Secure Income on Auto Pilot

As I’m finishing up the week from meeting with other investors I wanted to throw a couple thoughts down on the paper/screen. the best thing about meeting with people smarter than you is it is a hotbed for ideas and it gets your mind thinking, the wheels spinning.

While I’m concentrating on learning all I can on trading options and stocks, investing in real estate, dabbling in crypto currencies and other businesses. The one thing that is always in the background on auto pilot is our dividend stock portfolio.

I have a good amount of cash in dividend stocks, enough to provide several thousand dollars of income for us. Worse case if other things didn’t work out we could live off that income. One of my favorites is QYLD that has been steady, even through troubles in the world never cutting its dividend. Another one I like is SLVO which is highly, highly variable but a cheap stock to get into. Between the two we get 10-20% dividends on our holdings for the year paid out monthly which makes for a nice reliable paycheck to make a house or car payment, even the grocery bill.

Now some of the online brokers offer some very competitive rates on margin loans. Say around 2.5% on Robin Hood at the time of this writing to even cheaper rates on Interactive brokers. So just thinking in my head which can be a bit jumbled at times, with an example account the size of $100,000 you could easily earn over $10,000 in dividends a year. Now with a 2% margin loan you would pay $2,000 interest on a loan of $100,000. This would double your buying power to $200,000 thus doubling your dividend income to over $20,000. After paying for your interest on your loan, your income would be at least $18,000. That is only thinking small though, imagine more leverage like 2, 3, or 10 versus a one to one margin. What if you add a zero to the math and invest more, the possibilities just grow from there. We didn’t even mention automatically rolling the dividends into purchasing more stock thus compounding the dividend growth…

As always do your own research and utilize margin or debt very carefully. After all, it’s one of the things I was told never to do!

This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.


Published by Jay

I came from a single parent house with four kids. My mom was a waitress and my sister helped pay the bills. I didn’t have any silver spoon in my mouth but I was able to break that cycle and I’m still learning about money and finances everyday. They just don’t teach you these things and it seemed like people didn’t want to share!

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