Want To Build REAL Wealth? It’s Time To “Bulletproof” Your Portfolio
In a sign of the times, I got a curious email the other day from none other than the local company I pay to fertilize our lawn.
Turns out, they’re hiking prices. Effective immediately.
The letter from the owner laid out the decision plainly:
“Last year, with all the insanity around COVID, we were just trying to hold on, keep our team members employed and avoid lay-offs as much as possible.
This year, like all other small businesses, we are managing significant increases in our cost structure. It is well reported that small businesses across the country are facing a labor shortage.”
He continued by pointing out that large companies moving to the area are making the competition for hiring intense (hint: Amazon). They’ve increased hourly wages to remain competitive while also improving the quality of life for workers to compensate for the “insane” cost of living in Central Texas.
In addition, they’ve dealt with other pressures such as higher fertilizer prices, higher gas prices, etc.
All of which are true, of course.
Now, I know paying for a “fertilizer guy” is a luxury. It’s one of those things I could easily do myself (as I do for the rest of our lawn). But since I want our property to look top-notch – not to mention it’s also one of those things I easily forget to do – I don’t mind paying someone to take care of the job.
This brought me back to some of the discussions my colleague Nathan Slaughter has had about the real-world costs of inflation. You see, I’m convinced that whether or not the inflation we are experiencing right now is “transitory” is academic. Don’t get me wrong, I do hope it is indeed temporary. But the reality right now is that all of these supply chain disruptions caused by Covid-19, combined with the inflationary effects, do indeed have real-world consequences.
Whatever your “big picture” concerns (inflation, the Fed, Social Security, Covid-19, etc.), at the end of the day, our goal should be to achieve a level of independence to where these things take on less and less importance in our daily lives.
And one of the best ways to do that? Earn more income. Plain and simple.
I recently sat down for a series of questions with my colleague Nathan Slaughter, Chief Investment Strategist of High-Yield Investing. We talked more about the challenges we face as investors, why we seem to “overthink it” when it comes to investing successfully, and some simple moves to take right now to reclaim your financial independence.
Nathan, I know you’ve gotten on your soap box about Social Security before. But a lot has been going on in the past year, and a lot of investors (especially in my demographic) don’t seem to understand what we’re up against. Care to elaborate?
Yeah, I could run you through the numbers. But at this point, everyone knows the story with Social Security. The math is ugly. The problem is that it’s out of sight, out of mind. So let me put it to you a different way…
Imagine if an independent money manager approached you with a 401(K) proposal. But instead of a menu of investment options, you have zero control over the assets. They are invested in Treasury Bonds earning next to nothing, so your assets don’t grow over time. You also have restricted access to your money, and can’t transfer it elsewhere. Ever.
There is also a good chance your future proceeds will be cut at some point. Remember, these “benefits” are not Uncle Sam’s generosity, but simply a return of your own money. Except in this case, you can’t pass any of it down to children or grandchildren. And if that wasn’t bad enough, any withdrawals might be taxable — even though you were already taxed on the deposit.
Yet, every paycheck you have money forcibly withheld (some would say confiscated) whether you like it or not.
When you think about it this way, it’s clear that nobody would willingly volunteer to sign up for a program like this.
Is there a way out of this?
Well, yes and no. The ugly truth is neither political party wants the fallout from enacting the reforms to make it solvent once again. Advocating for a reduction in benefits is tantamount to political suicide.
Would you want to be the one who asks hardworking families to surrender any more in payroll taxes than the current 12.4% (split between employer and employee)?
We could raise the retirement age to 70 as some have suggested. But I don’t relish the idea of punching the clock that long. Do you? There just aren’t any easy solutions.
That’s why I’m not relying on Uncle Sam to meet my retirement needs. If there is still money in the system in 2036, when benefit payments are expected to exceed inflows, that’s great. But at the rate the system is hemorrhaging money ($230 million per day), I’m taking charge of my own financial future well before then.
My subscribers over at High-Yield Investing feel the same way. They’re committed to having a second income source that is free of the shackles and restraints of Social Security. Regardless of what happens in Washington, this revenue stream can put extra cash in their pocket each year.
A lot of investors get fixated on the latest investing fad. But we’ve been advocating for “no-brainer” stocks in some form or another for years. Why is this so important?
Sometimes, we make investing more complicated than it really needs to be.
If you want to systematically build wealth over time, then seek out exceptional companies with sustainable competitive advantages that translate into superior returns on capital. These well-positioned leaders routinely generate surplus free cash flow — and share it generously with stockholders.
Instead of “renting” a ticker symbol for a few days or weeks, become a part owner in these special businesses and don’t let them go. That’s been Warren Buffett’s strategy, but it’s not very popular advice in today’s “meme stock” world.
But if I could impart one single thing on our readers, it’s this…
Stop chasing after quick scores in the market and latch onto Bulletproof companies that have an incredible track record of paying bigger and bigger dividends. Over and over again.
Once you have this part of your portfolio in place, there’s nothing wrong with the “fun” stuff. But this is far and away the surest, safest strategy I know of, for building wealth.
Can you give us an example?
Absolutely. Let’s take Johnson & Johnson (NYSE: JNJ) as an example to see how easy this can be…
Imagine you spent $10,000 on this stock 20 years ago. That would have bought you about 187 shares. By simply holding on to the stock and reinvesting those dividends, you’d be sitting on 317 shares worth more than $55,000 today.
Not only does that beat the S&P 500 over that time frame, but let’s say you decided to “flip the switch” and live off of that income. The stock pays $4.24 per share right now, so those shares would be throwing off $1,300 in dividends a year.
Everyone knows JNJ is a fantastic company. So all you really need is time and patience. Let dividend reinvestment and compounding do the rest…
Of course, I know not everyone has 20 years. That’s okay. If you have more to put in, then that can make up for the “lost” time. Plus, don’t forget, even JNJ has still managed to grow its dividend by about 6% a year in just the past five years alone. And there are plenty of more enticing income plays out there.
That’s good stuff, Nathan. Now, tell us about the 5 “Bulletproof” stocks in your latest report…
One of my favorite things about my work is that we get to show people just how easy this stuff can be. We just showed one example of what a modest sum in a well-known income payer can do for you over time.
Now imagine what you could do with five.
And no disrespect to JNJ, we’ve found a group of stocks that offer a much, much better deal for investors in terms of income and upside. In fact, I can say that out of the dozens of different stocks I’ve spent the past year digging through, these five are in a class all their own.
If you want a “stupid simple” strategy to help you build massive wealth that lets you tune out the latest hype and noise from Wall Street, then that’s what my latest report is all about…
In my opinion, holding these five “Bulletproof” income stocks is the best “no brainer” way to build wealth. You can pick up the stock, relax, and watch your dividends pile up year after year.