Ahh, patience. You know that feeling you get when you pull the trigger on a new stock purchase? It feels great. The number of shares you own increase, the value of your portfolio increases, and your forward dividends increase. Overall, it is a great feeling of achievement. Then comes the wait. The wait to reload for the next purchase. For myself, that wait is usually 3 months long. Equal to one full quarter of the year. Other DGI investors tend to make a new purchase (or multiple purchases) every month or two. Either way is fine, but one thing is clear, patience is an essential key to long term investing.
Patience is defined as a person’s ability to wait something out or endure something tedious, without getting angry, annoyed, or anxious. It is natural for some, but has to be learned for others (especially in an age where we are accustomed to instant gratification). One thing is clear though, dividend growth investing is not a get rich quick scheme. It is a long-term game that can take decades depending on your circumstances and situation in life. For me, patience was more something I had to learn and then once learned; refined and disciplined.
When I first started investing in dividend stocks I was not very patient and that resulted in mistakes. For those familiar with my story, my journey into dividend investing began in the worst possible way. I ended up with a sizable amount of money to invest and I wasn’t so patient. As I stated in my About page; “I started investing and learning about investing. Oops! Perhaps I should have placed more emphasis on the latter first before jumping right in.” I wanted to make some money and make money quickly.
My lack of patience resulted in my search for high yielders with equally high dividends. The concepts of dividend sustainability, patio ratios, etc., were still largely foreign to me. I wanted to jump in right away. So, I ended up buying a handful of energy stocks (mostly oil companies) at a time when oil prices were plummeting. The dividends look great on paper, but they were not sustainable. Cuts soon followed and the value of the stocks plummeted. I ended up selling nearly all of them (3 stocks for losses and 1 stock for a gain). The worst one hit me at a $4,500 loss (total investment was $5,000), leaving me saving only $500 left before the company went bankrupt.
But in a real way, that experience proved invaluable! I needed to be patient. I needed to stop and learn more before getting started again. Above all, I had realized that long term investing takes time and patience. Rome wasn’t built in a day, then neither would my portfolio, the Dividend Empire. Thus, I learned to slow it down and take advantage of opportunities as they arose.
All of that paid off handsomely when I moved into my new home over one year ago. The pace of my investing slowed down (I was no longer throwing everything in at once), yet the amounts remained comfortably large. I usually just make one large purchase per quarter. I let my funds accumulate nicely before I pull the trigger. With a 50% savings rate I can save up about $2,000 every three months from my working income for purchasing stocks. The rest of the savings from my working income goes into my money market as an emergency fund. So, $2,000 of working income is saved plus the $2,000 plus I get in dividend income each quarter means I am investing a total of a little over $4,000 every quarter.
I rest of the time is just patiently waiting and watching. Sure, the craving for new purchases (plus increased dividends) is always there but compared to three years ago, it is quite tempered and disciplined. I have also learned that patience’s does not mean idleness. I am not just sitting around and nothing is happening. Instead, my money is working for me 24 hours a day, 7 days a week, all year long. Progress towards new goals and milestones is happening all the time. I see this every week. The dividends are coming in, the paychecks continue clearing, my bank accounts keep increasing, dividend increases continue, and it is all adding up nicely. Waiting (having patience) is really not that painful as it once was. In fact, I find it enjoyable.
Do good things come to those who wait? In the case of dividend growth investing, I certainly believe so. So, I am waiting patiently for the money to accumulate for my next purchases which will probably in October. I also realize that there will come a time when my dividends will grow large enough that I will be able to make large purchases of stocks each month instead on only quarterly. As I continue the march towards the $10K mark in forward dividend income I patiently wait till that day. How about the rest of you? Are you patiently waiting for something good? Did you learn patience or was it natural? Let me know in the comments below! 🙂
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