- Intentional Dollar
- Posts
- Exploring the soldiers, enough, and no's
Exploring the soldiers, enough, and no's
Logan
July 11, 2024
In partnership with
Exploring the soldiers, enough, and no’s
Welcome to the Intentional Dollar weekly newsletter — great work taking this small step to move your money forward. I’m Logan, a Certified Financial Planner™, and I’m excited you’re here!
What’s inside?
One tool to experiment with
Two quotes from others
Three questions to dig deeper
Four lines of poetry for the point
Disclaimer: This is not investment advice. These weekly posts represent my simple thoughts, a few quotes, and some questions — for educational purposes only.
Check out today’s sponsor:
Steal our best value stock ideas.
PayPal, Disney, and Nike all dropped 50-80% recently from all-time highs.
Are they undervalued? Can they turn around? What’s next? You don’t have time to track every stock, but should you be forced to miss all the best opportunities?
That’s why we scour hundreds of value stock ideas for you. Whenever we find something interesting, we send it straight to your inbox.
Subscribe free to Value Investor Daily with one click so you never miss out on our research again.
One tool to experiment with:
The Soldiers
You’re the commander of a disciplined army. An army that battles to grow your money, one share and one dollar at a time. You are at war.
The strategy in this war of wealth is to grow and duplicate your soldiers, building a dominant force to win and hold the high ground.
There are two real ways in which we measure the effectiveness of your army:
Number of soldiers
Strength of each soldier
The trouble is, only the first measure is in your control.
Each soldier is subject to weakness and strength based on the underlying market. Your soldiers are weak when markets are weak, and your soldiers are strong when markets are strong. This seems unfair, but it’s true for the opposition as well.
This second measure is controlled by the market, not you. The market will swing, jump, crash; it will expand and contract. These gyrations are out of your control and my control.
However, disciplined investing can build you the kind of army that has an effective presence in all battle conditions — weak or strong.
That’s what we are here to explore today.
Each dollar you place into service in your investment account gives birth to a new soldier. A perfect carbon copy of the those that have come before it. This soldier is a share, or a fractional share of a fund or company.
When you own a fund like the S&P 500, there’s a strategic way to add this element of growth to your army, and it’s dividend reinvestment.
The S&P 500 pays a dividend every quarter. The fund sponsor aggregates the cash received from all the component companies and distributes them across the fund shares.
This dividend payment is a return of capital to you. You still own every original share of the fund, but you get a quarterly “thank you” cash payment for being a shareholder.
Most shareholders will let these cash payments sit idle in their accounts and deploy them at a later time, either when they have enough to buy full shares, or when they remember their cash has been growing and needs a new mission. Good shareholders, you and me, do something different. We reinvest upon receipt.
Dividend reinvestment is a one-time election at the time you buy your shares. The trade ticket will prompt you to make a decision, dividends in cash, or dividends reinvested. One decision, and you’ve pressed the button that mints a new soldier each quarter.
Let’s say the S&P 500 has a dividend yield of 1.40%. Each $100 that you invest pays you $1.40 for the year. By reinvesting, you take the $1.40 and use the proceeds to buy a fractional share.
Each $100 soldier gives birth to a $1.40 micro soldier each year — you don’t have to do a thing. That $1.40 might only buy a tiny piece of a share, but that piece gets the same dividend percentage.
This creates the beautiful cycle: next year, your original $101.40 army gets to distribute another 1.4%. Which is $1.4196 to buy a fractional share, a new soldier. Each soldier is like a Russian nesting doll and will give birth to an entire clan, each quarter, forever.
This is why dividend reinvesting in the right fund is so powerful.
Turning on dividend reinvestment is a one time decision that pays you quarter after quarter, year after year. You turn an ordinary GI into a super soldier.
grow your troops
Two quotes on enough:
Your money won’t ever be right if you always want more than you have.
“He who knows he has enough is rich. Perseverance is a sign of will power. He who stays where he is endures. To die but not to perish is to be eternally present.”
“Experience has taught us that material wants know no natural bounds, that they will expand without end unless we consciously restrain them. Capitalism rests precisely on this endless expansion of wants. That is why, for all its success, it remains so unloved. It has given us wealth beyond measure, but has taken away the chief benefit of wealth: the consciousness of having enough.”
Three questions on no’s:
How might I use a careful “no” to grow my dollars?
What if my inability to say no is costing me real money?
What’s the best, worst, and likely case if I say no?
Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.
Four lines of poetry for the point:
The wealth war is won
with an army of size.
Reinvest your dividends to avoid demise,
You’ll grow your troops, and realize your prize.
Contact Me:
Content ideas, questions? Reply to this email or reach out to me at [email protected]
Disclaimer: This is not investment advice. These weekly posts represent my simple thoughts, a few quotes, and some questions — for educational purposes only.
Reply