Money makes money. It is a term we often hear. But do we fully understand what this actually means?
The reality is that you can go to work each day and earn a paycheck. And that is something worthy of doing. The world needs our labor, and we need money in order to live and take care of our needs and that of our family's needs.
But at the end of the day, if anyone wants to ever enjoy true financial freedom, and even retirement (especially early retirement), then Don't Just Work for a Paycheck (read.cash). Work for a future.
In other words, a paycheck should not be something we only consider will cover what we need today. It should also cover what we need tomorrow. And the stock market is one way to achieve that through dividend paying stocks.
What Is a Dividend Paying Stock (read.cash)? Simply put, it is owning a piece of a publicly traded company. It is your opportunity to share in the profits they make. Because when you are a shareholder, you actually own a part of the company.
Dividends are simply your share of the company's profits as an owner of the company.
The reality is that you can work to the bone until your last breath, only using what you earn to pay for what you need now. Or you can save some of it, and invest it into solid companies that will pay you a little slice of their pie each and every quarter.
And this is income. Just like the income you receive in your weekly paycheck. This is real money that you can earn and spend just like any other money. Only, this money is not made from what your butt does. This is money made from money you have already made.
It is literally money making money.
I talk often about all of the things that we must do that pull us away from what we want to do. And sure, sometimes that is in fact what we have to do. Life has certain obligations. There is no getting around that. But it does not have to be all about that, all the time.
The more we can replace our income from working for it with money that makes money from money we have already worked for, the more we can have the freedom to pursue our own desires. The closer we can get to doing what we want, and being able to do that without breaking the bank, or having to make sacrifices.
Life Can Sometimes Make Me Crabby (read.cash), and part of the reason it sometimes does is because one can be pulled in directions that they would prefer not be pulled in. But that's life. It does not have to be that way forever. We can reduce the pull, and we can distance ourselves from what pulls us.
That takes money.
Granted, this not an overnight thing. Building wealth usually never is. It is something that one must pursue for a long period of time, slowly adding and building on the future. But, we also must be actively engaged in the process of doing that. Contributing to it. Not waiting for it to happen, but doing it. And being patient is important to the process too.
Rome was not built in a day.
Of course, there are many ways to build wealth. Dividend paying stocks just happen to be one of the ways, and should be a part of your own path toward accomplishing it. It is one piece of the whole pie. But it plays an important role.
The value really is in learning and earning. We all know how good it feels when our paychecks roll into our bank accounts each week, or however often you get paid. Every time that money comes in it feels like a new start. A new beginning.
Relief.
We are good for just a little while longer, and in our minds that paycheck feels like freedom. Albeit a short lived one. But freedom nonetheless. That same feeling happens when you see that a dividend has been paid as well. It just feels good. It is real money. It's income.
The difference is that we did not have to punch a time clock for it. It simply landed in our pockets because we took some of our money aside and put it to work to make more money for us rather than have to go out and work for it through our labors.
Is there risk involved? Sure there is. It's the stock market. But think of it another way. Is there ever a guarantee when you take a job that it will be there tomorrow? The pandemic showed many people that a job is never a 100% guarantee of a living.
But what is, in my opinion, the greatest risk of all? Not preparing for the future. Not keeping some of your money and letting it earn more. Not investing in replacing an income over time.
And only relying on a paycheck for an income at all. We can either be forced to keep working for it. Or we can slowly build a future where our money works for us.
Lead image courtesy of Pixabay, user PublicDomainPictures. Graph Growth Finance - Free image on Pixabay
Well written and explained, people can save money, but only investment will bring liquidity.