Lately, KC and I relaunched our survey on dividend investing.
Of which, we found the #1 problem faced in dividend investing is – “What stocks to buy?”.
Thus, I would like to address this in this article.
Now, imagine this.
Assuming you’re an eligible bachelor, wishing to find a partner.
We met up and you ask me if I can recommend any ladies who are single and keen to mingle.
Instead of scrolling through my phone list, here is how I would answer:
“What kind of relationship are you looking for?”.
Are you looking for something that is short-term and non-committal? Or, are you looking towards marriage, starting a family? The kind of relationship that you want to have will influence who you would wish to mingle with. If you just want a fling, you might find a partner who’ll share the same desire with you. If you are into marriage, you’ll find your future partner very differently.
It’s the same with stocks.
The kind of portfolio you intend to build will determine how you select stocks. If you wish to have quick returns, you’ll choose stocks differently from others who aim to build long-term wealth. The same logic applies.
Now, let’s say you’re into short-term flings and I’m one who values marriages. The next question is –
“Are you asking the right people the right questions?”.
In other words, don’t ask a long-term dividend investor about trading stocks for short-term gains.
Do you follow?
Here, let’s assume that you’re looking to start a relationship with a clear objective of marriage. In this situation, the next question to answer would be: “What do you look for in a future spouse?”.
There are many beautiful ladies out there, but who is the right one for you?
Let’s say you’re career-oriented. Is it a plus to you if your spouse is a career-woman herself? If it is and you find such to be appealing, would it make sense for you to join associations, meetings, and gatherings that allow you to meet and network with career-oriented women? For a start, you can join associations like BNI or Toastmasters. Or, you could sign up for workshops which would be attended by people who are positive and seek improvements.
I’m just throwing in ideas.
But for whoever you are looking, you might want to identify their common traits. For instance, for successful career women, maybe they share similar traits in their values, emotional maturity and priorities in life.
It’s similar to stocks. If you’re looking to build a dividend portfolio, it would make sense to narrow down your search to stocks that pay increasing dividends consistently. What kind of stocks have such abilities to pay increasing dividends consistently? What traits do they have? Which kinds of businesses tend to pay dividends? How’s their financial track record? and so on and so forth.
Once you have clarity of what you’re looking for, you’ll work towards finding it yourself.
So, back to the #1 problem in dividend investing – “What stocks to buy?”.
This problem is reflective of one’s lack of clarity of “What he or she would like to attain” and “The
traits or characteristics of a stock that would help him or her achieve their desired results”. So, in other words, people who ask “What stocks to buy” are quite similar to another person, who does not know “what relationship he or she likes to have” and “major traits that he or she is prioritising on in a future spouse”.
In many ways, investing is quite like “pak-tor” a.k.a dating.
If you’re a newbie in investing, ask yourself this key question: “What kind of stock portfolio would you have 5-10 years from today?”.
5 years later, at age ____, will you be interested in trading stocks for quick gains?
Or, at age _____, will you have a stock portfolio that pays $_____ a year in dividend income?
I can’t answer that for you.
You have to reflect and come out with your own answer.
Obviously, I have already come out with my own answer. I chose to be a dividend investor who’s interested in accumulating dividend-paying stocks for the long-term. As such, I build my portfolio to fulfill that objective. So, if you’re looking to trade stocks for fast gains, I’m really the wrong guy to talk to. But, if you’re looking for dividends, then it makes a lot more sense to immerse yourself with relevant materials (like our Dividend Vault Course) which are catered for such a purpose.
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