How to give your children $1 billion each …

When I was still on my own personal financial ‘seeking journey’ …

[AJC: This is the journey that you may be on right now; you know, the one where you read Every Available Book And Blog on Personal Finance Looking For the Mythical And Magical Secret To Financial Success But End Up Settling On Becoming A Miser Disguised As A Debt-Free, Frugal-Saver]

… I remember being very impressed by a tape set [AJC: Yep, that's a cassette tape set] about a guy who had a ‘system’ to guarantee that your children could become billionaires in their own lifetime.

I no longer have the tape set, but it was all to do with putting aside $x per week (and, adjusting for inflation) and relying on the power of compounding (sic) to allow the sum to run up to $1 billion.

Sounds simple, so I ran a few numbers on my own, and here’s what I came up with:

- Put aside $5 a day, beginning the day your children are born

- Increase by 5% each year and keep up for 40 years

- Vest the sum into your children’s names when they are 80 years old

Then they will each have $63 million dollars!

Not exactly $1 billion, but not a bad sum, right?

Now, it’s really a Grandchildren’s (or, Great Grandchildren’s) Plan, because your children may not even be alive at 80, but if they do the same for their children, and so on, it’s a reasonably smart and easy Generational Wealth Plan and your progeny will thank you for it (well, you won’t be alive, but take my word for it).

But, there are (other) problems:

- Your children have to wait until they’re 80 to ‘cash out’

- You have to contribute for 40 years, starting with $1,825  year and ending with $12k a year (probably, when YOU need it more than your children do)

- And, $63 million is ‘only’ worth – a still healthy – $5.5 million in today’s dollars

Ashley Ormond (a fellow Aussie) has a more practical, shorter term plan in his book that shows you “how to give your kids $1 million each!”

It’s essentially the same kind of plan, obviously running for a shorter period, and includes interesting tweaks such as having your kids pay you back your $7k initial contributions. It also includes sensible children’s savings strategies (such as setting them up with individual ‘saving’, ‘spending’, and ‘investing’ accounts) … but, the rest of the book is Aussie-specific.

Still, all these ‘power of compounding’ books and strategies show me – after spending a LOT of time, in the service of writing this blog, playing with simple spreadsheets (and, you should do the same) – is that there is no real power in compounding at all …

… it’s just simple maths and (a lot of) time, and if you rely on it for your real wealth … well … you’ll never have any

A brilliant 94 y.o. investor?

Edward Zajac is an amazing man: at 94 he is still alive, sprightly (or so it would appear from his photo), and actively investing his own $2.5 million share portfolio …

… and, is still sharp enough to describe himself as an opportunist.

Wealthy Matters shares Ed’s financial success with his readers (you should read the whole article to learn more about Ed’s ‘EZ’ investing system):

Stick with stocks, says investor Edward Zajac. He should know. The 94-year-old has been trading for 72 years and said he’s made about $2.5 million.

So, should we all aspire – strictly from an investing standpoint (after all, who doesn’t want live to 94 and still be so ‘with it’) – to be like Ed?

Absolutely!

According to my calculations, Ed (assuming he started on or around the average salary for college educated technicians “installing computer systems” of $1,900 in 1939) would had to save 50% of his salary until he retired young (at the age of 51) and receive Warren Buffett level stock investing returns (21% compounded) for the entire period!

What I can’t model, because the numbers simply fall short, is how Ed managed to draw enough salary to “travel the US in a recreational vehicle with his wife” after he retired in 1968, yet still manage to double his portfolio again in the 42 years since he retired.

Good on you, Ed, we have a lot to learn from you

real rich, real simple, redux

This is a redux of a 2009 post, but it’s about time that I gave my newer readers a heads-up as to what we’re all about … if I had to point somebody to just one of my posts to get them started this would be the one; putting in all of the links nearly killed me

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I get a lot of questions, comments, and e-mails in general from new readers, and this one – from Chad – is reasonably typical of what I might see:

I’m turning 27; just got a job making 50k/yr.; on the market for my 1st condo to live in (and hopefully rent out a room); have 1 student loan at < 3% fixed interest. My goal is $7 million in 13 years.

1. I have very little to no knowledge of finance/investing. Do you recommend any resources to get me up to speed so I can understand what you write about?

2. Where does my situation put me in terms of Making Money 101 and 201, i.e. where do I go from here?

I appreciate ANY direction you can give me as I do not want to be stuck behind a computer in a cube for the next 30-40 years.

