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Why do I invest money and what are my financial goals?

Hi friends! I am Linda Richardson. I am a 21-year-old-year-old girl who believes smart investments can help to reach financial goals like early retirement.

Today, I am going to share my journey with you all. I will talk about what got me into investments, what my outlook is on dividend stocks, and what my investment goals are. So, here we go.

What got me to start investing?

People say that environment and association have a profound impact on a child. And, I believe this line by heart. Children of a musician family are likely to develop a heart and ears for good music. Likewise, children of film stars are likely to be interested in acting right from their children. The environment helps to condition their mind and shape their interests. I am no exception.

Ever since my childhood, I have seen dad working as an investment broker. He used to work with various clients, speak about stocks, bull market, numbers, a series of technical terms that I didn't understand back then. But, those words used to intrigue me. I loved the way dad used to speak to his clients. He was always full of passion and enthusiasm.

I was too small to understand the dynamics of investing. I didn't understand how people used to become rich by investing money in the stock markets. And I still don't understand everything. I have a long way to go. It is an honest confession.

Every day, I used to see clients speaking to dad regarding their investments. I heard their laughter and understood something good was happening in their life. Gradually, as I was growing up, I observed that many people made a lot of money by applying wise investment strategies. One client became a millionaire after selling his stocks. He had excellent stocks in his portfolio. He sold them at a very high price and became a millionaire. I think it was this incident, which attracted me to investments. I was only 12 back then. I didn't have any money. But, I made a promise to myself that if I ever have money in my hand, I will also invest it.

After I turned 20, I made the final jump. I felt it was the right time. I have been working as a freelancer for the last three years. I am now 21 years old. I started working as a freelancer at the age of 18. After working hard for two years, I was able to save a bit of money, which I wanted to invest in the stock market and let it grow. Dad is not part of my life anymore. So, I had no one to guide me. But, I used to watch a lot of news on stock investment. I read articles on investment. And, I got the basic idea from there.

Why do I find the dividend investing world great?

My earliest memories of dividend investing are when dad used to bring discount coupons for cookies, clothes, and makeup. He used to get discount coupons as part of the stock dividends. Soon after dividends or discount coupons used to arrive, we went shopping. I loved that experience. I could buy my favorite cookies, and mom could buy her favorite lipstick shade. Even when I think about those days, I feel happy.

For me, dividends are extra income. These are like a bonus or passive income to me. I can use this money for various purposes. For example, I can use the money to enroll in a debt relief program and reduce credit card debt. Other than that, I can use the extra money to buy groceries, pay insurance premiums, buy birthday gifts, build an emergency fund, and so on. Dividend-paying stocks give me a steady source of income every month.

My observation is that dividend-paying stocks show steady growth and give good returns to investors. Since they have to pay dividends, they tend to make good business decisions. They prudently allocate funds to boost productivity and reap profits.

Remember, only a company that has a steady source of income can pay consistent dividends to investors. Hence, many of these companies with a robust dividend history are trustworthy. These are blue-chip stocks with steady cash flow.

The best dividend-paying companies are usually less volatile than the other stocks. People tend to buy stocks of these companies to arrange a steady source of income. As such, the demand for these stocks is also high. This helps to increase the price of the stock gradually.

Some companies even give bonus shares to investors, which I regard as nothing less than dividends. I have seen dad getting an equal share of the bonus. For instance, he had 25 shares in a company. The company gave him another 25 shares. He got 50 shares. Later, when he sold those shares and made money.

But here I would like to share a point with you all. Usually, companies allot bonus shares through DRIP (dividend reinvestment plans) or stock-splits. And they do not hand out extra shares without a corporate action.

Ever since the pandemic broke down, the stock market has faced massive corrections. Some days, the market is up, whereas other days, the market is down. The stock market is extremely volatile right now. But, it is mainly due to the new situation. However, even amidst the steep corrections, I have received dividends every month.

Yes. I am not lying.

The dividend-paying stocks paid me dividends every month on the scheduled date. I didn't have to send emails or run after them to get dividends. That's the beauty of dividend investments.

Believe me, dividends have helped me to cover my various expenses amidst the economic uncertainty. Thank god I invested in dividend-paying stocks a year back. Thank God! Otherwise, I don't know how I would have survived. Last year, I saved the entire amount in the emergency fund. This year is different. I need the money to take care of my family.

