Well, the actual amount of money is really secondary to why I get excited about income from investments, and why I cheer for ours to grow month after month. Here are some of the reasons why I believe income from investments in the form of dividends (or re-earned income) is important, and why I really get behind our income from investments graph:
- They're Passive! That's right, I don't have to get up early, I don't have to check my inbox, I don't even have to attend any meetings. I get paid simply because I am allowing my money to be at risk. My money sits patiently at the whim of the fickle and hyperactive stock market. As a fellow middle class guy once said, I get paid while I'm sleeping.
- They Grows Like Nobody's Business Ok, it is somebody's business, but they are a heck of a lot more generous with raises than my employer is. Many companies have grown their dividend payments at rates north of 10% annually for decades. Examples of these would be Johnson & Johnson (JNJ), Bank of Nova Scotia (BNS), and McDonalds (MCD)
- They're Human Dividends are tangible, and give us long term investors a warm and fuzzy feeling. Dividends affect our psychology as investors in a healthy way, they're also relatively permanent, and they're not 'paper gains'.
- They Sneer at The Government of Canada A resident of British Columbia earning $50,000/ year pays only 4.4% tax on Canadian dividends. In Ontario they would pay 8%.
Sometimes it's easy to be shortsighted and jaded when it comes to money. Passive income, especially when it comes from dividends, is one of the best things going. It can not be compared to employment income. Why not plant the oak tree seed early so that you can enjoy the shade it provides as the years get on.This post was inspired by Re-Earned Income by Mr.Cheap, from Quest for Four Pillars.