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Hey Traders,
It’s Thursday, and what a difference a day makes. Last week, we watched the Dow Jones sell off 1000 points, and I know a lot of folks were scared.
But let me share a little insight into what I do personally — maybe it’ll clear some things up for you, because I’ve been getting a lot of questions with all this selling off lately.
My Approach to Trading and Investing
I trade a lot, almost every day, and I dabble in all sorts of options strategies — selling options, doing spreads, covered calls, naked puts… and even a little directional trading.
Everything you do in the market carries some level of risk.
The only truly risk-free investment is a government T-bill, and even that’s just a baseline for risk-free returns.
But here’s something I don’t often talk about: a large portion of my wealth, let’s say 80%, is invested in dividend stocks.
I call it my Dividends for Life portfolio, and it’s exactly what it sounds like — dividends that keep on giving.
The Power of Dividends
I was talking about this portfolio last week when someone called in and asked if I was moving my money into small caps. The answer is absolutely not.
I don’t mess with small caps. My focus is on solid, reliable dividend stocks that I never plan to sell. Why? Because these stocks pay dividends no matter what.
Take Coca-Cola (KO), for example.
It could drop from $60 a share to $6, and it would still pay its dividend.
I reinvest those dividends into more shares, which lowers my cost basis and increases my yield on cost over time.
I’m not interested in chasing high yields; I’m interested in stable, growing income.
A Legacy to Pass On
Here’s one thing a lot of folks don’t think about:
I’m never going to sell this portfolio. I’m building it to pass on to my grandson, little Jack, and my other grandkids.
When I open my brokerage account, I don’t even look at the P&L (profit and loss). All I care about is the dividend income — the cash flow that portfolio generates.
For me, it’s about having a solid foundation.
T-bills and my dividend portfolio are the bedrock of my financial strategy.
I’ll say it again: About 80% of my total wealth is in those 2 things.
The rest, the money I trade with like mad, is money I can afford to lose. You should never trade with money you can’t afford to lose and that’s why I only use 20% of my money for those kinds of trades.
The Key to Success
Remember, I don’t get shaken out of stocks. With drops like this week, I don’t panic. I don’t get scared.
Back in my younger days, sure, I got rattled, but not anymore.
I’ve been in the market for over 40 years, and I’ve learned that the real key to success is having a solid foundation — a cornerstone of reliable income.
So, whether you’re just starting out or looking to solidify your financial strategy, consider building your own Dividends for Life portfolio.
It’s a strategy that lets you sleep easy at night, knowing you’ve got a steady stream of income, no matter what the market throws your way.
And when weeks like this one come by every so often (because they always will), you can sit back, kick your feet up and rest easy knowing your money is working hard for you.
Trade well,
Jack Carter
