What would you do…

… if you wouldn’t need to work anymore? If you wouldn’t need to worry about food, shelter, and health, what would make you get out of bed every single day?

As the election in the US is drawing closer, I have spent some nights learning about some of the presidential candidates. The person who is standing out of the crowd for me: Andrew Yang. And even though I don’t think that he will be successful in the current campaign, I believe that his time is yet to come.

His MATH campaign (Make America Think Harder) is clearly not aiming at the people who are currently in power and who will remain so for a few more years – probably. Politics in America are old, white, and corporate. But times will change. All those who cling to power now have a very short candle of life left to burn. Once they’re gone, the change will come.

But politics aside, I want you to think about what would happen if the concept of a universal income for citizens would become reality. How would your day look like?

The Freedom dividend

This concept, also known as a universal income, is not a new idea. Without getting into details, let’s just assume that it’s feasible and you and your partner suddenly start receiving 1.000$ each on your bank account. Unconditionally, on every first day of each month.

That’s 2.000$ for the household a month. 24.000 $ a year. It’s not enough for a “perfect” life, but it’s probably enough to let you stop worrying about food, shelter and to some degree, about health. How would this change your life?

Critics are easy to point out that people would just stop working, stop doing anything for that matter. To a point, this is probably true. People would probably stop doing jobs that pay less than that. For example, service staff in restaurants or coffee shops who don’t even get paid by the hour but rely solely on tips might reconsider their life choices. Employees who get their lives sucked out by unscrupulous managers (*cough*A-m-azon*cough*) might be OK to sacrifice 100$ or 200$ a month to get their life back.

But we all need a purpose in our lives. And while many people think that rich people, those who could afford to hang out on a beach in Bali or the Bahamas all day, are living the dream relaxing and spending money all day long, nothing could be further from the truth. Most rich people work actually quite a lot. The difference is though, that they work on things that they are passionate about. Because they can afford to do so.

Don’t wait for Andrew Yang

The truth is that many skills, many qualities of the past, have disappeared over the years as they proved to be not profitable enough to provide an income for people who practiced them. Artists, handicrafts, social workers, volunteers. The list is long. Some of them were meant to go and nobody will miss them. Others are dearly missed and needed.

So while we wait for this concept to get embraced by nations who can afford it, there is another option to take matters into our own hands and to get the freedom dividend anyway: By investing, and generating passive income.

The freedom dividend is exactly that. A dividend. And you don’t need to wait for Andrew Yang to get it. All you need to do is to start investing in dividend-paying stocks. And while you build up your savings and your passive income, whether Andrew Yang will be successful or not, will not hinder you from achieving the target of getting some freedom back through regular dividend payments straight to your bank account.

Once you get that, you might find your passion in some jobs which are dearly missed and needed, but which are not being pursued by anyone due to low profits and lack of interest from large corporations. The term “retirement” might just then receive a completely new meaning for you and for others…

New Year’s Optimism

The first month of any new year tends to be great. Not only does it feel like a fresh start, but it also helps us to draw a line, to make a clear cut, and it reminds us that it’s never too late to start over. This psychological and ever-repeating pattern also shows on the stock market. Throughout history, January has tended to be a great month for stocks.

2020 is not different and off to a great start. The US markets keep moving up because, despite all the disturbing news across the globe, there are plenty of positive news that people don’t talk about.

Good news vs. bad news

Indeed, regular news channels tend to report only the most shocking and catastrophic events. No matter which news channels you follow, chances are that roughly 95% of whatever is being reported on is something that is meant to upset you, to make you sad, angry or disturbed. Something good or positive will usually get a window of 10-20 seconds by the end of the show. Something to “brighten the day”.

But against all odds, the world as we know it is improving on many factors. For this, you just have to dig a little deeper into the news cycle.

General education levels across the globe are increasing, child mortality is shrinking, poverty is at lowest in human history, we can cure millions of diseases and are living longer than ever.

I am following regular news channels to get my daily portion of negativity in, and an alternative channel to balance this out again. There are several to choose from, and one of them is this one: https://www.goodnewsnetwork.org

Investors sentiment

Why is all this important? Because the stock market is very closely related to human emotions. The sentiment of investors, their emotional connection to the markets, to the companies they invest in, their attitudes, all this has an effect on the stock market.

This is why traditionally, the beginning of a new year is a great time for investors, and why this is the time when one should hold on to his shares as they climb up to new record highs.

So when is a good time to sell? There is no easy and definite answer to that. But there is a quote that gives an indication: “Sell in May and go away…” and of course: “…but remember to come back in September”.

Ethics and the Stock Market

Everybody wants to do the right thing. At least on paper. Of course, it sounds so much better to say “I contribute to saving the world” instead of “I contribute to spreading cancer”. Right? With this idea in mind, there is a large movement among banks and financial institutions who like to put some ethics on their website as a leading principle, and thus to promote “green” investments, “sustainable” companies and socially engaged institutions and individuals.

However, more than often, this is nothing but a farce, a concept lost in translation somewhere between blurry definitions, bureaucratic approach, lack of real oversight and purely financial motives.

You don’t support any company when you trade its shares

Let’s make this clear from the beginning. You don’t really support any company when you but its shares – unless it happens during the actual public offering, the IPO. The IPO is the only real point in time when you can show whether you support a company or not, by purchasing its first shares (and thus giving your money directly to the company) or letting the opportunity pass, thus keeping your money for yourself.

After the IPO, all publicly traded shares are being traded among the investors. The company itself doesn’t see a penny from the shares after that. Unless, of course, it’s trading its own shares as well.

This doesn’t mean that there is no indirect support. A higher stock price might make it easier for the company to get loans or to convince new business partners to work with them. But this is something you have very little influence on. But saying that, let’s say, you would support tobacco companies because you bought some shares of a tobacco company is, in my opinion, pure bogus.

You get voting rights and the opportunity to express your opinion

On the other hand, once you purchase some shares and the annual general meeting of the company shareholders takes place, you will get a proportional vote on certain company policies and decisions. So if you think that the company you invested in has a generally solid business model but you would like to express your idea of having some things being done a little differently, you get a say.

From where I stand it’s like democracy. You can abstain and not vote, thus undermining the democratic process. Or you can join in and get a say. Of course, if you are just one in a million (or billion) it won’t count for much. But if there are others who share your concerns, then at least you get a shot to support changing things for the better.

Do your own research, don’t rely on analysts

I am seeing this over and over again. Companies are receiving countless awards for their sustainable practices, their carbon footprint, their ethics… whatever. But forget the awards, forget the analysts who praise whoever is paying them. Do your own research.

Sustainability and ethics are such broad terms, and there are really not many companies that truly get what it means. So I prefer to just take a look at the basics and I usually start my research within a company itself. How are the employees being treated?

Ethics and sustainability go hand in hand with taking care of company stakeholders, and no other stakeholder is more important than a corporation’s own teams. Are they paid sufficiently so they can live on their wage and support their families? Do they get health-care plans, provident funds, and a healthy work-life balance?

The easiest way to do such checks? Talking to people who work there, or reading what they say. Less than 20 minutes of online research will quickly reveal whether a company is what it promises or not and whether you will get what you expect.

The stock market is about profits

Reality is that business, in all forms, is about profits. Like it or not, a company and its share price won’t grow if their business doesn’t make money. So the only true support or rejection of a business comes from the consumers. Not from people trading shares.

And some people who don’t understand this principle might see it as some kind of evil plot, but it really is not. True, most investors have very little morals, but also very little loyalty. They will always support a successful business. If a company is bad and does bad things, people should make conscious decisions on whether they support and buy these company’s products or not. If a clear trend emerges that will show rising profits and rising market demand for a “good” company, then investors will follow this trend. So it really is about who is doing the better job.

Unfortunately, in reality, many people still don’t care enough. How else would one explain that some of the largest companies in the world can do the worst things to humanity and yet being still massively supported by its consumer base? I am specifically referring to a popular e-commerce giant who is almost daily in the press for neverending revelations about abusing and underpaying its employees, and a social media giant who is actively contributing to misleading, if not to brainwash people into mindless puppets following fake news and disinformation campaigns. And no, this has nothing to do with free speech.

Having said all that, it’s really up to you how you define your idea of supporting or not supporting a company. Trading shares has very little real impact, but personally and emotionally it can play an important role. And the financial industry knows it. So, don’t get played by them by blindly following some awards, but invest just a little time to do your research, adjust your own habits (like i.e. where you buy which products) and to support the right thing in the right way.

Monthly Dividends

Looking forward to the year ahead, I have summarized my expected dividend payments and put it together in a nice, motivational format. What do I mean by that? Being a numbers guy, I crunched the numbers. Let me summarize the highlights:

On average, I will receive 8 dividend payments per month. 3 of those are coming from monthly dividend-paying companies. 5 are from quarterly, semi-annual or annually paying corporations.

This also means that, on average, I receive a dividend payment every 4 days. In reality though, due to the payment structure of most companies, it’s rather every 2 weeks.

The total expected dividend growth for the year 2020 is anywhere between 15% (conservative assumption) to 40% (optimistic assumption). I put the pessimistic one in my budget first, better to be positively surprised later.

My annual yield on the currently invested amount will come up to 4,53% – after taxes. This might go down if I add more capital to the portfolio, and it will increase if my dividend estimates should move higher than expected. As I do have some plans to balance my portfolio and to do some adjustments, I am pretty confident that my dividend yield might reach over 5% by the end of 2020.

Compounding interests and monthly dividends

Now, in the 4th year of investing, I start to see and feel the power of compound interests. It’s just growing. Some shares rise, some fall. But the more I diversify, the more the portfolio can balance and bounce in the right direction.

And then, all paid-out dividends are being re-invested and create just more income.

This becomes especially obvious with companies that pay monthly dividends. These few cents, that come up on top every few months when I re-invest into an existing or in a new position, really start adding up.

By 2021, and with adding 3 more monthly dividend payers, I should receive a dividend payment every 3 days. Every single one of these dividends will be, on average, a double-digit one, enough to potentially cover all my regular daily and monthly expenses. Even without living too frugally.

