well what’s going on everybody welcome
back to money on live TV I am Mike the CPA and on this channel we cover
finances investing and taxes hope you’re all having a great day I got my coffee
and I’m ready to talk about some more dividend investing! first off I just want
to say thank you for the tremendous positive support you’ve poured out on
that last dividend investing video it was unbelievable I don’t think I’ve ever
had a video hit 10,000 views so quickly so this thank you so much if you want to
continue to see more content like this and around this topic area just continue
to crush that like button it’s gonna let me know that you want to see more of it
also it’s really gonna help out the channel so thank you for continuing to
just crush that like button and this please leave your questions your
comments down below I still have a lot of people to get back to now speaking of
comments in the next part of this series it’s all gonna be about answering your
questions your comments concerns whatever it may be about dividend
investing so definitely whatever your thoughts are whatever questions you have
leave them below and that’s what I’m the base this next video on for this series
all right so this video is coming from a
subscriber request in a sense because they asked me they said Mike how did you
get started and what did it look like what you know what kind of money did you
contribute monthly to these accounts to get this ball rolling so that’s what
we’re gonna discuss today and I’m gonna show you how you can start I’m gonna
recommend some videos you watch and also just kind of give you some tips along
the way with hopefully without making it too detailed I still want to keep this
one pretty casual but we’re gonna get more and more detailed along the way I
know you made some big mistakes thanks a lot chipper but don’t worry we’re gonna
be covering those mistakes so yes along the way as we’re discussing this I’m
gonna be sharing with you some of the mistakes I made so that you can avoid it
for yourself so let’s just go ahead and get started and let’s talk about first
let’s talk about portfolios or what platform I use to build a dividend
investing portfolio for my wife and I we used a merit rate okay that’s what we’re
using we originally started with Scottrade but in the past year or so
that’s that Ameritrade bought them out and so now Scottrade
to become Ameritrade and that’s why we use them I like them it there is a small
transaction cost per transaction of $6.95 but beyond that I it’s it’s not
too bad I can I can do dividend reinvestment programs I can open up a
Roth IRA through them I can you know invest in options if I want there’s all
sorts of things you can do on the platform now if I were you if I were
starting over you might look at Robin Hood
if you know if I were starting over I’d look more at Robin Hood as an investing
platform for a taxable brokerage account because there’s no transaction cost when
you buy or sell investment so that part I really like but there also are some
limitations as well so you want to look into what those limitations are if you
want to know how to start investing in stocks that pay dividends and how to set
up an account check out this video right here let me get this my doing this right
here we go yeah so right above my head here click there and it’ll take to you a
video that I produced it’ll show you step-by-step how to how to open an
account how to start investing in in stocks that pay dividends and it will
also discuss a few of the other investing platforms out there so check
that out now let’s start with my mistakes so if I were you the if I were
to do things over and do it differently the first thing I would do is I would
start with a Roth IRA the mistake I made as I started with a taxable brokerage
account okay so everything I was investing in could be taxed but as much
as you we can I encourage you to undo your investing tax-free so that’s why I
would recommend for you if you’re starting from ground zero and this is
this is what this video is about it’s starting from Ground Zero or building a
dividend portfolio from zero dollars invested accumulating bit assets that
will help you grow in a dividend income to from zero to a hundred dollars a
month zero to two hundred three hundred four hundred you know etc okay so that
that’s my first tip is start with the Roth IRA because Roth IRAs are limited
to how much you can put into them every year and so I have videos that cover the
rules on Roth IRAs so check that video out I’ll link it in the description
section below and I also have a video that covers how much money you could
pinchley earn buying investing in a Roth IRA over the course of your lifetime
it’s quite substantial and the best about a Roth IRA is everything that
comes out is completely 100% tax-free and does not affect your taxable income
so that’s number one is I would first I would find an investing platform that
you feel comfortable using and then I would open up a Roth IRA so what you’re
gonna see is that from this example and these aren’t our exact numbers but
roughly speaking this is pretty much what we do it’s pretty close okay and
don’t focus too much and how much money we put in every month some people are
gonna be able to put in more than what we do some people are gonna be able to
do less but don’t get hung up on that okay start start start with whatever you
can do if you can do a hundred dollars a month do 100
if you can do 500 a month do that but make sure you start off as much as
possible doing it through a Roth IRA first if you have more money than that
you can invest then open up a taxable brokerage account and then you know
anything in excess of what you can contribute to your Roth invest there and
that will help your get your dividend income snowball growing okay that’s what
I recommend okay so let’s look real quickly at what and how my wife and I
basically started let me zoom in a little bit so you can see this so when
we first started investing in year one now like I said this is just an example
these aren’t our exact numbers and I’ll tell you more here in just a little bit
but we first started in year one we didn’t always invest a consistent amount
some month will you put in like 800 bucks son some months a thousand 1250
some months zero because we had home repairs and other things we had to deal
with so that we were not able to really invest okay so some months we didn’t put
anything in but most months we consistently invested okay about a fifth
about a thousand bucks a month right so by the end of the first year we had
about 10 grand give or take if you want to know what we do roughly today well it
now this is a example we’re starting with our taxable
