Most powerful force in the universe

The Irrelevant Investor
1/18/2017

Buffett has been rich for­ev­er, but 95% of his net worth was earned after his 60th birth­day.

Read this arti­cle to under­stand the pow­er of com­pound­ing and why even long term thinkers can’t com­pre­hend how things will play out over the long arc of time.

Compounding plays an impor­tant fac­tor in the Elephant’s Paycheck Blueprint because we rein­vest div­i­dends and count on annu­al div­i­dend increas­es (which com­pound on each oth­er year-after-year). We’re com­pound­ing that div­i­dend return because we get div­i­dends from our div­i­dends, and over time, it real­ly adds up. Even after a “short time” like five years, you’ll see real­ly inter­est­ing num­bers if you look at com­pound div­i­dend growth from rein­vest­ing and annu­al div­i­dend increas­es.

It’s anec­do­tal, but after about 4 1/2 years the pay­check from the total­ly ran­dom sam­ple port­fo­lio I put togeth­er increased 75%, and has a pro­ject­ed raise of over 10% for the next year (con­ser­v­a­tive­ly). The anec­dote I like to tell… you prob­a­bly aren’t get­ting 10% a year (year after year) at your job. But your port­fo­lio can.

Part of the rea­son it’s hard to under­stand is that, as I write about it, I have to shift between absolute num­bers (a 10¢ increase) and rel­a­tive num­bers (a 10% increase) as I’m describ­ing dif­fer­ent aspects of what to expect. I don’t think peo­ple under­stand per­cent­ages very well. If I told you you had a $1 a year income from invest­ing, you’d roll your eyes. But, it’s impor­tant. If you had only invest­ed $50, that’s 20% — a fan­tas­tic income per­cent­age.

At a time when peo­ple want quick answers to things, but don’t want to stop and think about what they mean, it’s hard to get read­ers to spend the time to think about what this all means, and why it’s impor­tant. I had some­one inter­rupt me the oth­er day and say:

wow, you’re a real­ly long term thinker.

Yeah. And I hope some of that will rub off on you guys.

A fair question

Charlie Munger is famous in the invest­ing world. He’s a plain-spo­ken mas­ter of what should be the obvi­ous, typ­i­fied by the fol­low­ing response to a request for invest­ment advice: Seems sim­ple. In fact it is, and it’s pow­er­ful advice. There’s real­ly no secret to get­ting start­ed invest­ing when tak­ing this advice. Which begs the ques­tion… […]

The Elephant in the Room has a Paycheck cover

The Elephant in the Room has a Paycheck (New York City: Infinite Probabilities, 2016)

A fun and social­ly con­scious plan to get you start­ed invest­ing. Written by yours tru­ly! Yeah, this is my book.

During the edit­ing process, I read my book over and over. There were times when I was feel­ing down about the pub­lish­ing process — whether how long it was tak­ing, or how dif­fi­cult some of the stages were. I’d read my book and be inspired.

I believe I’ve told a unique sto­ry that will help peo­ple who are not friends with num­bers get start­ed invest­ing. Technology is mak­ing it eas­i­er than ever to get start­ed, but peo­ple still need a sto­ry to hook their inter­est. Here it is.

It’s a quick read, shouldn’t take more than a cou­ple or a few hours. But be pre­pared to re-read it, espe­cial­ly Part Four where I out­line spe­cif­ic action­able steps to get start­ed.

I’m also work­ing on a free email course to take that sec­tion even fur­ther for peo­ple who start invest­ing mod­est­ly with the pur­pose of learn­ing more about invest­ing. Subscribe if you’d like to be noti­fied when it’s avail­able.

What are Dividends?

Dividends are awesome. Pick the right company, and they go in one direction - UP! Dividends have been rising faster than earnings, and that's a great opportunity for long-term investors

40% of total stock returns come from div­i­dends, but what are div­i­dends? From Part 2 of my book: When you pur­chase shares in a com­pa­ny, you become a par­tial own­er of that com­pa­ny. When buy­ing shares on a stock mar­ket through a bro­ker­age, you’re buy­ing shares of a pub­lic com­pa­ny – a com­pa­ny that has […]

What are Dividends?

Stockpile Review

I am in love. The most fun way to invest in the stock market is dividend reinvesting. Stockpile makes dividend reinvesting as simple as it is fun.

I can’t even con­tain how excit­ed Stockpile makes me. I have such a pas­sion for invest­ing by rein­vest­ing div­i­dends and hav­ing mon­ey make mon­ey. These guys seem to have thought of every­thing, and invest­ing is as easy as it can be. You can get start­ed with as lit­tle as $1. (Whether it makes sense to […]

My first Stockpile gift card; I felt I had to use the product before I could write my Stockpile Review
30 Lessons for Living

30 Lessons for Living: Tried and True Advice from the Wisest Americans (2012)

I love lis­ten­ing to old­er people’s per­spec­tive on life.

There’s a good quote from this book, it talks about how impor­tant it is to con­nect with oth­er peo­ple. I couldn’t agree more, as it’s some­thing I learned too late in life. In fact, help­ing my chil­dren be more con­nect­ed with oth­ers is one of my top par­ent­ing pri­or­i­ties.

Read this book when you have time to chew on it.

“Stocks, Reinvesting & Diversifying w/Marco Schwartz”

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Mastermind.fm
11/8/16

I’m enjoy­ing mastermind.fm and have recent­ly sub­scribed to fol­low their pod­cast.

This episode is chock-full of moti­va­tion! A great dis­cus­sion on buy­ing com­pa­nies who increase their div­i­dend pay­ments, as well as oth­er ways to invest for pas­sive income like peer-to-peer lend­ing and affil­i­ate mar­ket­ing.

Their dis­cus­sion about why to invest and how to get start­ed with div­i­dend invest­ing is in align­ment with the Elephant’s Paycheck Blueprint. I was pret­ty sur­prised to hear the inter­view­er talk about how hes­i­tant he was to get start­ed, and how lit­tle he knew. Marco real­ly helps the lis­ten­er under­stand the impor­tance of build­ing a dis­ci­pline of invest­ing just the same way one builds their own free­lance busi­ness.

Their con­sen­sus: no mat­ter how tal­ent­ed you are, no mat­ter how bril­liant — you must have inter­per­son­al skills to suc­ceed. Many young peo­ple today are so focused on gain­ing tech­ni­cal exper­tise that they lose sight of this key to job suc­cess: traits like empa­thy, con­sid­er­a­tion, lis­ten­ing skills, and the abil­i­ty to resolve con­flicts are fun­da­men­tals in the work­place.

How to buy a stock

Especially if you just have a little money to get started

I think the sim­ple step of how to buy a stock can be a bit over­whelm­ing if you’ve nev­er done it before. New com­pa­nies are try­ing to make it eas­i­er to get start­ed using tech­nol­o­gy to make the pur­chase more approach­able. Stockpile is sim­ply one of the best way to get start­ed build­ing wealth because you can buy shares […]