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Investing In A Tough Economic Environment

Posted on | May 29, 2011 | Comments Off on Investing In A Tough Economic Environment

The hardest part about investing in a tough economic environment is finding capital to allocate towards investments.  Let’s face it, it can be difficult to pay the bills and have a little bit left over to go to a movie or something, especially when young and not in the prime earning years of your life.

The reality unfortunately is that your young years are some of the most important years to be investing.  This is due to compounding interest which can be very, very powerful if you give it a few decades to work.  Giving it a few decades to work requires investing young, maybe even in your early and mid 20’s.

A tough economic environment makes it hard to increase your income.  As such, it can be hard to increase your investments and build up massive portfolios over time.

How can you compensate for the economic environment?

If you can find secondary methods of earning income, this is your best bet.  Supplemental income can really offset a lack of income increases or even a decrease in income.  This can help you sustain or increase your investment dollars even in a tough environment.

The market itself can be impacted by a negative economic environment by resulting in increased volatility.  This is nothing to be concerned with; instead, it represents potential opportunities to buy stocks at better values.  Truly, I prefer volatile environments.

When my goal is to build up a portfolio of dividend stocks over the next twenty years, the reality is that a stock market crash now would be beneficial.  I could accumulate massive amounts of shares and then let them bounce back and pay dividends over the next twenty years.  Of course, this assumes quality fundamental analysis and stock picking, but that’s where this website can come in handy.

On this website, we’ll continue to recommend quality dividend stocks and “dive deep” with regards to getting to know these companies.  This is the key to successful, long-term, fundamental, dividend investing.