While I love reading these sorts of e-mails (AJC: I really do!], I have a hard time responding because I can’t / don’t give direct personal advice … but,

I can suggest that Chad think about:

1. Exactly HOW important that $7 million in 13 years is to him, and

2. Assuming it’s VERY important (critical even), how he is going to get there.

You see, my advice might change according to his Number – more importantly to his Required Annual Compound Growth Rate:

a) If low – say, no more than 10% to 15% – then I would point Chad to the various ‘frugal’ blogs (my personal favorite is Get Rich Slowly) and ‘starter books’ like The Richest Man In Babylon, or the more modern equivalent: Automatic Millionaire by David Bach, or anything by Dave Ramsey or Suze Orman.

Each would probably suggest something along the lines of:

- Keep your job; times are tough!

- Save as much of your salary as you can (max your 401k’s, then your IRA’s)

- Pay down ALL debt, following a Debt Avalanche or Debt Snowball, whichever is your favorite

- Invest any ‘spare change’ (after all debts are paid off and the requisite ‘emergency fund’ has been built up) into a low cost Index Fund

… and, wait until your government-directed – or, employer-forced if you are retrenched and become unhireable – ‘retirement’. This is where that fully paid off home and a lot of candles and canned food stockpiled will really pay off … you won’t be able to afford real food

a) If high – say, more than 10% to 15% (and, I would venture that $7 million in just 13 years would well and truly put Chad in the 50+% required annual compound growth rate category!) – then I would instead point Chad to books like Rich Dad, Poor Dad and The E-Myth Revisited and then towards this blog and its 7 Millionaires … In Training! ‘sister blog’ and suggest that he starts working his way through the back issues (well, posts).

After reading/digesting properly, he should be able to come up with his own plan … something along the lines of:

- Keep your job, but get into active stock and/or real-estate investing – better yet, start a side-business; because times are really tough(!):

i) A mildly successful part-time business might provide additional income to help you weather the financial storm and supercharge your savings, investment, and debt repayment plans

ii) A more successful part-time business might provide a built-in ‘emergency fund’, tiding you over should you lose your job and/or unexpected expenses crop up

iii) An even more successful part-time business that can be started and/or survive during a recession may prove to become wildly successful once the clouds of the recession begin to lift, maybe even carrying you directly to your Number [AJC: do not pass Go, but do collect $200 million ]

- Control your spending, and save as much of your salary as you can to build a war chest for starting / running your business

- Pay down ALL expensive debt, following the method laid out in the Cash Cascade, but keep your mortgage (lock in to current low rates) subject to the 20% Rule and the 25% Income Rule and seriously think about keeping your other cheap debt loans.

- Invest any ‘spare change’ from your job and business (after all expensive debts are paid off and the requisite ‘business startup fund’ has been built up) into quality ‘recession-priced’ stocks and/or true cashflow positive real-estate.

… and, wait until you have reached your Number (through sale of business and/or conservative valuation of your equity in your investment assets).

That’s it

Premature Retireration …

Don’t get me wrong, early retirement is great …

… not for everybody, mind you.

Many go back to ‘work’ because post-retirement life can become pretty boring, if you haven’t properly planned your time and your money.

I don’t include in ‘work’ anything where you are earning money because you want to, except where the commitment / stress / boredom rises to sustained uncomfortable levels and you feel that you can’t just walk away, in which case it’s probably ‘work’ just the same.

No, the real problem is that people don’t know when ‘retirement’ really begins:

They think it begins when they receive the huge card signed by 50 people they have hated for 40+ hours a week, or when the gold watch that they expected to receive turns into a Parker pen (in a nice box!), or when they get a nice speech from the boss who says: “Gee, we’ll really miss you, Bob” when your name’s John.

But, it really begins much, much later.

Ashton Fourie puts it best when he says:

This reminds me of a conversation I had with a friend after we sold our first business.

His comment then was, that having a pile of money, is not useful, because expenses continue to be a regular occurence. So we realized that one can only really “retire” when you have enough secure, passive income. Many people make the mistake to think you can retire on a pile of money.

Until you’ve figured out how to turn the pile of money into secure, long term passive income, you’re going to have to keep “working” – even if that “work” is the process of moving that money into income generating, secure, instruments.

This is really a very important observation and realization!