For me, there are two benefits of investing in dividend-paying stocks.

The first one is a steady source of income. The second one is capital appreciation, which is mainly applicable to dividend growth stocks.

Apart from dividends, you can always enjoy financial benefits when there is a hike in the stock price. So, you can not only enjoy the dividends but also higher stock valuation with time. You can sell the shares and earn a significant amount.

Moreover, dividend-paying stocks often increase the dividend amount over time. This implies that you will receive more money every month.

Like I said before, dividend-paying stocks give you cash at the end of every quarter or month. However, some companies give you another alternative option. And that is, you can reinvest the money (received from dividends) into an additional number of stocks. For instance, if your dividend amount is $500, then the company will reinvest it and buy a few more stocks for you. This will help you grow your investment over time due to compounding interest. If you like this feature, then choose dividend reinvestment plans. The dividend-paying company will automatically reinvest your cash every month or quarter.

Please note that the second benefit is more applicable to dividend growth stocks. Some dividend stocks do not fulfill the growth aspect.

What are my investment and financial goals?

I have a couple of investment and financial goals. Let me discuss my investment goals first. During the pandemic, due to the massive market corrections, the price of a few of my stocks has dropped. Earlier I had planned to sell some of my stocks this year. But that was not possible in 2020.

I am still in profit. However, the profit margin has dropped. So, I have changed my investment goals now.

My first goal is to create a diversified portfolio where there will be a mixture of small-cap, mid-cap, and large-cap companies.

My second goal is to invest in a few secured bonds too. I want to get assured returns from some of my investments.

My third investment goal is to hold on to the stocks for the next 10 to 20 years. I am 21 now. There will be both ups and downs in the stock market. But in the next 20 years, I am sure the price of the stocks will double or triple by that time. I will be at 41 by then. If everything goes well, I might retire at that age. And, even if I don't retire at that age and hold on to them for a few more years, then I will get even better returns.

Other than my investment goals, there are a couple of financial goals as well.

My first financial goal is to reduce credit card debt and pay back whatever money I owe them as soon as possible. My mother has a mortgage as well, which I need to pay off. That is why I need to grow my money fast. And investment is the best option to do that. I am planning to make extra payments on debts with the money I receive from dividends. My plan is to get rid of debts by chipping away debts with small extra payments.

My second financial goal is to finish my degree, get a job, and arrange a steady source of income from dividend stocks and my monthly paychecks (from my employer) so that I can make more investments. Freelancing helps me to cover my expenses. But I need more money. After finishing my studies, I will either take freelancing as my full-time career or take a good job. I am just hoping that the pandemic will be over soon.

My third goal is to revise my budget so that I can survive this period of economic uncertainty. It is better to have cash in hand since no one knows what will happen in the future. I have divided my dividend income into two parts. I am using the first portion of my dividend income to make extra payments on debts. And I am using the second portion of my income to boost my emergency fund.

All three financial goals are short-term goals. As of now, I am only focusing on short-term goals. I will think about long-term financial goals in the post-pandemic era.


So, this is how I got into investments. I consider myself new to the world of investments. But, even during my brief stint in investments, I have understood one fact clearly. If you can invest wisely and buy the right stocks, then you can grow your money fast. Of course, you need to have patience and perseverance. You have to hold on to those stocks for ten to twenty years or longer, and then sell them. Usually, after 10 to 20 years, the price of blue-chip stocks will double or triple. So, you will always be in profit. The trick is to choose the right blue-chip stocks in the right sectors. If you choose the wrong blue-chip stocks, then you may not reap profits in the long run. The decision of selling your stocks depends on you. If you’re looking for income through dividend growth, you may never sell your stocks. However, if you have a specific end goal in mind, then you may sell stocks once you achieve them. My only advice to you is that please don't be greedy. Don't buy stocks without doing proper research. There are risk factors. But, if you are careful, you can make a lot of money. It is possible. Some people who have completed their journey to FIRE run their families with the money received from dividends. That is something I am looking forward to in my life. And that is one of my end goals actually.

Linda Richardson is a New Jersey-based financial writer and a perennial student with an ongoing interest in learning new things.
You can find her on Twitter at @LindaRossie9, Email she currently writes for creditcardconsolidationdebt.com

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