most of the Fund was built over the course of only six years. And I did that on a middle-class salary that I earned at my car dealership day job.
Dividend growth investing is the investment strategy that unlocked FIRE for me.
The strategy changed and saved my life. I’m forever grateful for it.
If I hadn’t started buying undervalued high-quality dividend growth stocks back in early 2010, I’d still be a miserable grunt at my old job, daydreaming about a better life somewhere else.
With that in mind, you’d be hard-pressed to find a more vocal advocate of dividend growth investing than yours truly.
I’m an advocate because I’ve experienced the results firsthand. I know what it’s like to live off of dividend income at a young age, and I think this lifestyle is too amazing to keep secret.
However, I’m here to tell you that undervalued high-quality dividend growth stocks can be terrible investments.
How so?
Let me explain.
I’ve received many emails and comments over the years from readers who are fearful of buying stocks.
They’re afraid to lose money. They don’t want to risk it.
My response to this apprehension is, it’s actually easy for an undervalued high-quality dividend growth stock to do absolutely nothing for your wealth and passive income.
Yes.
You read that correctly.
It might be the greatest stock in the whole world, yet it could do zilch, nada, nein for you.
You simply need to avoid buying it.
This brings me to one of the most valuable pieces of advice I can ever share.
Take action.
Dreams only come true when you take action and make things happen.
As Shia LeBeouf would say, just do it!
Nobody is going to knock on your door, take you by the hand, and whisk you off to a mystical fairyland. You’ll never have anything you don’t take.
The FIRE Fund didn’t build itself. My financial independence didn’t achieve itself. My dream lifestyle, which now involves traveling the world, didn’t create itself.
And that undervalued high-quality dividend growth stock won’t buy itself.
It’s simple.
If you never take action, you’ll never reap the rewards.
Even the greatest stock in the world can be a terrible investment, if you never buy it.
That’s by virtue of the opportunity cost you absorb by not taking action.
While some investors hem and haw over a 5% +/- differential in valuation on a stock, there are plenty of other people out there never committing a dime to investments in the first place.
Either through fear or ignorance, they avoid stocks completely. And they’re missing out big time.
Be careful of this opportunity cost. Apprehension and fear can be very, very expensive.
Sure, not every stock I buy will be a great long-term investment. There’ll be some businesses in my portfolio that end up going the wrong way on me. I’m wrong sometimes. That’s risk.
It’s a calculated risk I happily accept.
The biggest risk I could ever take would be to not take risk.
I guarantee myself a 100% loss on every dollar I waste instead of investing.
So make sure you don’t make a horrible investment out of what could be an amazing investment. Keep perspective.
Undervalued high-quality dividend growth stocks can be incredible creators of long-term wealth and passive income, but only if you actually step up to the plate and buy them.
Don’t make inaction the action you decide to take.
Don’t let avoiding risk be your biggest risk.
And don’t let those dreams be dreams.
What do you think? How important is it to take action?
Thanks for reading.
P.S. If you’re ready to take action and achieve financial independence, check out some phenomenal resources that I personally used on my way to becoming financially free at 33!
Great motivational article Jason. You are so right about taking action. A little over 6 years ago I started to take action and have been taking action. Now I am a few hundred dollars off from $20 grand of passive income a year. It all started because I took action.
Felix,
Thanks, man!
Financial independence doesn’t achieve itself. You have to step up, take action, and accept risk. Takes a lot of hard work to get to where you want to be in life, but that just makes it all the sweeter once you get there. You wouldn’t appreciate it if it were given to you.
Best regards.
Yep.. I think MJ said it best.. something like you miss 100% of the shots you don’t take.
Jessie,
I can’t argue with that! 🙂
Cheers.
When picking stocks you do not have to be right 10/10 times, just 6/10 times. You can lose 100% of what you invest, but you can easily get 200% on an most investments in the long run. Great post as always Jason!
Mitchell,
Absolutely. Stocks have unlimited upside, but the downside is limited to 100% of your initial capital. That’s a dynamic that Peter Lynch used to really hammer home with his books and speeches, but people continue to miss out on that simple concept.
It seems more natural to fear losing 10% on a stock than 100% on a useless trinket you’ll never use again after you buy it. People are funny.
Thanks for dropping by!
Best regards.
Another nice post Jason.
Your story are really inspirational and even though we dont have the same tax-rules in Europe, it can be done and its nice to be reminded to keep taking action towards your goals.
Personally I started my FI-journey 2 years ago, and allready have had 2 months where passive income surpassed expenses.
Keep up the good work.
RJS,
Thanks so much!
