118. Make $1 million in 24 years investing $1,000 per month in dividend stocks

Investing in dividend stocks, can be seen as a long-term goal which can achieve 10% annual return (4% estimated dividend rate and a 6% annual estimated stock appreciation growth over 10 years).

It is a "lazy"-way investment approach of becoming rich, or in other words, one does not need to trade actively to get this 10% return.

The dividend payout can be seen as "rental" income, like $100,000 at 4%, brings in $4,000 per year of rental income, comparable like rent on a property. You are certain of this income as the dividend is set upfront by companies, however what is not certain is the appreciation, price-increase of the stocks you are investing in.

What this means is that it is possible in a bear-market to lose 30-50% of your investment, but in a longer-term view, like over 10-20 years, these stocks should appreciate.

So the dividend-income somewhat reduces the risk of investing in dividend stocks.
As well, one can know if the US economy goes into a (big) recession or not, as long as the economy is growing, one should not be immediately worried of losing his/her investment in dividend growth stocks.

Another advantage is that by investing on a monthly basis into the dividend stocks results in "dollar-cost averaging" his/her investment over a longer period of time, thereby reducing volatility risks.
For example, if one invest $100,000 instantly, his/her full investment is at risk, while someone who invests only $1,000 per month is less worried about the fluctuations of the stock market; he/she invests in the long-term.

Here is a calculation how $1,000 per month at 10% annual rate of return yields:
Year 1    12000      
Year 2    25200      
Year 3    39720      
Year 4    55692      
Year 5    73261      
Year 6    92587      
Year 7    113846      
Year 8    137231      
Year 9    162954      
Year 10    191249      
Year 11    222374      
Year 12    256611      
Year 13    294273      
Year 14    335700      
Year 15    381270      
Year 16    431397      
Year 17    486536      
Year 18    547190      
Year 19    613909      
Year 20    687300      
Year 21    768030      
Year 22    856833      
Year 23    954516      
Year 24    1061968    

As you can see, in about 10 years, one has accumulated about $200,000 and after year 24, over $1 million.
If you save only $300 per month invested into dividend stocks, in 24 years, that's $300,000, $500 per month becomes $500,000!
A good website about a successful guy that invests in dividend growth stocks is: www.dividendmantra.com

Also see: Quantimize: For bull market doubters, this relatively safe dividend strategy has provided big returns

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