“I want passive income from ‘dividends’ deposited into my account every month or every period.” “But I don’t want to spend time analyzing individual stocks or checking financial results…” “I thought professional mutual funds would be safe, but I’m worried about whether I can really win given the high trust fees (commissions)…”
This is a wall everyone hits at least once when starting to build assets.
While the reliable cash flow of dividends is attractive, trying to pick high-dividend individual stocks on your own always comes with the risks of ‘dividend cuts’ due to poor performance and the trap of ‘stock price crashes’.
So, is an ‘active fund’ managed by professionals the answer? Unfortunately, over 90% of high-dividend stock funds selected by professional fund managers fail to beat simple market averages (indices) in the long run—that is the harsh reality. Even if you keep paying high fees, the probability of that effort being rewarded is extremely low.
So, what is the realistic optimal solution for busy individual investors to obtain both ‘dividends (income)’ and ‘stock price appreciation (capital gains)’?
In conclusion, it is to buy ‘high-dividend index mutual funds (or ETFs) based on strictly selected index rules’ as a system.
Why a ‘high-dividend index’?
There is no need to rely on the subjectivity or predictions of professionals. Index funds, where stocks are mechanically selected and replaced based on clear, objective rules (indices) such as ‘whether dividends have increased consecutively,’ ‘whether finances are sound,’ and ‘whether the dividend yield is appropriate,’ offer the highest reproducibility and can be managed at overwhelmingly low costs.
Eliminating ‘trap stocks’ that only have high dividend yields and riding on a ‘collection of excellent companies (index) where dividends grow and stock prices rise accordingly’ at a low cost—this is the ‘system’ for individual investors to survive and win.
What you will learn in this article
In this article, we will explain the concrete steps to capture both dividends and asset growth by relying solely on objective ‘numbers and rules (indices),’ completely eliminating human subjectivity and professional advice.
There is no need for difficult financial statement analysis or daily stock price checks. We will explain in detail from here on out the strategy of entrusting your investments to an ‘excellent index’ and steadily increasing your dividends and assets while leaving them alone.