I remember being insanely jealous [AJC: slight exaggeration] of my friends who cashed out while I was still trying to earn a quid. Now, I am insanely jealous [AJC: this one is probably a huge exaggeration for dramatic effect] of those who still have a job or a business because they can spend pretty much whatever that want, knowing that next week the magic pot of honey will be refilled.

You see, it really is all about cashflow …

… when you have a pile of cash, you can only deplete it. Sooner of later it has to run out, no matter how much you started with, right?

Just ask [Insert big spending celebrity who's financially crashed at least once in their lives: Elton John; MC Hammer; Willie Nelson; etc; etc]

So, think about the early days of your retirement as a “transition phase” while you busily reassign your financial jackpot into income-producing investments then think about how much income those investments produce (after tax, various buffers for contingency, and reinvestment to keep up with inflation) and retire on that!

It’s impossible to pay for good advice …

This is not just a provocation … I think it’s true.

It may not be true in some technical professions: think of a doctor or an accountant … you pay for advice and you expect it to be good (after all, she’s got a PHD right?).

Even then, how do you know it’s good advice?

After all, in most cases, you’re hardly expert enough to judge

Should you be worried?

Not  unduly. After all, those articles about the accountant who diddled his clients books is something that you only ever read about. It never happens to you. Right?

What about the guy in the picture to the left? Would you go to him for advice on a healthy lifestyle?

The picture is of a statue, but it bears an uncanny resemblance to a doctor-friend of mine, whose picture I can’t show for obvious reasons; he’s actually a top vascular physician and surgeon.

So, best case, quality of advice is difficult to determine.

But, it’s downright impossible to pay for good, personalized financial (or business) advice!

A simple example: if you want to grow a successful business, can you pay a consultant to tell you how?

Of course not! If they knew the ‘secret’ to building a truly successful business, they would be busy doing it for themselves.

The best you’ll get is some clown offering cheap advice

Let’s try personal finance: people ask me how to select a good financial advisor:

The first thing that I ask them is how much money they want (and, by when)?

The answer is usually $7m7y (or, some other large Number / soon Date).

The next thing that I ask is how much of their own money their chosen advisor has made following the same recommendations that he is giving to them?!

I made $7million in 7 years, but it’s impossible for you to pay me for advice; I give it away … because I want to.

Still not sure?

OK, let’s say you want to invest in stocks.

Who do you want to pay for advice: (a) somebody who’s read about investing in stocks, or (b) somebody who’s made a lot of money investing in stocks?

If (b), why are they taking paltry fees from you?

Oh I see … they aren’t just taking fees from you, they have a managed fund. They’re not really taking money for advice, rather earning a fee for running the business of managing a huge bucket of money (including your tiny drop).

Even so, let me ask you another question:

Who do you want to pay to manage your money: (a) somebody who’s made a lot of money investing in stocks?, or (b) somebody who’s made the most money investing in stocks?

If (b), then who’s made the most money investing in stocks?

Obviously, it’s Warren Buffett (with George Soros a good second … but, if you said John Bogle you fail because he made money through his business of selling his low cost index funds to the masses, not from investing his own money in them).

So, if you want to invest in stocks, you can’t buy the right advice, because nobody’s selling … and, if you want to invest in some kind of fund you can’t pay for the best advice available …

… but, you can tap into that advice for ‘free’ just by buying Berkshire Hathaway stocks.

If I wasn’t going to manage my own money – listening to plenty of ‘advice’ but, ultimately taking my own counsel – that’s what I would do!

The Pay Yourself Twice Wealth Strategy!

As you have no doubt worked out for yourself paying yourself twice is in itself just a stepping stone to financial success.

Let’s just quickly recap for new readers:

The likes of David Bach (The Automatic Millionaire) like to tell you that you needn’t do much more than ‘pay yourself first’ (i.e. save) 10% – 12.5% of your gross salary in order to live an idyllic life (well, at least retire well) … going so far as to call this “A Powerful One-Step Plan to Live and Finish Rich”.

The reality is that this is actually a dangerous financial strategy to pin your financial future on.

Whilst the idea of saving money is to be commended – in fact, saving is absolutely necessary – the sad reality is that you would need to pay yourself first 75% of your gross income, starting now and continuing for the next 20 years, just to maintain your current standard of living in retirement.

Clearly, my solution – which is to Pay Yourself Twice 15% of your gross salary – does little to bridge the gap.

