In the middle of the night, a loud roar erupted from my eldest son’s bedroom.
My son, Nick, surrounded by a group of his teenaged friends, had just hit it big.
It was March 2021, Nick had recently become interested in one of the hottest financial trends of the time – cryptocurrency.
Now, longtime readers know crypto is something I stay away from. But I understand its appeal for some folks – especially the younger crowd.
Besides, there wasn’t much I could say to urge caution when he banked nearly $60,000 instantly from playing a crypto game.
Here’s a video of the momentous occasion:
Unfortunately, that victory didn’t last long…
Today, I’ll tell you what happened with Nick, what advice I gave him, and how you can use it to change your mindset to preserve and grow your own wealth.
Advice for My Son
Being the responsible, caring, and experienced father I am, I immediately sat Nick down after that night.
Yes, he was an adult, I acknowledged. But this was significant money that could help him sleep well at night for decades to come.
If he only used it well.
I told him to put 40% into dividend-paying stocks like the kind I recommend. I’d accept another 20% if he wanted to buy my old BMW (which he did). And then he could do whatever he saw fit with the other 40%.
As it turned out, that was investing tens of thousands of dollars into cryptocurrencies… Again, it’s not something I agreed with it. But that final 40% of winnings was his to do whatever he wanted with.
Well, that decision didn’t turn out well for Nick.
In fact, he lost all of it.
And then, to make matters worse, he doubled down…
He let the thrill and ease of quick money sway him into making bad decisions. In his mind, other people might not be able to, but he could win it all back and then some…
So he just cashed out of his dividend-paying stocks and invested that money into crypto instead.
That’s how he lost the other 40% of his winnings, leaving him with nothing but a car.
That he now has to service… With no money left.
How He Would’ve “Won” With Dividend Stocks
So has Nick learned his lesson?
When I asked him what he would do if he could go back in time and do things differently, his answer wasn’t that he’d invest everything in dividend-paying stocks.
Yet if he had, he’d be in a much more solid financial place today.
Take VICI Properties (VICI) – a gaming REIT that rents space to enormous casino names like Caesars (CZR) and MGM (MGM), for example. It pays a yield around 4.5% and is one I thought would appeal to my game-playing son.
Since March 2021, VICI has returned over 29%. Compared to the S&P 500, which is up only 1%.
As for the cryptocurrency market Nick favored instead? In the same time frame, Bitcoin is down 68%… And the world’s second largest crypto, Ethereum, is down 36%, at the time of writing.
Investing in something that volatile is almost never a good idea if you’re looking for a reliable income stream.
So while I fully understand the allure of the immediate or popular gain…
Now that I’m older and wiser, I’m all about sleeping well at night. My hope is that Nick will reach that conclusion himself.
While crypto isn’t garnering the same popular appeal it did earlier this year – with scams and frauds being brought to light – it still provides a cautionary lesson.
When it comes to creating wealth that lasts – and preserving that wealth – the best way to do it is through proven companies with strong fundamentals, business models, and shareholder rewards in the form of dividend payments.
And my hope is you won’t repeat these mistakes… and can choose investments that provide income streams that last.
I’ve put together a list of my favorite dividend stocks to own today. These are companies like VICI and others that have been generating income for shareholders for decades. And you can get access to this list by signing up for my Intelligent Income Investor newsletter here.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily