The following lessons would likely have made my financial
life easier and my current financial situation better had I learned them sooner
than later.
Dividend reinvesting
Having a DRIP
(dividend reinvestment plan) is something I wish I’d known about much
earlier in life. As a more conservative
investor, it really used to bother me when the stock market would take big
dips, taking my retirement plan along for the ride. With dividend reinvesting though, while my
fund price tends to correlate with market trends, it also purchases me extra
shares each month at current market prices and that continue to earn for
me.
So when the market goes down, while my fund price might
follow, I’m continuing to add shares at a lower price, so it doesn’t hurt as
bad. Had I recognized the benefits of
such a plan at an earlier age, I could have taken much of the stress out of
stock market investing and built up significantly more shares over a period of
nearly a decade.
Dollar cost averaging
One of the main things my dividend reinvesting taught me was
the value of dollar cost
averaging. Being able to purchase shares
at high prices, low prices, and places in between spreads out my risk of buying
too many shares all at once and at too high a price.
I’ve found that while shares of stocks or stock funds are
most commonly associated with dollar cost averaging, it can be done with a
variety of things like commodities or even real estate as well.
Time and patience can
be valuable partners
As I age, I begin to realize the true value of time and
patience when it comes to investing and personal finances. Getting overzealous or impatient can lead to
poor investment decisions or unnecessary risk.
For example, I sold the company stock I held in my 20s
unnecessarily, pulling in a small profit from its increase from a $10 per share
purchase price to $14 per share. My
reasoning…the stock wasn’t doing much and I was tired of watching it. I didn’t need the money, and I wasn’t loosing
money. Several years later, the stock
price went to around $45 a share when the company was bought out. I lost out on thousands of dollars in
potential profit because I got antsy and sold too soon.
A job is more than
just a paycheck
I couldn’t wait to graduate from college. Not because I was excited about a career but
more because I was excited at the prospect of earning money and getting a
regular paycheck. But over time and as I
advanced in my career, I began to realize that a job can be much more than just
a regular paycheck. Sure, that’s certainly
a part of it, but there is -- or at least can
be -- more to a job.
It wasn’t until I actually left the regular workforce to
become a self-employed individual that I began to fully comprehend just what a
job could be. There is the opportunity for
networking, possibly building connections that can lead to career advancement
or better placement. There can be a
variety of benefits related to health care, transportation, retirement
planning, and things like free meals, uniform or clothing allowances, company
awards, bonuses, and functions, and numerous other perks. And of course there may be opportunities for
growth potential through learning on the job skills or continuing education
programs.
Had I realized this earlier on in my young career, I might have stuck with regular employment a bit longer before venturing out on my own. This way I could have absorbed more of these benefits for longer, making my position stronger once I eventually moved on to working for myself.
Disclaimer:
The
author is not a licensed financial professional. This article is for informational purposes
only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in
this article is solely at the reader’s discretion.
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