Of course, it’s what you do with the money that counts:

I assume that your current ‘pay yourself first’ savings are going into some sort of employer sponsored, tax-advanatged retirement plan …

… which we already know cannot possibly be enough to support your current lifestyle in retirement, let alone set you up for that hammock in the Bahamas with free flowing Pina Coladas that you crave

However, I do want you to keep your retirement fund going – and growing – because it is insurance, if all else fails.

But, it’s the “all else’s” that will make the difference between an austere retirement in 20 – 40 years or a certainly more memorable (and, very early) retirement with $7 million in 7 years … or a happy medium, if that’s more your speed.

And, that’s why you need to Pay Yourself Twice:

- Once to maintain this insurance policy, and

- The second time to build your investing war-chest.

If the power of compounding at bank to mutual fund rates of return (i.e. 4% – 10%) is not sufficient, then it stands to reason that you need to start investing at (much) higher compound returns.

This means building up a modest starting capital amount and ‘rolling the dice’ with higher risk / higher reward investments e.g.

A few minutes with a good compound growth rate calculator will (a) confirm how well your current strategy is doing against your desired retirement needs, and (b) tell you how deep into the above table you need to dive to bridge the gap.

It goes without saying – so, I’ll say it anyway (!) – that I hope that you all succeed with your investments, be they in stocks, real-estate and/or businesses. However, if you should fail … well, by continuing to Pay Yourself Twice, it won’t take too long to build up enough starting capital to have another go.

And, it might take one, two, five times before you are successful …

All the while, you have a 20 year backup plan (by also continuing to pay yourself first) just in case

The problem with P2P lending …

I am not a fan of peer to peer lending, so please forgive me, when Glen Millar of Prosper – one of the leading P2P lending sites – sent me the following e-mail, if I didn’t fall all over myself with excitement:

As a personal finance blogger we thought you might have interest in Prosper (www.prosper.com) and peer-to-peer lending.  You may know that Prosper was the first peer-to-peer lending marketplace in the US.  In 5 years, we have originated over $215 million in loans on our site.

In fact, here’s what I said in my reply:

Oops!
http://7million7years.com/2010/01/13/peer-to-peer-lending-a-7m7y-tool/

My argument in that post was about risk; Glen responded with a link to the following:

The basic argument being that Prosper manages loss/risk better than competing P2P sites through their proprietary rating system which “allows [Prosper] to maintain consistency when giving each listing a score. Prosper Ratings allow you to easily analyze a listing’s level of risk because the rating represents an estimated average annualized loss rate range.”

Which is all well and good until it is YOU that suffers the statistical loss/es (you can get unlucky and lose on a number of your loans); I don’t know about you, but I don’t like any system where I play statistical roulette without at least some measure (OK, illusion) of control.

The only control that you can really apply here is diversification: take out lots of small loans in your risk/reward categories:

In fact, if this risk-rating-system is so good, why doesn’t Prosper simply knock out the competition by adjusting the interest rate earned by the rating-weighted loss-rate and carry the risk themselves?!

But, what’s your for/against reasons?

I would like to hear both from readers who swear by P2P, and those who wouldn’t touch it with a 10 foot pole …

The myth of semi-retirement …

We were driving through Sedona and stopped into some sort of Big Box Store to pick up some rubber beach shoes so that we could take the kids to Slide Rock.

We met a nice, older lady at the checkout and – as I tend to do with anybody and everybody – we got chatting.

Then she said something that took me totally by surprise:

She said that she moved to Sedona now that she is retired!

Retired?! Hang about, I thought, isn’t she standing at the cash register swiping my credit card?

Perhaps, reading my mind (more likely, the expression on my face), she clarified: she moved to Sedona when she retired from full-time work, and now that she is ‘retired’ (there it is again!) she only works part-time.

Why is that when you are studying – or perhaps slowly returning to the workforce post-parenthood – you are happy to tell your friends that you are “working part-time”.

But, when you reach 65 and suddenly find that you still need to work (perhaps with reduced hours, or in some sort of micro-business that you set up for yourself) you are “retired” or you are in that even less definable state of “semi-retirement”?

In fact, there are whole websites and books devoted to the subject of semi-retirement. One of those books is “Work Less, Live More” by Bob Clyatt; I bought it on the recommendation of Jacob from Early Retirement Extreme (he left a comment on this post) … I’ll be commenting on one specific aspect of this book (in fact, the very aspect that prompted Jacob to recommend it to me ) in an upcoming post.

