Why A Saver Like You Must Own Dividend Stocks!
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I’m sure you’ve probably noticed, but it’s not exactly easy to find a good place to invest your money these days.
Listen to the mainstream business news and you’ll likely come to the conclusion that the stock market is filled with risk. And even though bonds are a ‘hot’ investment right now, most are exceptionally overpriced and ready for a fall.
For most people, that leaves simply depositing hard earned money into a savings account. After all, if it’s stuffed into your savings account, you can’t lose it… right?
Hold on a second…
You might just lose your money in a regular savings account… You see, now that the Fed has promised short-term interest rates will stay at ridiculously low rates for the next few years , savers will have to continue enduring years of miniscule returns.
But as lousy as it is to get essentially nothing for saving, your puny Certificates of Deposit (CDs) and savings account returns have an even bigger problem.
Let me explain…
Exceptionally low interest rates make keeping your money in CDs and saving accounts a loser’s game.
Why?
It all has to do with negative real interest rates.
Even though you may see interest payments drop into your account every month, inflation is secretly robbing you blind. You see, according to US government data, inflation is currently running around 2%.
Do the math and you’ll find you’re getting negative returns on your savings. In other words, you’re losing purchasing power on every dollar that’s not giving you returns over 2%.
And wait until you hear this…
Many investment experts and economists believe government inflation figures are way too low. As a matter of fact, they feel a more accurate reading is in the realm of 5-8%!
If that’s true, it represents a BIG problem for savers.
I don’t know if you’ve noticed but it’s virtually impossible to find CDs returning over 1%. And if you can, banks usually require you to tie your money up for 4-5 years! For short term CDs, you’re looking at a return of 0.10%- if you’re lucky.
And savings accounts?
Forget it. You’ll be lucky to find any bank that will give you over 0.5%.
Is there any hope? Are savers destined to see valuable purchasing power slip through their fingers as inflation rears its ugly head?
Or are there ways to earn more on your money, without taking a ton of risks?
The simple answer is… yes.
There are low-risk ways to earn more than 2% on your money- WAY MORE!
How do you do it?
Low volatility, dividend-paying stocks.
Now before you grimace at the idea of buying “risky” stocks, hear me out. The market is filled with reliable companies whose stocks barely move an inch from day-to-day and week-to-week.
So the risk of losing all your hard earned money is extremely low.
But here’s the best part…
There’s a slew of low volatility, dividend-paying stocks capable of giving you yields of 5%-10%… and much more!
And that’s just the start of it…
Dig a little deeper and you’ll find there are companies that get special tax treatment from the US Internal Revenue Service (IRS).
These companies are capable of safely giving you dividend yields of 10% or more!
So if you’re a saver who’s tired of getting microscopic returns on your cash, seriously consider the income potential of dividend stocks.
Since the stock market is undoubtedly filled with tricky investments, I’m going to show you the type of dividend stocks you should avoid. That’s something we’ll cover in the weeks ahead.
After all, if you’re looking into high-yielding dividend stocks, you likely want to earn a hefty income stream- but also keep your initial capital safe.
Look around, these great investments are out there!
Category: Dividend Basics
