Treat your money like employees, here's how you can put them to work

The GOAT

“If you don’t find a way to make money in your sleep, you will work until you die” - Warren Buffett

Among so many things we can learn from one of the greatest investors of all time, this quote truly hits home.

It was one of the quotes that led me to becoming a dividend investor.

And as you might know, I’m not 100% invested in dividend stocks, nor will I ever be.

I believe in implementing more than one strategy, otherwise you’re just limiting yourself.

With that being said, over the last 8 years of my investing journey, I’ve found that nothing makes me happier (when it comes to money) than to see my passive income grow.

The dopamine hit you get when you see your money working for you is unmatched.

Every investor should earn some kind of passive income from their assets. And in today’s newsletter, we’re going to cover 4 different ways you can do just that.

If you’re going to be invested in the stock market long term, you might as well get paid to wait.

4 Ways To Make Your Money Work For You

1) Dividend Growth Stocks

Stocks that consistently grow their dividends over time. When you own these kinds of stocks, you’ll get a raise every single year without having to do a single thing.

The great part about dividend growth stocks is that these types of companies understand how to turn a profit and have been doing it for years.

A counter argument against dividend stocks is that the company doesn’t know what else to do with their cash so they return it to the shareholder.

That may be the case, but a return of value during the course of your holding period keeps you invested and seeing consistent returns.

Whereas if you were to own a stock that didn’t pay a dividend, the only time you would get that return of value is when you sell (hopefully for a higher price than what you paid).

If you don’t know where to start, start here:

1) Dividend Aristocrats List - stocks that have consistently risen their dividend for 25+ consecutive years

2) Dividend Kings List - stocks that have consistently risen their dividend for 50+ consecutive years

2) Money Market Funds

Money market funds are a type of mutual fund that invests in high quality, short term debt instruments, cash and cash equivalents.

As of today, I keep about 20% of my net worth inside a Money Market Fund.

Why?

Because I’m looking at making a downpayment on a piece of real estate in the next few years and this fund will be used to do that. I don’t want any volatility from fluctuations in stock prices. So I opted to keep the bulk of my future down payment inside a Money Market Fund so I can preserve my purchasing power.

If I want, I can also use this cash to invest in the stock market if the right opportunity presents itself.

The Money Market Fund I buy holds HYSA’s across Canada from large financial institutions and targets a 4.75% yield per year.

Although this can fluctuate depending on interest rates, I know my money is outpacing inflation every year and I can sleep well at night knowing I can pull that money out whenever I need it.

This is a good way to keep money on the side, not exposed to market volatility, while you’re either saving for a big purchase or just don’t want all of your net worth to be exposed to volatile market prices.

3) Exchange Traded Funds (ETFs)

ETFs are a great way to buy the whole pie, instead of just slices of a pie.

Let me explain…

When you buy an ETF, you’re buying the fund, but becoming a part owner of all of the holdings inside the fund.

Not only do they allow you to diversify your portfolio (for a small management fee), but you can also earn passive income from them as well.

Personally, I buy index fund ETFs as well as dividend ETFs. Both pay me passive income and allow me to sleep well at night.

Realistically, it would take a total market collapse to lose all of your money in ETFs.

I’ve built the foundation of my portfolio on index funds and I suggest you do the same.

Only then should you consider branching off into individual stocks.

Remember: you can’t build an empire on a weak foundation.

4) Crypto Staking

Believe it or not, I also own crypto.

Although I’m majority a dividend growth investor, since I have a solid foundation in place I’ve allowed myself to allocate some of my net worth towards higher risk and more volatile assets that have a larger runway for growth.

I’ve only allowed myself to do this because I’ve set up a solid foundation beforehand.

But as a younger investor, I can afford to take on some extra risk in hopes of a higher pay off.

As of today, I own Bitcoin, Ethereum, and Solana.

Not only do I own these coins, but I also stake them. This is what I call a “crypto dividend”. I make money while I hold my crypto. Does it get any better than that?

Below is an image of what I earn every year on my Solana (4.6% per year).

This amounts to about $111 CAD in “crypto dividends” per year, and they get paid out every 3 days.

To date, I’ve earned almost $150 from staking this coin. It’s not a lot, but considering I only have a couple thousand dollars invested, it’s not bad. These rewards get reinvested automatically and help fuel the compound effect.

For those wondering, I only keep about 5% of my total net worth in crypto. I won’t claim to be a crypto expert, however I don’t mind holding for the potential upside.

If all goes according to plan and these coins explode, I’m happy. If they go to zero tomorrow, my net worth doesn’t take much of a hit.

But that’s just another way to make your money work for you.

See you in the next one!

Alex (The Dividend Dominator)
Founder and CEO of Dividend Domination Inc.
Follow me on Twitter, Instagram and LinkedIn

Two weeks ago I asked you the following question…

Here were the results…

If you chose B, congratulations. You picked the right answer.

If you chose A, you didn’t do your homework. By choosing B, you can buy $1M of Bitcoin and have $1M left over to do whatever you choose.

If you chose C, you probably like passive income. The issue is that $2,000 per week today may be worth a lot less in 30 years, due to inflation. However, that’s something we can’t possibly predict.