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EARN $10,000 PER YEAR IN DIVIDEND INCOME - How Much Do You Need To Invest? 📈💰



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but now as you can see in in year 41

and when you're 65 years old and your

account balance is worth

1 million 17863

you've only put in 48 of that money the

rest came from

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dividends

what's up guys it's mike good morning

everyone i hope you are doing well

today's video we're going to answer the

question of how much

does it take in terms of the amount

invested to earn

10 000 a year annually

in dividends and that's coming up in

this video if you're just joining us for

the first time i just want to say

welcome and i want to say welcome to

all the new subscribers if this is your

first time here we make videos that

cover finances investing

taxes and more i have a really cool

spreadsheet i'm about to go over with

you that i've

just built i thank you all of you for

being here today and taking time to

watch these videos if you want to

support the work i do you can do so

simply by dropping a like

leaving a comment below and making sure

you're subscribed and if you do

subscribe make sure you hit that bell

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so you get notified when i post a new

video someone asked me

just the other day they said mike what

is dividend investing

and dividend investing if you're new to

this it's simply

a strategy or way to invest it's an

investing

philosophy whereby you as an investor

you purposely and intentionally buy

shares of stocks etfs or mutual funds

that pay you dividends what you'll find

is some stocks pay dividends

and others do not it's a very passive

way

very simple way but very slow way to

build wealth and it is a very slow

process if you don't have a lot to

invest but

it's a process nonetheless that's going

to help you build wealth

and it's probably the most passive

income available

and it takes less management than owning

rental real estate some people love

rental real estate others hate it

well dividend investing is alternative

to that whereby you simply you earn your

money from your job

or your business or wherever you invest

it

and you watch your money grow and your

investments grow over time

so that one day you can walk away from

your current employment our current

business and still have an

income coming in for the rest of your

life because that's the overall concept

of dividend investing i'm going to

include time stamps down below if you

want to skip ahead but

this spreadsheet i've built it took me

gosh i want to say

like three to four hours to build this a

lot of variations i don't

claim it to be mathematically perfect

it's not

i did the best i could with the

knowledge i have of excel

i'm sure some of you out there can build

this a lot better than i can

but nonetheless i took the concepts i

know of investing how these things work

and have programmed them into a

spreadsheet that calculates

a compounding interest formula that

includes the

average annual dividend rate which we're

going to talk about the com

the compounding dividend growth rate

which we're going to talk about and

various other factors like how much you

can invest per month your age where

you're starting from and so on and so

forth

as you're about to see so many of you

came here just because you want to see

how to make ten thousand dollars a year

annually in dividends

and really what it comes down to is how

much money

does it take to invest now you can look

at this in one of two ways

some people like to view this equation

based on how many shares of stock they

buy how many shares of stock it takes

i like to view it from a money

perspective of really

how much money do i need to invest to

buy x number of shares

that produce me x amount of dividends

into whereby i can make that much

annually or monthly in dividends or

whatever my

desired goal is when making ten thousand

dollars a year

in dividends annually i'm in this simple

example i'm i'm using really

conservative numbers here

very conservative numbers that i think

often

understate what you can actually achieve

but i want to i want to make this

conservative so whereby you have a i'd

rather have you be conservative and

think you need to invest more

than in investing too little and not

having the money be there when you're

ready to retire but having an average

starting yield of three percent

so what that means is there's when you

buy a dividend

stock or a stock i should say when you

buy stock or an etf that pays dividends

it pays dividends at different rates so

let's say you hold 10 different

companies you own microsoft apple you

own a couple of real estate investment

trust

like um the the oh realty corporation

trust

or you know you own a health care reit

or something like that

