If you're a regular reader of StreetAuthority, you know I love getting -- and reinvesting --paychecks.
Simply, my goal is to earn a paycheck every day of the month by owning a basket of solid securities -- and then grow the size of those paychecks by harnessing the power of through reinvestment.
So far, the results have been very rewarding. From an initial $200,000, I'm earning nearly $16,000 in dividends a (or more than $1,300 a month) using this strategy. And that doesn't even include a penny from the healthy I've made from most of my holdings.
But as I said, you may have already heard this before. My goal today is to show you how to get the most out of yourusing a simple yet effective three-part strategy.
I Dividend Trifecta, and it's the cornerstone of my advisory, The Daily Paycheck. The great thing about the Dividend Trifecta is that it's fully customizable to your own needs. You can use it to multiply your over time, preserve -- even bring in a second to your retirement.it the
Here's how it works...
I have three separate portfolios within The Daily Paycheck, and each helps me achieve one part of the Dividend Trifecta strategy.
My High-Yield Opportunities portfolio offers higher yields but is a bit riskier when it comes topreservation. The yields here start at about 7.5% and go up from there. Some of these and yield 10% or more.
Although these are riskier, I take special care to choose only those securities thatample reward for the risk. Many of my high-yield holdings are long-established closed-end , specializing in everything from utilities and to convertible .
My Fast Dividend Growers portfolio has the lowest yield of the three portfolios. But what it lacks init makes up for in price (the average total return for these is 58%). These are increasing payments by up to 15% a -- making them perfect if you want a rising stream of but also the potential for hefty in the process.
The SteadyGenerators portfolio is full of dependable dividend-paying securities. These are some of the most reliable payers on Earth. If you're a conservative investor, then these can deliver consistent dividends -- no matter what happens in the .
When you own all three types of theseand reinvest the dividends, you can see some pretty dramatic results. I've received more than $47,000 in paychecks so far in less than 42 months. But because I reinvested, my portfolios are now worth over $290,000 -- nearly a 46% total return since inception.
My three portfolios work together, producing the characteristics I'm looking for -- an overall approach that minimizes volatility andrisk while maximizing my monthly .
I've now spent more than three years using this strategy. I love its simplicity. My dividends get reinvested every month without me having to lift a finger. Overall, the portfolio has been roughly 40% less volatile than the overall. To me, that represents 40% more sleep-filled nights.
The Investing Answer: Your needs may be different than mine. The good news is that this strategy is fully scalable to any size portfolio and can be easily adjusted.
If, for instance, you have less tolerance forlosses in the short , you want to own a smaller percentage of High-Yield Opportunities holdings in your personal portfolio. If you have a very long horizon and have lower needs, you may want to hold a higher percentage of Fast Dividend Growers. And if you have a need for stable current right now, then you are likely to find that Steady Generators meet your needs.
Before I started using this strategy, I was anxious about creating a portfolio that couldme once I retired. I'm no longer anxious. My Dividend Trifecta strategy is generating more and more every month. And I know that when retirement comes, I can just flick off the reinvestment switch and start living off the .
That's the kind of experience I want every Daily Paycheck reader to have.
- Create a retirement savings goal
- Design an investment plan to reach it.
- Get a professional money manager to continually monitor and rebalance your portfolio
Sound complicated? Don't stress. Vanguard's new robo advisor service can help you put all of this (and more!) on autopilot, all for an annual gross advisory fee of just 0.20%.