Maybe it is a stretch to call investing incomes an "illicit" thrill, but it's certainly one that's unusual, and far from as celebrated in our mainstream financial culture as it should be.
Nike Tn I'm writing this on the first business day of August. Yesterday I looked at my IRA statement online.
Market Values Don't Make Or Lose You Money Unless You Sell Now
Now, according to the common, herd, conventional thinking promoted by brokers, the mainstream financial press and your neighbors, is that because its total market value value was a little higher than last month, I should have been happy. I'd "made" money.
However, my happiness should have been tempered by the memory that several months ago the balance was even higher. So I've actually "lost" money in the past few months.
I was happy, but not because my total market value was higher. In fact, that tempered my happiness.
I was happy because I now had enough cash received from dividends and interest paid by my portfolio holdings to buy 100 shares of Enbridge Energy Management, L.L.C., a Master Limited Partnership-like entity (structured for IRAs) I've been aching to add to my account.
My happiness was tempered by the recent small rise in the market, because that meant that I'd have to pay a higher price for those 100 shares of EEQ than if I'd bought them last month.
My IRA Contains More Shares Today, and That's the Best Thing
Still, I was happy to open my inbox first thing this morning and find the email confirmation that my buy order had gone through and I am now the proud owner of 100 shares of EEQ.
That's a real accomplishment, because it means I have grown my IRA account using the cash income it generated to buy yet more shares. I've been investing incomes that are generated by the securities in the IRA itself.
Now, because EEQ is structured for IRAs, it pays out its generous dividends in the form of additional shares of stock. Therefore, this recent acquisition will not add to the cash income of my portfolio. But that's even better. It will grow my ownership interest in that Master Limited Partnership without any effort on my part, just like a Dividend ReInvestment Program (DRIP).
Your Retirement Account Should Grow Itself, In Addition to Your Continual Deposits
Most people look at their IRA statement and hope the market value has gone up without them doing anything. (Or because they've made additional deposits, especially out of their paychecks.) Their IRA portfolio won't expand without paying in additional money or the market goes up. They put their money into "growth" stocks, which often don't grow -- or lose their growth during bear markets.
I'm all in favor of making the maximum deposits, but I don't want you to depend on the market of your securities or mutual fund shares.
That's my whole point. So many people don't realize they should not depend on the stock market to grow their retirement accounts (in addition to making additional deposits, of course). Their retirement accounts should generate investment income that can be used to buy more shares.
Market Prices Fluctuate. They Don't Represent True Growth Unless You Depend on Them.
The market prices of your shares will go up and down. Count on it. Forget about it. Don't think about it -- you can't control it or predict it.
Focus on the number of shares you own. When you have enough cash to buy more shares, then your IRA has gone up even if the market goes down today.
Of course, you must focus on the right kinds of shares too. Last month I could have bought hundreds of other shares of good, dividend paying investments, and they'd have been good additions to my IRA, but I chose not to. And that's because I needed to diversify into Master Limited Partnerships. My next goal is to buy 100 shares of Kinder Morgan Management, LLC, another Master Limited Partnership, because my portfolio needs more of that kind of security and I don't want to depend on just one company, even if it's a very good one. (And Enbridge is a very good company.)
The sooner you get started investing incomes generated by your retirement account, the bigger the income that account will be generating by the time you retire. Get started now.
Author Information: You can build a large portfolio of income-generating securities. Click here to get the information you need to effectively make money from your investments whether the markets go up or down. If you're ready to discover how investing incomes can help you retire with financial security, visit this page, enter your email address into the form and click on the Submit Button. Then go to your inbox and verify that. It's free for the taking. http://www.incomeinvesthome.com/. hostgator coupon
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