Glad to hear you started down the path to FI. It’s an amazing journey. And FI is really just the beginning in many ways. It’s simply a platform that allows you to excel, own your time, and add a lot of value to your life. It’s wonderful. 🙂
Yeah, not every country (or even state within the US) has the same dynamics – taxes, income, COL, etc. But thinking about this too much is missing the forest for the trees. Do what you can, location-wise, to put yourself in an advantageous position. Then get rocking and rolling with everything else. Sitting around and complaining about high taxes while you waste your money isn’t gonna get the job done. You’ve gotta get the lifestyle in place and build in the right habits. It’s then just a matter of time.
Keep it up over there!
Best wishes.
Jason,
You miss 100% of the shots you don’t take. – Gretzky.
Keep crushing it with your monthly income. Good luck on your next travel location. One warning on Tbilisi though (if you stay there), is that Russia wants that land… Otherwise excellent wine and cheese comes from there! (at least that is what I hear)
– Gremlin
DG,
Thanks a lot. Seeing the snowball start to roll away from me at this point is an awesome sight. It’s a huge weight lifted that’s lifted off your shoulders when your essential expenses in life are already paid for. I’m blessed!
Yeah, we might see about Georgia. I’m not too concerned about geopolitical stuff in any of my travels, unless there’s some indication of imminent war or something. Besides, I’ve witnessed firsthand just how much China apparently wants to spread itself across SE Asia. Geopolitical concerns/changes have gone on since long before I was born, and they’ll continue long after I’m dead.
Cheers!
Hi Jason,
Thanks for putting out such a motivational article. I wholeheartedly agree with this – you really need to begin. The enemy of the good is the perfect in this regard. It really doesn’t matter if you buy at a less than perfect valuation because the beauty is that you keep learning as you go and buy buying into a good business with a long track record the odds are against you screwing up big time, although it is still possible.
I was a big earner and a large saver and started the dividend growth investing journey 5.5 years ago. I was motivated by many books and blogs, including a very strong influence from Dividend Mantra.
Well in the past 5.5 years I’ve received $412K of dividends (through the end of this month) and have additional unrealized capital gains of $560K. That’s nothing to sneeze at and even at a high paying job (and after paying taxes) this would amount to many years of equivalent hard work. This methodology really works. In a bear market the dividends will still roll in but there will be unrealized capital losses so that’s just part of the process and I don’t attach much to that for this very reason – it’s just part of the fluctuation.
I’m fortunate enough to be retired at this point, at age 46, and am picking up projects because they interest me and because I can help other people in the process of doing them. I still need some time to get used to this whole retirement thing but it’s a wonderful challenge to face for sure!
-Mike
Mike,
Couldn’t agree more. Perfect is the enemy of good. Nothing I’ve ever done in my life has been perfect. But a number of pretty solid steps in your life can add up to a hell of a lot over time, especially when any of those steps involve the power of long-term compounding.
I don’t have a perfect body, mind, financial situation, or anything else. Perfect can never be attained in this life. But if you never start working toward BETTER, you’re doomed. Besides, if perfect was attainable, what would be left to live for? Taking action and accepting risk is partially so thrilling because you know you’re on your way to some kind of improvement.
You’re in an awesome spot over there. And that’s because you started taking action a number of years ago. That portfolio didn’t build itself. Your early retirement didn’t achieve itself. Your progress didn’t attain itself. It was all you. Congrats on achieving all of that. 🙂
Thanks for adding your thoughts!
Best wishes.
Hi Jason great points in the article. Not all investments go great how ever I find that even under performing stocks can be ok over time.
KHC is a good point big drop in share price and a dividend cut however if its just a portion of your portfolio the impact is tiny and you still get a dividend :-).
A loss is not a loss ( or gain ) unless you sell. A dividend is always a dividend ( cash ) unless it goes to zero.
Dividend increases of other holdings will quickly replace a small cut of an anomaly stock like KHC this allows you to just hold tight.
If you focus on the income goal and not portfolio value share price is is only a value number.
If you are getting say $25,000 per year on a $250,000 portfolio or $12,500 on $500,000 …. Which would you rather have ?? Pretty simple.
I enjoy stopping by for a read. My Favorite is always your monthly dividend updates !
Bob
Bob,
Right. Even a big loss on a stock that you actually realize (by selling) because you took a risk and ended up wrong is STILL better than never taking action and accepting risk in the first place. That’s kinda my point. Too many people don’t take action on the big things because they fear risk, yet they don’t mind pissing away endless amounts of dimes on lifestyles that aren’t working to their advantage over the long run.
It’s better to have taken a shot and missed than to have never taken the shot at all. Because you’re giving yourself a chance to score. It’s about having the right outlook and attitude, which repeatedly translates to every aspect of your life.
Thanks for dropping by!
Cheers.