Do you have a solid plan to survive this market? Are you focused on wealth preservation, tax strategies, estate planning, and putting your lazy cash to work? I hope so. Because for so many, it’s in times like these that anxiety and fear put them in a state of paralysis analysis—as if studying extra hard will help. As you know from Your Survival Guy, failure to plan is a plan for failure.
Know Thyself: “My Precious”
Failure to know thyself is such a common pitfall for the average investor. Precious time is spent looking at stock prices rather than understanding one’s risk tolerance. Because it’s not until markets fall that the average investor realizes his risk tolerance is a lot lower than he and his spouse thought it to be. When markets go up, they rejoice in their newfound wealth like Gollum and “My Precious!” but they are not prepared for the loss.
Action Line: Wealth creation is best served over time. S-L-O-W-L-Y. When you depend on markets for your self-worth, it can easily be taken away like a lost ring. Rather than rely on fickle price fluctuations, focus your attention on dividends. This year, while prices for stocks are falling, dividends are expected to reach new highs. Hannah Miao reports in The Wall Street Journal:
The companies in the S&P 500 paid out a record $140.6 billion in dividends in the most recent quarter, according to S&P Dow Jones Indices. That’s up from $137.6 billion in the first three months of the year and $123.4 billion in the same quarter last year.
Annual dividend payouts have notched new highs every year for a decade, excluding a slight decrease in 2020. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said he expects dividends to set new records in the current quarter and for the year as well.
Payments this year are projected to grow at a faster pace than usual, as companies have logged strong sales and are passing on a slice of the elevated profits to shareholders, according to Mr. Silverblatt. He estimates dividend payments will jump more than 10% in 2022 from last year’s record $511.2 billion, which would mark the first double-digit increase since 2014.