Let's see if this describes your investing during the past few
In 2008, you got out of the market, but only after your retirement
account lost 35%. Then, even after the market started to rally, you
just couldn't pull the trigger to get back in. The memory of those
sleepless nights was still too fresh.
But sitting on the sidelines hasn't been without pain. As the
market rebounded, your money-market fund paid an average of 0.07%,
meaning you were on pace to double your money in 990 years. Savings
and certificate of deposit rates were only slightly better.
If this describes what you went through, don't worry. You're not
alone. As of last week, more than $2.7 trillion dollars sat in
stingy-yielding money-market mutual funds.
But it doesn't have to be that way. I have a way to earn
considerably more on your cash...
Millions of investors, one simple solution
I recently asked some of my
subscribers about their investing experience during the past few
Turns out, many of them were in the same boat. They used words like
"burned," "scammed," "devastated," and "lost my butt" to describe
their fallout from the dreadful 2008 market. Two readers
specifically mentioned taking a 50% hit on their retirement
accounts. And they complained about the "measly" yields their
sidelined cash was earning.
But there was some good news.
I was happy to see that many people said the strategy behind
The Daily Paycheck
gave them the confidence to finally get back in the market. And I
was truly impressed by their results so far. (One subscriber told
me he earned $4,004.14 in dividends last year. Another said he's up
Now, no strategy or investment is without risk. But the "Daily
Paycheck" strategy focuses on solid, dividend-paying securities to
provide steady income streams. And if you have just a little time
on your horizon, reinvesting those dividends can grow the streams
For instance, my readers who invested in the conservative
Reaves Utility Income Fund (
received 7.5% more income in December 2010 than they did in Decembe
r 2009 -- just by reinvesting the dividends. Includingcapital
appreciation , they had total returns of 27.3% for the year... and
that's from a utility fund!
Meanwhile, the income my subscribers will receive this month from
one of my newsletter's master limited partnerships (
) will be 9.9% higher than it was just nine months ago. So far, the
total returns from that investment are more than 40%.
The market rally might be fizzling, but that won't stop
In the past few weeks, the market rally has lost a little steam.
And maybe you're worried that you waited too long to get back in.
But the beauty of a strategy that usesdividend reinvestment is that
your income continues to grow, even when the market doesn't.
The chart to the right shows your potential annual income stream
assuming a $20,000 initial investment in securities with an
averageyield of 7%. Thanks to the power of reinvested dividends
anddividend growth, after 10 years your portfolio could be
generating $5,299 in annual income -- that's 278.5% more income
when compared to an investor who doesn't reinvest. In fact, it
could be generating aneffective yield of 26.5% based on your
initial $20,000 investment.
If you have even a little bit more time on your investment horizon
(or more money to invest, or additional dollars to invest each
year), then the numbers only get better. And keep in mind that
these are conservative estimates: They don't include one penny
ofcapital appreciation .
No one should have to wait 990 years to double their money. And now
may not be the best time to plow all your money into high-risk
stocks. But there is another alternative.
Action to Take-->
Reinvesting your dividends may not be as tempting as the
get-rich-quick schemes you read about. To some extent, it is the
tortoise of the market. But after watching what can happen to the
hares, you may want to consider a strategy that gets you across the
-- Amy Calistri
P.S. -- I believe so much in reinvesting dividends that it is a
cornerstone of my "Daily Paycheck" strategy. If you want to learn
more about how to implement the same strategy I use, click here. My
boss -- StreetAuthority co-founder Paul Tracy -- used the same
strategy to generate $6,639 in December alone. Get the details
Disclosure: Neither Amy Calistri nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.