Dividends and The Capitalist Code

There are many people who discus the economy and what is going on and some write books. One of the speakers is Ben Stein who wrote the book The Capitalist Code, published by Humanix Books, West Palm Beach, Florida, 2017.

The book is designed for young people and hopefully older people are essentially doing what Mr. Stein recommends.

Someone is sitting in the shade because someone planted a tree a long time ago – Warren Buffett.

That means time is going to be on your side, think about Mr. Buffett’s long time holding in Coca-Cola. The stock pays dividends and over the years has increased in value but does not usually go up or down more than 10% a year. If you own it for years, the value has increased and the dividends you received would have paid for your costs and the money continues to flow to your account.

Do what you love, the money will follow – Marsha Sinetar

There is no one way to make a living, there are multiple methods. It is wonderful if you love your job or love parts of it, but unless you own the company one day you may be asked to leave. The key is live on less than you earn, whatever you feel is comfortable and save first, then spend. The savings as long as the investment vehicle is good will over time use compound interest to become large when you need it at retirement.

One of the best methods is buy an index fund for the S&P 500 which gives diversification, is low cost and because the index is changed at least twice a year (the losers go out, the winners come in) over time the index will be higher than when you buy it. Contribute monthly and in a few years, you will see the difference. If you want diversification, buy a dividend fund (if a company cannot pay a dividend, the fund sells it for one that can). Over the past 10 years, it is easier to buy the funds and contribute to them, most large fund companies have index funds.

Take advantage of all tax subsidies – Frank Knight

Understand relatively wealthy people write the tax code and there are more tax subsidies or breaks the more money you have invested or saved. Whether you call them incentives or deferred taxes or subsidies, the tax breaks are available to all but benefit those with more invested or saved. What you wish to do is convert short term taxable income into long-term very highly tax advantaged capital gains income. Use the system to your advantage.

Liquid assets = Action – Herbert Stein

What this means at some point, you will wish or want to sell your assets. If you own stocks or index fund or other types of funds you can sell them and receive your money within 3 days. You can invest in many other asset classes but understand how long does it take to get your money out if needed?

Linking to dividend paying stocks, if you place an emphasis on dividend paying stocks, you expect to live a number of years and be rewarded for what corporations do – try to make profits and reward their shareholders. The income you receive ensures an income stream and over the long term because profit making companies trade at higher valuations the shares increase which is a lovely benefit. If the dividend decreases, you can find alternatives there are always good alternatives on the stock market, it is just a matter what one you choose.

There are more questions than answers, till the next time – to raising questions.


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