How can you tell if someone is wealthy?
For most famous people, you can look up their net worth online.
But what if I told you that number doesn’t tell the whole story?
When it comes to living financially free, there’s only one number that matters.
And it’s not your net worth.
It’s the size of your passive income stream. The money you receive monthly, quarterly, or annually for doing nothing but holding an asset.
In other words, your dividends.
For years, stock market traders have obsessed over getting the right timing to make the most money. But according to a University of California study, only 13% of traders following this strategy were successful over six months.
Today, I will show you why buy-and-hold dividend investing delivers far better returns than relying on market timing. And prove to you that the size of your passive income is a more important number than your net worth when it comes to living the life you want to live.
Market Timing Can Destroy Your Wealth
Let’s compare buy-and-hold investing vs. market timing since the 1930s.
One thing market timing investors don’t tell you is that there are 10 days each decade that impact your bottom line more than the rest of the 2,510 trading days combined.
And those 10 days can make or break your wealth if you miss them.
Below is a chart comparing buy-and-hold investors to market timing investors who missed the 10 best days of each decade.
| Decade | Price Return | Excluding Best 10 Days per Decade |
| 1930s | -42% | -79% |
| 1940s | 35% | -14% |
| 1950s | 257% | 167% |
| 1960s | 54% | 14% |
| 1970s | 17% | -20% |
| 1980s | 227% | 108% |
| 1990s | 316% | 186% |
| 2000s | -24% | -62% |
| 2010s | 190% | 95% |
| 2020s | 18% | -33% |
| Since 1930 | 17,715% | 28% |
Source: CNBC
As you can see, long-term investors far outperformed those who tried to get in and out of the markets and ended up missing just 10 days.
And there’s no way to predict the best 10 days of each decade.
So what’s the only way to ensure you’ll be in the market when they occur?
Buy and hold dividend blue-chips.
Don’t gamble your retirement away by timing the market and missing out on the most important days for your portfolio.
Share Price Isn’t the Most Important Thing to Look For
When you’re buying shares of stock, share price matters.
But once you own shares of a dividend-paying stock, what the share price does isn’t as important. As long as you’re receiving a consistent dividend.
Why?
Look at any stock chart. You’ll see that nothing goes up all the time.
Despite this volatility, there are dozens of high-quality stocks that pay reliable, predictable dividends. And that have grown that dividend for years.
When it comes to dividend payments, they have nothing to do with day-to-day share price movement.
This is why I focus on dividends. And can sleep well at night, knowing that there’s always income coming in.
If you’re a wealthy individual with all your money tied up in investments and funds… How would you pay your bills?
Your net worth doesn’t help you there… your income does.
Sure, you could sell shares whenever you need money to fund your retirement. But to make a profit, market timing needs to be on your side. Not to mention, you could owe taxes on any capital gains.
It’s great if you happen to sell when the market is near all-time highs. But no one wants to be forced to sell shares when the market is down 20%.
Liquidating assets to fund a retirement increases the risk of running out of money before you die.
But you don’t need to put yourself in that situation.
The best dividend-paying stocks mean you never even have to touch your principal. They’ve been delivering safe dividends for decades… and should continue for decades to come.
A Top Stock Pick for Financial Freedom
The way to reach financial freedom is by having your passive income exceed your lifestyle expenses.
I use blue-chip dividend stocks to generate this passive income because it tends to rise every year, regardless of whether share prices are up or down.
And one of my favorite ways to do this with is high-quality real estate investment trusts (REITs). By law, REITs pay dividend yields well above market rates. They also provide reliable, predictable annual growth.
Here’s the long-term dividend chart of one of my favorite SWAN REIT stocks.
This company yields 3.6% right now (well above the S&P 500’s 1.4% yield) and has been growing its dividend for 13 consecutive years.
Most recently, in December 2022, it raised its dividend by 12%. And I expect to see another strong dividend raise at the end of this year.
You can learn the name of this opportunity by checking out my special SWAN Stock presentation here. And how to get the names of all my favorite dividend-paying stocks right now.
Happy SWAN investing,
Brad Thomas
Editor, Intelligent Income Daily