Invest in the stock market for the RIGHT reason, using the RIGHT choices!
Investing in the stock market is not purchasing a stock at 25 dollars a share, hoping it will go to 35 so you can sell it, then hoping it will drop back to 25 so you can buy it back, so that you can sell it again at 35, and so on and so forth.
In my opinion, that is gambling. And, I would imagine, some would believe that ANY investment in the stock market is gambling.
So, for the sake of argument, let's assume that every investment in the stock market is a gamble (whether you're trading in and out of a stock position or a long-term investor). If every investment in the stock market is a gamble, then, how does the investor/gambler stack the odds in their favor?
What are the right investment choices for the right reason that will stack the odds in favor of the individual investor, to receive a return worth the gamble? What is the RIGHT reason, and what are the RIGHT choices to make when investing/gambling in the stock market when looking for a return better than a passbook savings account, a CD, Bond or Mutual Fund?
The right reason to invest/gamble in the stock market, believe it or not, is not to make a profit! That's right! The right reason to invest/gamble in the stock market is to provide an INCOME! Actually, I'll go even one step further! The right reason to invest/gamble in the stock market is to receive an EVER-INCREASING CASH income every quarter from every stock that you own.
Once you have set your mind toward this right reason for investing/gambling, then the right choices will become very clear.
If every stock owned (every quarter) is going to supply an ever-increasing cash income, then two right choices, right from the get-go, are necessary. One, that every company's stock purchased must pay a cash dividend, and two, that every cash dividend paid by the company would have to be rolled back into more shares every quarter, until retirement. Those two right choices means that every quarter there will be more shares of each company owned, which, in turn, will create an ever-increasing cash dividend income (as long as the companies owned maintain their dividend).
To stack the odds further in favor of the investor/gambler, another right choice is necessary. Only those companies with a long-term history of raising their cash dividend every year will be chosen. This right choice will provide a yearly increase in the cash dividend income for the retirement years, when the dividends are being sent home to help ends-meet, and are no longer adding shares to the portfolio. The rising yearly dividend increase will, therefore, help off-set the risk of inflation.
Now, there is another right choice to make. To receive the best return on your investment/gambling dollars, all companies chosen will be purchased commission-free. All dividends from each company, each quarter being rolled into more shares, will be commission-free. Therefore, every cent earned in ever-increasing cash dividends every quarter and any extra cash put into your investment/gambling plan will work toward always increasing your cash-dividend income.
By investing for the right reason and using the right choices you automatically become a long-term, dollar-cost averaging, buying investor/gambler of company's shares, free of commission charges, whose companies raise their dividend every year, with the investor's / gambler's idea or purpose being to provide an 85% tax-free income, through ever-increasing cash dividends for the rest of your life, no matter what the price of the stock at any given time in the market place may be.
For more excerpts from the book 'The Stockopoly Plan ? Investing for Retirement' visit: http://www.thestockopolyplan.com.
You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way (typos excluded). Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where the article was published.
Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book 'The Stockopoly Plan'; published by American-Book Publishing. The book can be purchased at http://www.pdbookstore.com/comfiles/pages/charlesmomelia.shtml.
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