The story of my life
I was not a
poor guy but also not a rich one when I started to invest my first money in
stocks. My family owns a little medium-sized farmland and they worked really
hard for their money. They had enough for living but they saved the money for
the future of their three children. I never needed to work in my childhood
(except for the business of my family). My university years were financed but
my private wealth was at the age of 19 not high enough to live off it. I had a
mid five-digit amount during that time.
I started
to invest my first money in the year 2000, the top of the technology bubble. I
lost much money with several small cap stocks. It was very painful for me but
also a good lesson. The defeat didn’t kill my interest in stocks and investing
- the topics had banned me for my lifetime and became my passion. I started to
study economics and observed the capital market as passive investor. As a
student I needed to take care of my money and made only a few smaller
investment trades with no significant gains. I learned a lot from reading, accounting, trading emotions (behavioral finance) and talks with
stock market professionals who wanted to sell me their funds and advices. But I
did not agree with them. I ever wanted to manage my own money. That was what I
worked for.
In 2003, it
was in the middle of my university time, the stock market began to turn. I was
so anxious to invest further money because everything I had known about the
stock market was only theoretically. A few books about Warren Buffett and his
great teacher Benjamin Graham were the basis for my investment philosophy. Both
impressed me very much because it was so understandable what they have done. It
is a very rational theory about fundamentals and the price of value. I also
read books about Peter Lynch and lyrics from George Soros, also from other
investors. But if I am honest, I never comprehend them because they have a very
complex behavior to invest.
My first bigger investments since 2003 were made in funds, BRIC (Brazil, Russian, India, and China) related products and index correlated funds (Exchange Traded Funds - ETFs - were not established for private investors with small budgets during that time). The investment themes became very popular while the major indices recovered. My investments doubled and I could make my first real money. Not fast, because I hold my investments over two years.
After I had
finished my diploma in economics in 2005, my private wealth was near to the
rage of 100k. It was enough to start a “normal„ life, enough to buy a home and
to finance the first slice of real estate loans or finally to buy a middle-class
car. But this was not my motivation. My first priority was to find a good job which should give me a regular
income and my second intention was to increase my passive income from capital activities. During that time, I had no larger positions in solid growing dividend
stocks and my annualized dividend income only amounted to a thousand bucks per
year.
I found my
first job at the capital market in 2007 after a year of job searching,
speculative investment trades and syndicated construction studies. I had some
luck with my investments and earned a few thousand dollars with
residential REITs trades. I am so glad that I don’t own these stocks today. It
is very hard to life from trading gains because you can’t forecast the stock market and price develpoments.
When I
started my first job, I worked as equity analyst and investor relations manager
for a smaller firm. I was one of only eight employees within the company and I
hated my job because I was on the sell-side and had to work for stock market listed
companies that don’t created shareholder value over the long-run. I hated my job
because every second I worked for my boss I couldn’t observe my own investments
and trade on my own accounts. I ever wanted to be a private investor, something
that I ever had done before and what I have studied over all the years. For two years, I wrote annual reports,
quarterly reports, created investor presentations, made conference calls and
talked with stupid low income investors.
In 2008,
the financial crises started with the collapse of Lehman Brothers. The stock
market crashed and investors fell in panic. The Dow Jones Index fell nearly by
one third. During my nearly two years of working, I didn’t made larger
investment trades. Therefore I saved much money also because of my thrifty living
style. I had only 10 percent of my private wealth in equities invested. Most of
these stocks were high-dividend paying closed-end fund initiators. I still own
these stocks today but they are nearly worthless. I also learned a lot from
this long-term trade error. However, the markets began to cash and I started to
buy stocks from my residual money over months.
My favorite
investment targets were big dividend paying companies like Coca Cola, Procter
and Gamble, Philip Morris etc. I bought stocks with huge brands and solid cash
flows. My strategy didn’t work in the short-run. Every day I lost so much money
that I that I felt really bad, because I never had invested so big amounts before
in a falling market. The amounts I lost per day were bigger than my monthly savings from my regular salary.
But I didn’t stop buying stocks due to my strong believe in the fair price of
value and strong market positions of the companies I invested in. I bought more and more stocks until my liquid
money funds were nearly distorted.
At the end
of 2008 and the beginning of 2009, the national reserve banks stepped into the
markets and flooded them with cheap money. During that time, I was fully
invested and my cumulated losses turned into profits. I started to invest on
margin. I borrowed roughly 20 percent of my net worth for a cutthroat margin
rate of 5.7 percent (today my rates are around 1.5 percent). I invested the
money into stocks with a yield around the high-yield region. At the peak of my
acquisition time, I owned around 60 stocks directly.
In April
2009, my two year permanent occupation run out and I decided to look for
something new. I had no plan what it could be. I didn’t know that I would
become a professional private investor.
In 2009, the
markets recovered over the following two years due to the quantitative easing
programs (QE) from the leading national banks in the world and the economic recovery.
Over that time I sold many stocks which I had bought during the financial
crises with 100-150 percent gain and invested the profits into some higher
yielding dividend stocks.
As of
today, my net worth is four-times higher after I gave up my permanent occupation.
I do not search other occupations anymore; I live off dividend payments and
have achieved my first goal. My current annualized dividend income is in a
five-digit region and my portfolio dividend yield is around three percent. I
plan to double my investments every five to ten years. This represents a yearly
return (dividends included) of 7-15 percent. Over the recent 13 years, I
realized such a return rate. Summarized, I would be happy to die with a
double-digit million amount.
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| My Home Office |
How my blog
works
Everybody
needs a regular occupation. With this blog, I try to give me a regular activity by discovering the best yielding
dividend stocks. Dividend payments are in focus of my work. I am a dividend
growth investor and like to have an overview of the best dividend stocks and
their current market ratios. I do this work primarily for myself.
I don’t
want to sell you stocks and you will never hear a buy or sell recommendation
from me. I try to show you objective figures from listed companies. All these
data came from several trusted information providers and is free available for
every investor on the internet. I own some of the stocks I talk about. In this
case, you will find a small disclaimer at the end of the article.
My work is also
free and for everybody available in world. Within the next months, I will publish
a virtual portfolio, funded with 100,000 dollars. All trades in this stock
portfolio will be transparent. I buy stocks for $5 per trade and like to fill
the portfolio with around 50-70 companies. So the total amount of single stock
holdings is between $1,000 and $2,000 dollars. You can find detailed fundamental
PDF-reports in the sidebar of my blog.
The aim is
to show you that you can make money with dividend growth stocks if you have a
long-term investment horizon. You can have a better performance with a lower
volatility. All you need is time and patience. Retiree with a high dividend
income takes a lot of hard work, cleverness and also a little bit of luck too.
I know that I have an inspiring life story and I hope it motivates you to stay invested by the theme of dividend growth stocks.
If you like
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Happy
Investing
Tom