brokerage account in this example because that’s what we did that’s what
we did and then like I said I should have started with the Roth but this is
where we started in this account even today we contributed about one
thousand to fifteen hundred dollars a month
consistently to this account every single month we budget the process is
this okay you we make money we budget save invest make money budget save money
invest that’s the process so that’s about how much we contribute to these
accounts every year our every every month okay about a thousand bucks maybe
up to fifteen hundred dollars a month that’s that’s what we’ve been doing and
that’s how we’ve been able to grow our investments over time looking back at
year one when I first started you we the mistake I made as an investor is I
invested too much money into too few stocks all at once that was the mistake
I made so our first two biggest investments ended up being about five
thousand and Chevron and about five thousand dollars in Blackstone and that
way it was they pay a good yield they’re strong companies but this was back in
like 2012-2013 or so okay our 2040 somewhere back back in that time span so
what happened is those companies greatly decrease in value and my account for a
while had like a non realize loss of about four thousand dollars it was not
fun and I could have avoided that had I been more careful about how much money I
invested into those companies early on so so what I’m saying is I don’t
recommend investing all your money all at once into into one or two stocks
scale into them and buy shares slowly over time so today instead of investing
five or ten thousand dollars at a time we invest maybe like a thousand to two
thousand dollars at a time or sometimes even only $600 or $700 so we’re more
careful about how much we invest per transaction and that’s a concept known
as position sizing which we’re gonna discuss more about that in a future
video so Chevron and Blackstone is how we got started and this will give you a
quick idea of how this works this because a lot of people are
asking how does this work so and these are rough numbers okay so in this
example were in the first three months of let’s say January February March
let’s say you invested $800 as of January 1st okay and you invested on
February 1st you invested thousand on March 1st you invested 1250 so in total
for those three months you’ve invested three thousand in $50 right so now what
we need to do is what is our average yield what is our weighted average yield
in our account so in this example our average yield our dividend yield is
three and a half percent okay three and a half percent so what we’re gonna do is
we’re gonna take these first three months we’re gonna multiply that by the
annual yield of three and a half percent that gets us one hundred and six dollars
and seventy five cents now if you listen carefully I said the three and a half
percent was the annual yield now most companies pay dividends on a quarterly
basis so that’s usually when you’ll receive your dividend income so we have
to divide this though this number now by four four four quarters so that’s how we
get twenty six dollars and sixty eight cents and as you’ll notice here so in
this example if we had invested about three thousand fifty bucks we might
expect our first total dividends our total dividends from whatever stocks we
own whether we invested in one whether invested in three different ones we
might expect twenty six dollars and sixty cents roughly in dividend income
okay this is not an exact science but this is generally how it works so let’s
let me show you let’s continue just so you understand what’s going on here
let’s look at the nix nix dividend payout date okay so from January to June
how much money did we put in well let me highlight this so from January to June
we put in five thousand one hundred and fifty dollars so 5150 what’s our average
yield we know it’s three and a half percent in this example so we’re gonna
multiply that number by three and a half percent now we’re at a hundred and
eighty bucks okay but now we have to divide that by four right because it’s
per quarter so we divide that by four so in the second quarter of year one we
can roughly expect our dividend income in total from however many investments
we own collectively it’s going to be a total of about 45 bucks in this example
and as you keep investing as you keep adding more money to your account then
that payment every quarter whoops sorry that payment every quarter is going to
continue to grow so by third quarter it’s going to be sixty six bucks by
December 31st you can expect your payment to be closer to a hundred so in
this example by the end of year one you have made two hundred and thirty two
dollars in dividend income with a three and a half percent yield and a total
amount invested of ten thousand eight hundred dollars but now some people now
some people ask me Mike do you reinvest your dividends absolutely so I reinvest
this so if we have been reinvesting these dividends we’ve now invested
eleven thousand thirty two dollars so in year two we continue to put money into
our brokerage account you know about 1250 per month 1250 1250 1250 and that’s
what that’s what I plan on doing this month to be honest 1250 and then next
month twelve fifty keep adding to it consistently and then in from our last
video if you remember in year two when we started getting serious about
investing that’s when we opened the Roth IRA for me okay so that’s when I started
Maxion a Roth IRA so we were doing 1250 per month up here and about five hundred
dollars per month in the Roth IRA now as you can see I have a dividend line here
on the tax Laberge count I didn’t have time to add dividend payout lines here
because I got a lot going on this weekend but you would also start to
receive dividend income from these accounts just like we showed in the
first video to this series remember that page where I showed you how we had three
different accounts the two Roth IRAs and the brokerage account all where they
were receiving dividends throughout the year that’s what it would be happening
so in year two we started I open that are off we max it out okay and so
following the same pattern our quarterly dividend and income up here continues to
increase because we have now we have more and more money working for us right
we have more and more money invested more money receiving dividends so at the
end of year two we have in this example about twenty six thousand dollars
invested and our total annual dividend income is around seven hundred and
thirty one dollars the other thing now that’s really important to point out is
that over time our average yield should increase now why is that so in year one