maybe you own johnson johnson that pays

the dividends maybe you own home depot

so you own these let's just say 10

different companies or 10 different etfs

that pay dividends

well each of those investments are going

to pay you dividends

at a different rate one of them might

pay you five percent

one of them might pay you three percent

one one percent

two percent so but it all averages out

to an average amount so that on average

you receive

of all those different amounts let's

just say you receive an

average yield of three percent when you

look at it from a global

perspective three percent and this

spreadsheet is designed where

you can tweak the interest rate to

whatever you want or tweak the dividend

rate to whatever you want to be

and the spreadsheet updates

automatically and then let's talk about

compounding

dividend growth real quickly because

that's really imperative

for this conversation when i'm trying to

have a conversation

with people about how much they need to

invest to earn a certain

amount in dividends it's hard to explain

to them without visually showing them

this

that you don't have to invest as much as

you think you do

are the younger you start the less you

need to invest because what's going to

happen

is your money is going to work for you

you're going to get the average

dividend yield of whatever this is okay

which we're saying three percent here

and then the

cool part about dividends and i

expressed this in another video which

i'll make sure to link that below check

it out

is that dividends aren't like a set

amount of interest

it's not a flat interest rate companies

that pay dividends

actually pay usually not always but

usually pay

more the longer you hold them and so

when you start off you buy a share of

stock

that's that the first year you hold that

stock it might pay 45 cents

per share the next year the that

that same stock you hold it's going to

pay you 50 cents per share

and the next the year after that it's

going to pay you 55 cents and so

it keeps increasing if it's a good

healthy company

american water works is a great example

of that whereby

every year they increase their dividends

by about 10 percent

and they've done that for i think the

last 10 years that's one example

and they like so for example like last

year they paid 50 cents per share

and then and they this year i think

they're paying 55 cents per share

in dividends so those are just some

concepts to keep in mind

but you don't want to just invest for

high yields you want to invest in

safety and you want to invest in a solid

foundation

a company that is healthy financially

has a strong

business model a business model that is

sustainable

is essential to the economy essential

for people's well-being

so that it continues to deliver services

and products whatever they do

for a long period of time well into the

future and can stand

the changing economic environments and

social environments

that we currently are facing each and

every year

different circumstances but that is

essentially the concept of

compounding dividend growth is that the

initial shares of stock you buy

the longer you hold them the more likely

they are to pay you more and more and

more money every year

you just buy and hold that's essentially

the strategy and then it's a matter of

how much you need to invest every month

and how quickly you can get there based

on your

personal financial budget in your

current financial situation i understand

a lot of people are going through really

hard times right now

due to the virus and everything going on

in the economy

this is so please i understand like you

might not be able to do this right now

and i always encourage people to just do

what you can okay do what you can and

have this not have this idea in mind

that like

or to help motivate you to do whatever

you need to do to get out of that

that funk that financial funk whatever

you can do to

to get back on your feet or when you can

never get back on your feet

then then please uh use this to to see

like okay this is

what i can do once i'm back on my feed

this is what i want to do with my

finances to get back on

good footing i know there's a lot of

people struggling right now and i don't

want to

discount that now let's talk about how

much it takes and

maybe how long it takes to earn ten

thousand dollars a year in dividends and

i'll show you

just a rough example of where i'm at in

the process okay in this example we're

using pretend your average starting

yield when you buy

various shares of stock it averages to

about three percent of all the different

types of companies you own or etfs you

own that's your average annual yield in

your portfolio

now most companies pay dividends

quarterly so this example this

spreadsheet is designed to

to show that on a quarterly basis okay

that's the majority of

of pa dividend paying companies you will

