Understanding Wealth IV

As I mentioned in my last post I will be talking about generating an income from Stock Dividends. Stock Dividends have some clear advantages and disadvantages that separate them from Money Market accounts. The biggest disadvantage that comes to mind is the greater potential to loose initial capital. Although companies that give the type of dividends that you would want to rely on for income are usually larger companies with very stable track records of doing business. Although that isn't necessarily a guarantee of any kind. Many of the wealthiest people in this world rely on dividends from stock investments as a source of income.

What is a dividend? Dividends are money given back to shareholders by the company. This money usually comes from profits the company has earned. Since shareholders own a small stake in the company, it's the companies way of passing profits on to the shareholders. Not all companies pay dividends, it's totally up to the management of the company. Some corporations simply keep the dividends to reinvest in their companies to help fund an increase in company growth.

When looking for a company to invest in for dividend income there are some things that you should look for. You want to look for a company with a history of paying consistent dividends. Dividends are usually paid quarterly so you want to make sure that they have been paying a consistent dividend for at least 5 years or more. You also want to make sure that the amount of the dividend is also consistent. Dividends naturally will vary some depending on company profits it's always a good sign if you see a slow steady growth in the amount of the dividend. Often times that shows the companies are having growing profits, and is a stable company. That's the type of company you want to invest in for income.

One of the very best things about investing in stocks that provide dividend income is the potential for capital growth. Stock prices go up and down so it's possible to lose your capital investment however, most companies that provide stable dividend are usually stable companies and more than likely their stock price will actually increase over time. Stock dividends usually are 4% to 6% of the stock price. That means if you buy a stock today at $10 per share and it has a dividend of $.50 per share. Over the next 5 years that stock price goes up to $20 per share and the dividend remains at 5% that means the stock that you originally paid $10 for is now paying you 10% on your money. So basically when investing in stocks with dividends your income stream can actually grow without the dividend itself increasing.

Understanding Wealth III

As I stated in my last post, I will be discussing one of the income streams that I have learned about. I will start by discussing one of the easiest to learn and understand, Money Market Accounts. Money Market Accounts, are very similar to any other savings account except they usually earn slightly higher interest. Some things to be away of about money market accounts is that most require a minimal deposit and you have limited access to your money sometimes you can only withdraw money 3 to 4 times a year. The interest rate on Money Market Accounts right now ranges between 3% to 6% annually. Currently the interest rate on mine is 5.04%.

Money Markets, are a great place to put money that you expect you may need but prefer not to touch it. I love to keep my emergency fund in a Money Market account. The Money Market account that I use is Paypal. There interest is very very competitive. Plus I do not have limited access to my account. I can withdraw money at anytime. It takes 3-5 business days to send money to my bank from Paypal but, I also have a debit card and I can use that to withdraw money instantly if I need to. Also Paypal, does not require a minimum deposit to open their Money Market account. I do not think Money Markets are FDIC insured but historically your principle in a Money Market account is very safe.

I encourage you to open a Money Market account if you don't already have one. Deposit money in there and "Walla!" you have your first additional passive income stream. I don't care if you deposit only $10 in there you have just started an additional passive income stream. Congratulations! Now just use your additional cashflow to add to it. You will be getting small interest payments monthly into your account, now your money is working for you, instead of you working for it!

In the next post titled "Understanding Wealth" I will talking about stock dividends!

Till Then,
Jackie O'Quinn
1-800-620-3019

Understanding Wealth II

In my last post I was talking about understanding wealth or at least my understanding of it. I mentioned creating additional cashflow and maintaining your standard of living despite the increase in cashflow. That last sentence will be the reason most people will never achieve financial success even though it is my belief I serve a God that has given us the tools to be prosperous most; of us will not lean on faith to find away to generate additional income or we will allow fear to keep up from stepping out and utilizing an additional income stream that may come our way, such as a homebased business.

Even if we create that additional cashflow, 98% of us will never be able to maintain our standard of living so that will can use that cashflow to generate more wealth, passive wealth. I challenge you to step up and be different. I challenge you to be a 2 precenter, create some free cashflow and save it until you learn how to utilize it to generate more wealth via other income streams. As you read my blog you will be able to learn as I am learning. Many things I have already learned, some I am still learning.

Other income streams in which I am currently learning and pursuing are as follows, Forex market, REITS, Real Estate, Stock dividends, and money market accounts. These income streams are not completely passive but they take minimal effort on my part. In the next couple of posts titled "Understanding Wealth" I will break them down individually and tell you what I have learned and why I like each one.

All the best,
Jackie O'Quinn
1-800-620-3019