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SERIES: BEGINNER INVESTING
I Invest Like a Dragon; the Simple Math I Use Can Help You, Too
Smaug’s gold hoard was inspirational.
Disclaimer: I am not a professional financial advisor, and what I say to you here is not intended to be taken as professional financial advice. I’m an ordinary individual investor who has invested in dividend stocks with reasonable success for over 30 years. If you need real financial advice, please find a fiduciary in your area.
Buy and Hold Investing
When I saw the dragon’s immense hoard of gold in The Desolation of Smaug, I had to giggle softly to myself. Yep, yep, that’s my investing goal! Keep on with it, Smaug! Good dragon!
I don’t think I’m a greedy person; I certainly hope I’m not. But that scene confirmed my personal investing philosophy. It even inspired a short story that got published in a young-adult fantasy anthology.
I don’t know how Smaug acquired all of his gold, but I know how I did — through buy-and-hold stock investing.
Buy and hold means that, when you buy shares of dividend-paying stock in a company with reliable cash flow over the past five or so years and low debt, you hang onto your shares and don’t necessarily sell them when the share price increases. Some people do sell their shares and take the profits, but I generally prefer to keep my shares. Because, you know — dragon.
Some people might tell you that buy and hold is passé, an old-school investing strategy. Maybe it is; it’s certainly not as exciting as day trading or investing in cryptocurrency — or as risky. It is also not exactly how professional investment managers invest. I’ll go into more detail about that later in this article.
Passé buy and hold might be, but it works, and when you employ this strategy, you don’t risk having a heart attack every time the stock market crashes. Instead, you can invest in good dividend stocks and remain mellow, even if the share price drops, because it will always appreciate again if the company is a good one, and the dividends will generally continue, unless a pandemic hits.