In the meantime, Bob did confirm that I am not retired … I am semi-retired.

According to Bob, I am semi-retired because I do various income-earning activities: I still own a business; I own two development sites (and, am going though the process of having development plans approved by council); I have started an angel investing incubator (or, at least, started to put the foundations in place); have a web 2.0 startup and a book well under development.

But, if I am doing these things because I am a hobbyist, am I any different from the guy who is game fishing every other day as a hobby?

But, if I am game fishing every other day because I need the income (e.g. I take some paying clients out on my boat, or I sell the fish), am I any different to the guy who needs to have a part-time business – or blogs – because he needs the money?

In other words, isn’t the difference between working part-time and being semi-retired the need to bring in income from the activities that you undertake?

Doesn’t that change the dynamic just a little?

Even though he may enjoy the core activity, isn’t the part-time game fisherman who needs the money a little bit more upset when a trip is canceled due to bad weather (or customer cancelation) than the guy who is doing it purely because of his love of the sport?

Whether you agree or not, let’s at least agree on something … at least for the purposes of this blog:

1. If you are retired, you don’t need the money – you just do stuff for fun.

2. If you need the money, you aren’t retired, you are [insert activity of choice: writing a book; blogging; game fishing; real-estate developing; etc.] part-time.

The day that I need to consult to top up the income from my investments is the day that I am no longer just having fun: I’m working part-time.

Maybe we can coin a new term: flexi-working? Semi-working? Whatever you call it, there ain’t no retirement happening …

How about you? Where do you draw the line between work and retirement? And, does it even matter?

Wrapping up …

You can check out the latest Carnival of Personal Finance (#298 – The Best Money Articles Online) here.

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I didn’t expect that one of my most argued series of posts would be about dividends; I thought it would be around my vehemently anti-anti-debt stance (see if you can work THAT out).

So, I’d like to wrap up that discussion with a point-by-point review of a really interesting comment left by Deek:

I see where you are coming from and disagree to a point. It depends on what your outlook is. 7 mil in 7 years of course dividends aren’t going to get you their.

But my grandfather who was a coal miner who cannot work into his 70s because of the type of job. He was able to be a dividend millionaire. When he did retire the income from dividends, his pension and social security was more than enough for him to live comfortable into his 90s and leave money for his children.

At 90 years old he isn’t going to work,build a business or mess around with real estate. He wanted to check he dividend paying stocks once a month and enjoy retirement, drink a few beers and his biggest worry was cutting the grass.

I also find it interesting you mention Berkshire Hathaway. Depending on when you look at BRK holdings they do invest a significant amount of money into dividend paying stocks even though they do not themselves pay a dividend.

This really summarizes a lot of the for/against arguments around dividend stocks, at least as raised by the many reader comments to my earlier posts, so I thought I should run my readers through it:

1. Yes, this blog is specifically aimed at those who want to make what I call a Large Number / Soon Date (eg $7m7y or $2m5y, etc.); however, in this case, I don’t think it makes any difference: investing in stocks just because they happen to produce dividends is dumb.

In my businesses, I am free to create a dividend whether the business is performing well or otherwise. So can the boards of public companies. If that simple point doesn’t win the pro-dividend lobby over, nothing will.

2. It seems like Deek’s grandfather did an amazing job! Investing in a bunch of “dividend stocks” – and, holding for long periods – is certainly a lot better than many other strategies, certainly for non-$7m7y’ers.

But, he may – probably (certainly!) – have done even better by following a Value Investing approach (e.g. such as that proposed by Rule # 1 Investing author, Phil Town). Buying and holding great stocks – ones that produce a steadily growing profit stream – is an even better way to make long-term money than buying and holding stocks just because they happen to pay a steady dividend stream. The two should be synonymous, sadly that’s not always the case.

3. I’m not suggesting that you (or Deek’s grandfather) should invest in business or real-estate etc. Although, I strongly argue that in retirement RE, in particular, provides a much more secure retirement, again for $7m7y’ers.

4. Deek’s point about Warren Buffett (“BRK holdings they do invest a significant amount of money into dividend paying stocks even though they do not themselves pay a dividend”) neatly summarizes my key point:

Like Warren Buffett, I am not against investing in stocks that pay a dividend; I am simply for investing in great businesses – or, the stocks of great businesses – regardless of whether or not they pay a dividend.

