Over the past few years, we’ve had the opportunity to discuss with many different dividend investors and it’s no surprise that many are frugal. Why is it not surprising? I guess that anyone who understands the power of dividends will tend to spend a bit less because every single expense is basically throwing away future cash flows in terms of dividends.
Thinking of getting a new TV? You might and perhaps should get it. But that $2000 could also be spent buying dividend stocks that would pay close to $100 every year for my entire life. It certainly makes you think twice but useless spending and how it will end up impacting our future lifestyles. Once those thoughts start entering your head, it becomes much easier to save more money.
In the end, saving is what it’s all about as well. As much I as focus on picking the right dividend stocks, reinvesting everything, reducing my trading fees and having a solid and diversified portfolio, the most important factor (by FAR) in growing my dividend portfolio is how much I’ll be able to contribute every month.
That Being Said
I also know of plenty of dividend investors that are not frugal. They do save money but don’t mind spending at all and simply consider dividend investing as a solid investing method like many others that is easier to replicate.