Not enough yet to cover the rent, but enough for everything else.
A major step closer to FIRE.

The markets are not ready to stop

Of course, this is also due to the fact that we have a robust economy and the Wall Street party didn’t stop yet. Most experts out there and I, don’t think that there is a high risk of recession in the US at the moment.

But at the same time, I am hesitant to deploy more cash into US-Dollar-based companies. There are just too many uncertainties with the impeachment, the drama with Iran and the rising tensions with China and Russia to keep a very high level of confidence.

So instead, and with the exception of the 3 monthly dividend payers, I will go for European stocks. Mainly the UK and the Netherlands, as many of them pay quarterly dividends. Regarding the UK, I have the suspicion that BREXIT might turn out not as bad as expected, which would push the British Pound back on track. The UK also doesn’t have a withholding tax on dividends, which is a great bonus.

The Netherlands charge me a 15% withholding tax, but it’s still moderate and given the highly innovative nature and sharp business acumen of this small but scenic country, I see some opportunities to invest there.

The 3 monthly dividend payers that I am looking at are by the way the following ones:

  • STAG Industrial (STAG)
  • Gladstone Commercial Corporation (GOOD)
  • Realty Income (O)

Disclosure: This article may feel, sound and be interpreted as financial advice, but it’s not. Investors are required to do their own due diligence, and accept risks that are associated with stocks and market investments.

2020 is here. It’s time for some predictions!

Ah, we did it! 2019 has passed and 2020 has started, and I believe that this year will be a very exciting one. Let’s do some stock predictions for the new year.

The stock market will continue to thrive

I know, some people just see bad things on the horizon, but I am pretty confident that 2020 will be another great year for investors. Mainly, because I believe that the US and Europe will finally find the courage to move on to new frontiers.

We are now starting to get into a generational transition. Plenty of Boomers will retire or be forced out of their VP and CEO seats. Some may pass away. And the new generation is going to do things differently. More disruption, more change, and more opportunities.

Some established companies may suffer, but those willing and eager to change will thrive. Among the most interesting players we may find:

  • Waste & Garbage. All companies that deal with trash. The world is getting trashed and while the old CEOs across the globe seem to care very little about it (they care in their public relations statements but not really in their day-to-day operations), the new generation will take things more seriously. This is a huge business opportunity.
    My personal stock investment for 2020 here will be Waste Management (WM).
  • Energy. Not all forms of energy will be favored. I expect most oil and pipeline companies to do very poorly in 2020, except for those who have already started to transition to the new age of renewables, who embrace technological improvements and start to integrate energy storage systems, virtual power plants, and micro-grids in their business plans. There is tremendous potential for growth in a business that will be always needed.
    My personal stock investments for 2020 here are E.On (EONGY) and Shell (RDS.B).
  • Chemicals. Yep, we need to replace all those nasty oil products with something, and chemical companies will be key to help with this transition. Those who invest steadily in research & development will thrive. Those who don’t change will go down among strong headwinds from governments, regulators and public demand.
    My personal stock investment for 2020 here is BASF (BFFAF).
  • Medical / Health. The rich world is getting grey, and with rising average age, there is also a rise of health-related issues, thus higher demand for all kinds of medications and health-care. There are only a few major players and it’s also a very hard business to get a foot in for new competitors.
    My personal stock investments for 2020 here are GlaxoSmithKline (GSK) and AbbVie (ABBV).
  • Construction. I know, not the most exciting field BUT all that money earned in 2019 needs to be deployed somewhere. With growing urbanization and infrastructures across the globe facing utter needs for improvements, this area will thrive for years ahead.
    My personal stock investment for 2020 here will be Caterpillar (CAT).
  • Technology. 2019 was great for technology stocks, and it will continue being so in 2020. If someone would tell me that there is a growth-limit to technology companies, I would seriously question his or her mind. Whatever the last 20 years have taught us is that we are just on the brink of the edge of discovering what technology can do for us and how far we can push it.
    My personal stock investments for 2020 here are Apple (AAPL) and The Trade Desk (TTD).

Note the differences in the bold letters between “are” and “will be” for each of the mentioned stocks. “Are” means that I already have them in my portfolio. “Will be” means that I have them on my watchlist and am planning to purchase them sometime in 2020.

I have also initiated some speculative positions in a few stocks that I think have very interesting potential, although I put very little money in it. On average only 350 Euros per company. These companies are:

  • Virgin Galactic (Space Discovery and Travel)
  • SailPoint Technologies (Digital Identity Management)
  • EnWave Corporation (Dehydration Technology)
  • Paragon KGaA (Automobile technology)

Also, I am looking to initiate small positions in:

  • Zoom (Video Communications)
  • KeySight Technologies (Electronics test and measurement equipment)
  • SmartSheet (Cloud-based data collaboration)
  • iRobot (Robotics)
  • Omron (Robotics)

These are or will be all speculative investments with very small stakes. I consider them to have an interesting potential versus risk ratio. Most of them don’t pay dividends and I don’t expect them to be my key to passive income. But I do think that they may greatly contribute to reaching my FIRE target in the long-run by an exponential rise in value.

Let’s see how much of all this will become true!