Starting Your Own Scythe

Life is hard but retiring early in life can be even harder! That's why I started my own dividend scythe. What is a dividend scythe you may ask? Simply put, it's a stock portfolio that focuses on dividend paying companies.

While the normal way of investing is to purchase stocks and add them to your portfolio only to hope that the price goes up and you can sell high, the dividend scythe works in a different and in my own opinion, much better way. Instead of having to sell a stock to obtain more money, I simply purchase only stocks that issue small payments called dividends. These are typically referred to as dividend payer stocks. I do not need to sell my stock to obtain these payments. The companies that issue dividends simply issue these payments as an award for continuing to be a part of their business (figuratively speaking of course). 

While this percentage award may be smaller than let's say a huge 100% increase in stock price that can be obtained through selling your stock, this strategy of obtaining dividend payers can be much more safe and can actually work in a snowball effect that other strategies lack. For instance, in the same scenario where you would hope to see a 100% increase in stock price to sell higher than you bought in, what would happen if the price were to instead drop? For non-dividend paying stocks, the buyer of those types of stocks could see only losses. If instead it were a dividend paying stock, the holder could hold onto the stock while it pays them dividends and then hopefully at a later date when the stock recovers from its dip in price, can still sell at a higher amount if he or she wishes. 

In time, as the dividend scythe gains more stock, the dividend payments can grow. This amount can then snow ball. This occurs because while I wait for retirement, I can reinvest the cash that is paid by these dividend stocks into more dividend paying stocks thereby creating a dividend snow ball. It's quite the retirement plan and it's not at all hard to replicate if one has a little bit of knowledge. 

How then does someone start their own dividend scythe? It's quite easy really. One can simply set up a brokerage account with whatever broker they desire to use and start buying stocks that issue dividends. From there, one can start to track their dividends monthly and annually to see how much passive income is being generated. Then, once that passive income surpasses what they wish to live on in retirement, they can retire and live off of the dividend scythe payments instead of reinvesting them. A word of caution however; not all dividend paying companies are made equal. It's very important that one learns to evaluate companies before they start chasing yields (dividend percentages). If you're unsure how to do this, a good start would be to move along to the next link, the investment essentials. In it, I've attempted to give a crash course education in understanding how the market works. It's not everything but at least it's enough to get the wheels moving in the right direction. 

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