The past 5 years have been hard on the market, and extremely tough on 401K's and retirement portfolios around the world.
But, with each recession and resulting market volatility, comes opportunity.
I am speaking to the younger generation of professionals who have 30+ years until reaching retirement.
The truth of the matter is that none of us know what the health of the economy will be like 30 years from now, or what the political environment will be like at the time.
One thing remains certain however; you will need a portfolio consisting of stocks, bonds, ETF's, property, or other assets that are impacted by the health condition of the global economy.
So if you can't predict the future, and you know hoarding cash under your mattress won't get you to retirement, you are left with little choice than to educate yourself and invest as wisely as possible.
So how does this recession provide opportunity? Well, being you are young, you have a chance to buy into very sound companies at affordable and discounted prices.
The concept of dividend income investing utilizes the power of re-invested dividends and compounding growth to secure a steady stream of growing income.
I love dividend-paying companies, and so should you.
In fact, it is hard to argue that a young professional's portfolio should not be loaded with diversified companies that have proven track records of maintaining and increasing their shareholder payments.
The best company to invest in is the one that is the most dependable, and without fail, shows their appreciation for their shareholders.
If company's dividends are never cut, and continue to grow throughout the life of your portfolio, you may never have to sell a single share, and more importantly, not concern yourself with the share price.
Let's take a look at the history of the S&P total return including dividends vs.
share price change only.
As is shown, since 1990, dividends have added over 40% more to the total value returned to investors compared to price change alone.
This is factor that simply can't be ignored.
The power of compounding dividends is amazing, and the earlier you start investing, the greater your monthly and annual investment income will be when it comes time to retire.
Now is the time to invest wisely in companies with proven track records, so you can rest easy when the market rides the inevitable up and down waves.
Don't concern yourself with daily share price fluctuations and the monthly changes to your overall portfolio value.
Rather, focus on the long-term strength of your chosen investments.
Until one of your holdings provides you reason to believe your long-term income growth is at risk, there is no reason to fret.
Believe it or not these companies do exist.
Let's take a look a few companies that have yet to cut dividend payments in more than 25 years.
These companies are paying just as much if not more than they ever have before, so why would I care what the share price is? I am often asked the question, "Aren't you scared to invest your money in the market after everything that has happened during the recession?" My answer is short and sweet.
"My future income is growing faster than ever before.
" People often become confused as to how my future is being decided now.
The fact of the matter is you really can't escape the need to invest.
Whether it's a 401k, IRA, mutual fund, real estate or junk bond, you need to invest.
The key is to not only do it wisely, but to start early.
The earlier you start, the faster the compound interest begins to take effect and the potential to retire early increases significantly.
It is important you don't get caught up in the dooms day and glory hype that seems to be everywhere.
Don't listen to the analysts and authors who concern themselves with what the market is going to do tomorrow or next week, or even next year.
This is targeted to people whom are approaching retirement in the near term.
Little authoring exists for those of us in our 20's.
Instead, focus your efforts on researching what companies are going to provide you value 30, 40, or 50 years from now.
You don't need to put your trust in the broad market, but rather in the specific companies you choose to invest in.
The share price may rise and fall with market sentiment, but if you focus on the reliability of the income generated from your shares, you will be able to rest a little easier later in life.
Start investing early and often, and give yourself the chance to never have to sell a share.