find and i have found they do pay

quarterly and not monthly i'm going to

leave the average compounding dividend

growth rate at just half a percent

that's very conservative it's very low

usually

the average is three to five percent but

i'm just going to leave it at a

conservative

half a percent and we'll go with that

and this example

is investing a thousand dollars per

month let's just say you're starting

from zero

and you want to invest a thousand

dollars a month in a dividend portfolio

and how long will it take you doing that

based on these rates to get you to

ten thousand dollars a year in passive

income well let's look at this

so what we see here is you start at zero

and so each year

you're investing a total of twelve

thousand dollars

now when you first start there's no

dividends coming in and

each row you're going to see it adds up

your takes you from your beginning

balance

to your new ending balance from month to

month as you're gonna see how it goes

you invest a thousand your ending

balance is a thousand then in month two

you invest another thousand your ending

balance is two thousand

still as you notice in month two no

dividends are paid but finally at the

end of march let's just say

for for example you start to receive

your first set of dividends you

receive 15 in dividends and then once

again

in june so you keep investing and

finally in june you start to receive

more dividends so now you have

more shares of stock working for you and

paying you dividends

the same is true all the way down to

september in december

so in the first year you invest let's

say about twelve thousand dollars

and you earn let's say 196 dollars and

35 cents in this example

that's where you start it starts off

small but then it grows

what you'll notice over here that i've

programmed this spreadsheet up here

so that you can enter your age whatever

it is let's say you're 25.

most people i think they start to have

money to invest once around 25 26 27 28.

i didn't really get started routinely

consistently as i i've mentioned in my

other dividend investing videos

until i was about like 28 29 years old

that's when

i really said okay let's go for this

let's let's do this and that's when i

started to get consistent

but do what you can and so this so if

you enter your age here

then it will it'll track your age down

here so you'll know

what age you'll be and where you're

going to end up but

when you go through this in the first

year you've invested 10 10

or 12 thousand dollars and you've made

196

dividends in year two now your

set of shares that you bought in year

one are now paying you more

due to that average compounding dividend

growth rate which we're saying is a half

percent

so now instead of them paying you three

percent on average now they're paying

you

3.015 percent more okay that's that's

what they're paying

when you buy the new shares the starting

yield for those though

still might be only three percent or 2.9

percent but for the sake of this example

we're sticking with three percent and

that's just what it is

whereas your older shares of course will

pay you slightly more so by the end of

year two you're at now age 26 in this

example

you've invested 24 thousand dollars and

now you're making about 600

a year in dividends in year three we can

see our our rate continues to go up

you're you've now invested 36 000

and you're making just under a thousand

dollars in dividends and let's skip

ahead

as you can see in year four you're

making doing the same process

you're making about thirteen hundred

dollars in dividends year five is

seventeen hundred and all the way down

if we go all the way to now the more you

invest obviously

the the faster you're gonna achieve

these results that's just just the math

at the end of the day it's just a

mathematical computation this is to help

you see

far out into the future of if you what

you do

now how it impacts your future later so

whatever you can do now to get this ball

rolling

the better off you'll be so all the way

down to year

19 or 20 is when if you're investing

just a thousand dollars a month you're

getting an

average yield of three percent then

and you're 20 you would start to make 10

000 a year annually

in dividends and if you started at age

25 you would be at 44

and you would have invested about around

240

000 of your own money but your account

balance though when you're 20 when

you're making this

amount of dividends is 332

215. so if we look at what percentage of

that investment of the 332

000 came from your own money not

dividends well we take 240

000 we divide that by 332 0215.

so you've contributed about 72 percent

of that money

over over 20 years is what you've put in

but what you're going to see though is

the longer

the time horizon you have to invest if

you keep doing this

let's just go all the way down to year

40 now you're 40.

