Thursday, October 8, 2020

The Overlooked Small Business Everyone Has Access To

   What if I told you that you have access to a small business opportunity that will bring in extra income and you don't have to do much work at all?  Many of us would say, "Sign me up!"  Others would say, "Give me a break!"  Most seasoned people believe that an opportunity like this does not exist.  However, I believe that one does if we change our mindset a little.  A change in mindset in many areas of our lives is what is required on the journey toward becoming a millionaire.

   I started investing routinely in mutual funds back in 2013.  These mutual funds are in a taxable account outside of a 401K or IRA.  Each quarter the funds I invest in return a divided.  At the end of every year the funds distribute capital gains.  Both dividends and capital gains distributions are based upon the number of shares you own in a particular fund.  One of my favorite funds is Vanguard's Wellington Fund.  It distributes quarterly dividends around $0.50 per share.  My very first year investing in this fund I received $163 in dividends and $611 of capital gains distributions.  I know, nothing to get excited about right.  

   Over the next year, I put money each month into the Wellington fund.  After the second year investing in the fund, my dividends totaled $1,631.  If you add in my capital gains distribution, my shares in the fund had generated $4,685.  

   I began to feel that I was making some progress.  Dave Ramsey says something to the effect of, "Traction yields satisfaction."  I began to calculate how much money my investments were generating on a monthly basis.  I also understood that the more shares I had, the higher my dividends and capital gains distributions would be.  I know this should not be very hard to understand.  However, when you see your income tied to the number of shares of a fund you own, you get motivated to save more so that you can purchase more shares of that fund.  It became a rewarding game to play.  As I calculated the monthly income from my investments in these funds, something clicked with me and I began to feel that I had a small business that I was building.  This small business opportunity is available to all of us.  To start investing in mutual funds you don't need much money to get started.  Some Vanguard funds only require $1,000 to open an account and you can do it all online.  Most Vanguard funds require $3,000 to start, but once you make the initial investment future investments can be very small.  I sometimes only purchase $100 of additional shares.  You can do this! You can get started in the process and get your small business of owning mutual funds going!

  The graph below shows the level of income investing in mutual funds has generated for me on a yearly basis.  I sold a ton of shares in 2019 to buy a lake house, that's why 2019 was such a down year.  I have rebuilt the number of shares I have in my mutual funds since 2019, but the reduction in interest rates has hurt 2020's dividends.  2020 numbers are also just 3 dividend payouts and does not include a capital gains distribution.  I expect that it will be around $15,000 by the end of the year.  Keep in my, I hardly lift a finger to make this income, just a couple clicks of the mouse to buy more shares!!



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The Real Millionaire

 I am a 39-year-old man with an amazing wife and 4 awesome kids.  I am also considered a net-worth millionaire.  Achieving this goal has alw...