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How We Started Dividend Investing From $0 Invested (Our Dividend Income Growth Journey)

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