Tuesday, January 19, 2021

Not All Investments Need to be Winners

I generally invest in Dividend Growth Stocks to earn an increasing dividend income. This is what I live on. When I was working, I used my portfolio as a reserve fund, that is for extra expenses that cropped up occasionally or backup funds if I lost my job. Things like that. It was also my Pension Plan. If you change jobs, even if the jobs come with a pension plan, you really need your own because you get little benefit from company pension plans if you change jobs.

I invested slowly over the years. I started in the mid 1970’s but I did not know what I was doing. I ended up being able to retire on my portfolio’s earnings in 1999. I had been let go from my job and I found I had enough money to not have to get another job.

Now, let’s get back to the point of this entry. I made lots of mistakes in investing, especially at first. I invested in some, what I thought were nice dividend stocks, that turned out not to be so nice. The think is when buying shares., you can only lose your investment in those shares. There is therefore a limit to what you can lose. However, the sky is the limit for stock investments that work out. So, basically, you only need to be right most of time, but not all of the time.

If you invest in the stock market, you are going to make mistakes. This cannot be helped. If you do make a mistake in buying into a company, sell it and move on. Hopefully, you will learn something from your mistakes. If you invest in Dividend Paying stocks, your mistakes may not be that costly.

For example:

I bought TransAlta Corp in 1987 and finally sold it in 2019. It had not done well for a few years. I sold below my purchase price. However, my total return was 6.12% per year. I had a positive return because of dividends.

I had Bombardier Inc, which I also in 1987. I also sold this below what I paid for it, but I had a total return of 11.08% per year because they paid dividends at the time that I bought it.

I bought a company called Gennum Corp in 1998 and sold in 2006 for slightly more than what I paid for it. I had a total return of 1.09% per year. It was a tech stock with dividends.

In 2006, I wanted to get into renewable energy. I bought Innergex Power Inc when it was an income fund. I sold in 2008 because it did not seem to be going anywhere. I lost 4.84% per year or a capital loss of 17%. I bought little as I was trying it out.

But over the years, my dividend income grew as did the value of portfolio. Dividend income tends to steadily grow. However, your portfolio value tends to fluctuate a lot.

On my other blog I wrote yesterday about National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more. Next, I will write about Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more on Wednesday, January 20, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures

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