Get it?

Dividends: real cashflow or fake cashflow?

If you’ve noticed, I made a couple of adjustments to this blog:

The first is that I have reduced my posting schedule to (generally) twice a week; I’m trying for a Mon./Thur. posting schedule, but – if you enjoy reading this blog (near-future multi-millionaires need only apply!) – your best bet is to sign up for the RSS/e-mail feed on my home page because I’m fickle … if I get the urge, I’ll post daily, or simply shift days to suit my increasingly challenged schedule

The second is that I’m posting more business-related posts (e.g. my Anatomy Of A Startup occasional series) … I am funding a series of startups with the ultimate aim of a Y-Combinator style of early stage entrepreneurship mentoring / funding program and what I am sharing in this series is real ‘special sauce’ stuff … like everything that I do, it’s usually simple but works!

Back to the first change: if I write less frequently, I’m hoping to challenge myself and my readers even more. To whit, my last post (inspired by Canadian Couch Potato’s brilliant post on the same subject) inspired a one week long comment-debate … one of the best that I have seen on this blog.

The main thrust was the debate around income v capital growth.

Jeff stated the ‘for’ argument best when he said:

The reasons why people desire rental income from real estate are the same reasons why people desire dividends from stocks…you get a cash flow without having to sell the asset at an inopportune time.

But, there’s a key difference between so-called ‘Income Real-Estate’ and its stock market equivalent – Dividend Stocks: Income RE produces REAL cashflow, Dividend Stocks produce FAKE cashflow!

To illustrate, let’s take a look, first, at income-producing real-estate:

Tenants pay rent; you pay costs; what’s left (if any) is real, spendable, excess income/cashflow that generally increases with inflation. Bad RE doesn’t produce an income. Period.

Now, let’s take a look at so-called Dividend Stocks (i.e. Company stocks that you buy specifically because they produce a nice, steady dividend stream):

Dividend-paying company sells stuff; they pay their suppliers and other costs; Good company produces profits / Bad company produces losses.

In either case, the Board meets and says “we gotta pay some dividends”.

The CFO says “But, we got bills to pay!”; CTO says “I got R&D to do!”; COO says “I got warehouses to build!”; CEO just wants to keep his job (he is hired/fired by the Board, remember) and says nothing …

The Board says: “Too bad. If we don’t look after our shareholders they’ll crucify us … even worse, they’ll vote us off our nice cushy board positions and we’ll even have to buy our own lunches!”

“Let the CEO deal with poor cashflow and working capital, insufficient warehouses space, outmoded products and technology, lack of marketing, and so on … heck, we’ll even borrow money from our provisioning funds or the open market, if we have to. No matter what, those Dividends must be paid … after all, we are a Dividend Stock!”

So, they say “no” to the CFO, COO, CTO, CMO … and, every other shmo’

Do you want your board fussing over distributing cash that it may or may not be able to spare? Or, would you rather that your Board focussed on building a GREAT company, with GREAT long-term growth and profitability prospects?

In order to answer that question, there’s one more feature of dividend stocks that we still need to examine; Kevin @ Invest It Wisely says:

The pro-dividend guys do have a compelling case that dividends grow more smoothly than the ups/downs of the markets.

To which I say, “so what?”

As we have already seen, the apparent  ’smoothness’ of the dividend stream can be illusory.

And, what are you going to do with any dividends that you have received pre-retirement?

I presume that you are going to reinvest them so that you, too, can get to $7 Million in 7 Years (or, at least to your own relatively large Number by your own relatively soon Date).

In other words, you’ll just take that relatively nice, smooth dividend stream and throw it right back into the choppy market [AJC: Next, you'll be telling me that you're Dollar Cost Averaging ... somebody, grab me a Tylenol, please!].

If you’re going to be fully invested in the stock market, for a number of years, then why don’t you at least buy some stocks in great companies that are going to grow, grow, grow … profits?!

If they happen to pay dividends, well great [AJC: you're going to give it straight back to them, anyway, aren't you?], and if they don’t, well who cares?

I mean, would you rather own “this dividend stock [that] has delivered an annualized total return of 3.10% to its loyal shareholders”? Or, would you rather own this never-ever-paid-a-dividend stock that has delivered an annualized total return of 20+% to its loyal shareholders for over 40 years?!

However, there is one special case (i.e what if you are already retired?) that I want to examine next time …