what does that do if we go to year 40

if you just continue this process all

the way through you're now eight if you

started at age 25 you're down age

64 you've now invested 480 thousand

dollars

your account balance is just under a

million dollars now in fact let's go

down the year 65 here we go

you're 65 you've been doing this for 41

years

and now you have a million dollars in

your account and you're making

33 000 a year in dividends

and so of that amount you can you can

see quickly that 492 000 is about half

of that

so when you only had 20 years to invest

you had to put in 70 roughly or 72

percent of your own money to hit that

goal

but if you have 40 years to invest then

you don't have to use as much of your

own money the dividends are going to

grow and work for you

you're just going to keep reinvesting it

into the same set of shares of stock or

different set of shares

what's whatever you want to do but now

as you can see in

in year 41 and when you're 65 years old

and your account balance is worth 1

million 17863

you've only put in 48 of that money the

rest came from

dividends and of course the longer the

time horizon the less and less of your

money you physically need to put in it's

just

having your money work for you and

that's the beauty in the concept

of dividend investing okay now i would

like to share a bit more about my

dividend investing journey with you

and this is kind of how i tested that

spreadsheet i was showing you on screen

is for the past seven years i've been

tracking

our dividend income for my wife and i

now as you know if you watch my other

videos we have a taxable brokerage

account and two roth iras so we have

three investment accounts we're using

to implement this dividend investing

strategy as much as we can

and in year six so what i had to do is i

looked at year six is where i

at the end of 2000 which is the end of

2019 and

i had to look back at roughly how much

did i have invested in 2019

and how much should i make in dividends

well we made just under five thousand

dollars in dividends this four thousand

nine seventy eight

and so now what i had to do is go back

into

this spreadsheet that i was using to

show you in this video

and kind of say okay well how do i start

from zero

and get to where i'm at roughly so what

i did is i looked at the total amount

invested

and of the total amount invested i had

to say okay well how much

of that amount was invested in etfs or

companies that actually pay dividends

that was the number i was looking for

and this is what i've arrived at so this

is

basically our current setup right here

this is this is what

we're doing and we've been doing this

now for oh well i think we're in year

seven now

but this is essentially and it wasn't

perfectly like this

but eventually got to this monthly

average of this

you know i don't know when we started

exactly but we were around 29 years old

so when we started

we showed it started earlier but here we

are and so in year six what i did

is i came down to year six at the end of

2019

and i looked for that total amount

invested

which and this is roughly what i saw on

my spreadsheet at the end of 2019

my total cost basis in companies that

paid

dividends and we're using this

spreadsheet and using those numbers

we arrived at 4955 which is like 20

bucks away

from what i actually reported on my

dividend tracking spreadsheet so that's

our trajectory right now

that's basically where we're at and that

was a big

part of the reason i made this

spreadsheet is not only for you but for

me as well as a tool

just to say okay well what if i change

my course what can i do differently to

make this grow faster and of course

and that and that's what this is here

for you is to help motivate you

to think about okay what can i do to

invest more on a monthly basis or at

least on a more routine basis

you know what in my budget can i cut

what expense is that where am i spending

money that i really don't need to

you know what do i really need that nice

car do i really need that nice watch

do i really need all those electronics

but rather

wouldn't it be cool if instead i can use

that money and invest it

and have my assets my dividend producing

assets someday

provide me those things and also provide

me a lifestyle whereby i no longer

have to to work as hard or excite i

enjoy working and i want to continue

working as long as i can

but i want to want to have like many of

you i just want to have more options

in terms of what type of work i do and i

think that's really important

and that's what i wanted to share with

you in this video all right guys well

i'm going to wrap up the video here but

hopefully that answers your question if

you want to make ten thousand dollars a

year in dividends annually

you're going to have to personally

invest about 240

000 roughly somewhere within that range

somewhere near that amount to make

this much annually in dividends but of

course the total amount invested

will be 332 000 because you're going to

have those

a lot of your money will be working for

you at that point and if you do a

thousand dollars per month it's going to

take you about 20 years to get there

so the faster you can invest the more

you can invest

the larger and quicker your account will

grow

i hope you enjoyed this video if you did

please drop a like below comment below

let me know

what you're doing to build your

retirement if dividend investing is one

of them i would love to hear your

feedback

and how you track it or where you're at

in your journey i

it's always inspiring to me and i think

to others to hear

your story this is my story but i love

really i love so much more

hearing about what you're doing and

where you're at in your journey

i love you all make sure you're

subscribed i'll see you in the next

video

and live life uncaged peace

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you