3 Essential Thoughts For Investors This Christmas

Co-Produced with Treading Softly

Have you ever been to a candle-lit service at a church for Christmas? Perhaps a candle-lit vigil? Have you perhaps lit a candle for a loved one while they’re away or even left a proverbial “candle in the window” for someone?

Lighting a candle is a largely universal expression. People all around the world and from various walks of life have interacted with the concept of lighting a candle. We light them for birthdays, weddings, funerals, anniversaries, vigils, and more. A lit candle invokes strong feelings, from joyful frivolity to the spiritual to the poignant.

We light them to shine a light on our memories, to illuminate our hopes and dreams for the future, and to give direction and hope to those we want to see again. A lit candle reflects our desires and losses, our hopes and struggles. This Christmas, many will light a candle to remember those who passed this year and could not join in on their family’s traditions. Some will light a candle at the closing of the year to illuminate their hopes for the next.

Today the market is closed, and we have time to enjoy ourselves with our family and friends. I want to light some virtual candles here with you.

Remembering This Past Year – The 1st Candle Lit

2022 has been a crazy year. The markets have been down heavily, with Growth taking a much harder hit than Value has throughout the year:

While the market has been beaten down, there has been a large number of excellent opportunities to lock in income for decades to come. The Federal Reserve has often made moves that negatively impacted the market, especially fixed income.

We have been laser-focused on finding excellent income investments throughout 2022, and looking at some of our favorites this year, you can see we’re happily collecting dividends with some great capital gains on top:

Strong dividend payers like Enterprise Products Partners (EPD), Antero Midstream (AM), and Greystone Housing Impact Investors, LP (GHI) (fka ATAX) have allowed High Dividend Opportunities members to stay ahead of the market and outearn it. Posting positive returns in an otherwise sea of negative returns in the market.

This is the benefit of having a diversified portfolio. While our portfolio had its share of holdings that were down and a few that were down a lot, we also had some holdings that were up a lot. 2022 was a great year for energy, it was a very difficult year for almost everything else.

The year did have some positive swings, along with its strong drops. The market is far from a calm flat lake but is a constantly shifting and wavy ocean. It is important, in my opinion, to look back over the past year and evaluate how you have done. You have winners and losers in your portfolio – we all do.

How have you done at progressing toward reaching your retirement goals? For income investors, this means considering your year-over-year income changes. Are you closer to your income goal, or are you falling behind your planned pace?

Many High Dividend Opportunities members have been sharing how their annual income is significantly up due to extra high yields offered by the market. While EPD and AM are examples of large capital gains in our portfolio this year, neither were our largest dividend raisers. In addition to the 14 special/supplemental dividends we saw this year, the HDO Model Portfolio had 44 dividend hikes! Many of our holdings experienced higher income, even while share prices declined.

Did you get caught up in the noise and distractions of life or investing? Or maybe made choices that don’t align with your goals? Let this time of reminiscing be when you refocus your efforts as we look toward a new year. If you achieved your goals, take a moment to give yourself praise and be happy with your hard work. Success financially is something one rarely stumbles into but is something that requires hard and diligent work.

Be proud of your successes and learn from your shortcomings.

Take a Moment to Dream and Hope – The 2nd Candle Lit

We lit a candle in observation of the past. Now, it’s time to light a second candle. This one is to shine light upon and illuminate our hopes and dreams.

What is it in 2023 that you want to achieve? Take a moment to think about it. Set some goals for your next year of life. These would be less practical goals and more hopeful ones. Dream big!

2022 was almost nothing like we would’ve expected it to be, but those who dreamed big were still able to find ways to work towards their end-game goals.

I like to take this time to help paint a picture of what I hope to do in my retirement. What is it that you hope to do? Spend more time with loved ones? Learn a new hobby? Travel? Meet new people to befriend?

Do you ever see people taking a moment to snap a photo of their food? Social media attention seekers? Not so fast, a study in the Journal of Personality and Social Psychology showed those who take a picture of their meals are more likely to enjoy it – crazy, right? It builds hope and anticipation for the coming meal, noting the positive aspects of it before eating it.

Taking time to dream and imagine with your loved one or spouse, if you have a life partner, or even by yourself, can help you build the desire and motivation to put the work in to achieve it. Think of this as the birthday for your portfolio and retirement dreams. We’re lighting a candle to illuminate your hopes.

Make a plan for what you want your future to look like, compare it to prior years, and see how it’s adjusted and changed. We all grow and change as the years go by, and so can your desires for the future. Change your goals accordingly!

A Light For the Lost and Sorrowful – The 3rd Candle Lit

Our last candle today will be one for the lost. When you tell someone, “I’ll leave the light on for you”, you’re telling them you will keep shining a beacon to find their way home. In case they get lost, sidetracked, or misled, they can still find their way to the safety of home. The candle serves as a beacon to the lost to find their way back home. Shining out against the dark, cold world and providing a ray of hope.

Some of you are really discouraged. The market has been a bully to many this year! Add to that fact that retirement planning and saving are tough! I get that. Some of you are discouraged because you’ve lost your way a little bit. Life’s storms have kicked up, and the results are leaving you turned around and lost. It can happen to the best of us.

Show me someone who has “never failed”, and I’ll show you someone who has never dreamed big enough.

I want to shine a beacon to bring you towards and illuminate what has led me to success for so many years – income investing. You don’t need a million or multi-million-dollar balance retirement account. You don’t have to make $100k a year to see success.

We can all achieve it – one dividend at a time.

I have the joy of seeing many start down the road of dividend investing and having it revolutionize their retirement outlook. They forgo gambling in hopes of finding the next Amazon or Netflix. They buy reliable income generators and reinvest the dividends diligently. This gives you a simple means to determine how much income your portfolio will produce in your retirement. Need more? Add as much spare change as possible and keep reinvesting those dividends. We recommend even retirees reinvest 25% of their dividend income at a minimum to keep their income stream growing year over year. Einstein is famously quoted as saying that compounding is the 8th wonder of the world. I would have to agree. It is one of the most powerful tools in existence, and it can help take a small collection of stocks and turn your portfolio into something magnificent.

When you focus less on the swings in market prices and more on the dividend-earning power of your portfolio, it changes how you see your portfolio each day. Instead of fearing the red days, you start looking forward to them as opportunities.

So perhaps you’re exiting 2022 discouraged and disheartened. Maybe some unexpected cash need, job loss, or other life event prevented you from meeting your retirement goals this year. This candle is for you. My wish is that it brings you hope as you use it to guide you toward a new outlook on investing.

The light is on for you, my friend.

Conclusion

Investing is one of the most unique journeys many of us take in our lives. The market remains one of the most effective wealth generators in existence, bar none. This means we’re often forced to interact with it if we want to see financial success, yet we can have very different approaches and experiences.

Lighting a candle is a universal experience, but its meaning can be varied and deeply personal. So too, will our outlooks on how to invest best and how we extract wealth from the market.

I am and always will be an income investor. This Christmas, I am lighting three candles for each of you. One to encourage you to reminisce on 2022 and its successes and shortcomings. One to encourage you to dream of the future and shed light on your hopes for 2023 and beyond. Finally, one more as a beacon to the lost and discouraged – there is hope and a way forward if only you follow the light to experience it!

Retirement should be something we look forward to, enjoy during it, and leave excitement behind for others looking forward to their own retirement. Together we can make this possible, and the market can pay for it! Sounds like a perfect plan, in my humble opinion.

Have a wonderful Christmas if you celebrate it. I look forward to our new experiences together in 2023.