if you remember our yield was only three and a half percent but in year two our
average yield became three point six seven five okay and all this is just as
an example but if you’re investing in good quality companies what’s gonna
happen is they’re gonna increase their dividend payout over time and I think
the average dividend increase for companies is anywhere from like three to
seven percent per year so in order to get that increase for this example I
took three and a half percent three point five times 1.05 is three point six
seven five so not only will you have more money working for you the longer
you consider you invest but your average yield if you’re invested in good quality
companies and good ETFs should continue to go up so your your income for your
dividends continues to go up as well does that make sense and that’s how
that’s why I got a lot of questions which I’m gonna address this in future
videos and we’re gonna look at how to like estimate it but I got a lot of
questions like Mike house how much money do I need to invest to make five hundred
per month in dividends Mike how much money do I need to invest to make fifty
thousand per year in dividends well the answer is it depends the sooner you
start this the sooner you’re gonna get compounding interest working for you
basically the sooner you start investing the less money you need to invest to get
to your desired monthly income amount in dividends let me say that again so it
sinks in the sooner you get started the less amount of money you need to invest
to get the desired amount of dividend income you want so that’s why when I
when should you get started get started today
right now as soon as possible all right let’s let’s wrap up example number two
and then we’re just gonna look at the summary on example number three and then
we’re gonna wrap this up okay so at the end of year two you’ve made
about seven hundred thirty one dollars in dividends in this example in roughly
that’s about sixty one dollars a month of course I don’t have it here but you
would also have made some money from your Roth IRA and dividends as well I
think in the first year I maxed out my Roth IRA I made a hundred and twenty
bucks and dividends give or take now looking at your three guys in your three
our account because we’ve even been contributing money now every month for a
couple years now plus were reinvesting the dividend so it’s at the beginning of
year three our account has twenty-six thousand 763 in it for our brokerage
account our thyra because we max it out it’s starting off now with over six
thousand dollars in an hour roughly six thousand bucks right so now we have we
continue to contribute money our dividend income keeps going up as you
can see here same concept it just keeps compounding compounding interest is
working for you you have more money working for you at the end of the year
three in this example forty one thousand dollars is should be in your taxable
brokerage account if this is the amount so you’ve been contributing and you’ll
make about thirteen hundred dollars in dividend income which is roughly over a
hundred dollars a month in dividends and your Roth IRA now has twelve thousand
dollars working for you and you’re going to be making money there if you remember
in year two that’s when my wife opened the Roth IRA for her so by year but our
I said your three I mean I’m sorry I meant in year three that’s when we
opened a Roth IRA for my wife so by year three we were contributing about this
much of per month to our brokerage account and then we’re maxing out our
Roth IRAs contributing monthly so that’s what we do if you really that like I
said these aren’t exact numbers but these are pretty close to what we did
okay this is how we how we’ve done this how we’ve gone from basically zero Nibin
income to several hundred per month and divet income and it should continue to
go up from there this is very easy to do all you’re doing is you’re like a real
estate investor you’re acquiring properties and collecting rental income
right you’re holding onto the property and collecting rent but
with stock so you’re buying stocks you’re holding the stocks now our ETFs
our bonds or whatever whatever you’re invested in and you’re collecting the
dividend income okay you’re not trading you’re not buying and selling so much
you’re buying and holding and you’re collecting income on those investments
alright guys and I don’t want to make this video too long so I’m going to wrap
it up there if you like the video let me know by dropping a like and now it
really helps out the channel and I really appreciate your support on this
series and make sure to share this video with a friend especially somebody who’s
new to investing because I think they’ll really find this helpful they might fire
it and find it inspiring and it will help them get an idea of what it looks
like or like at least roughly what it looks like for my wife and I of how we
built a dividend income over time it’s just consistently contributing money
month after month after month now as we go down the line and we’re gonna look at
videos on stock analysis we’re gonna start to get into that very very soon
and you’re you’re gonna be able to start to learn truly how to invest how to
build a portfolio manager portfolio manage your risk and all these other
things stuff the average person has no idea how to do okay and I’m not an
expert I am NOT an investing expert but I’ve been doing this for years now and
I’ve learned a lot along the way and I feel like I have plenty to share with
you guys so make sure you leave your questions your comments below
I can’t wait to to read them and I want to address them in the next video I’m
gonna be compiling a huge list of questions for the next video and I just
can’t wait so look forward to reading what you guys have to say okay everyone
I’ll see you in the next video I hope I’ve been able to explain this clearly I
hope this made sense and how to show you how easy it is to get this ball rolling
just start from whatever amount of money you can invest start there and grow that
amount over time and keep doing it consistently and you’re gonna get a
dividend income snowball working in your favor
you’re gonna start building passive income and you’re gonna have options
that other people don’t have and you’re gonna have those options sooner in life
rather than later because you’ve done this because you’re
not chasing the most expensive homes you’re not chasing you’re not all about
driving the most expensive cars but you’re buying in acquiring assets that
pay you money monthly annually and quarterly
and you can easily do that with dividends take care everybody I love you
all thank you so much for your support and I’ll see you in the next one pace