If you want to invest without too much stress involved, but still earn consistent returns, you need to buy into outstanding businesses, Brian Beach in Daily Wealth explains…
An outstanding business is one that has durable competitive advantages. And one that returns large amounts of capital to their shareholders by paying you dividends.
And, of course, you must buy them at good prices.
If you buy quality and buy it at a good price, here’s how you can boost your returns with no extra effort…
Reinvest your dividends!
This means you take the dividends you receive from an investment, and use them to buy more of that investment. It allows you to earn dividends from your dividends.
If you keep doing this, it allows a small amount of money to grow into a huge amount of money.
Check with your stock broker about reinvesting your dividends to see how much they will charge you. Depending on your account, they may even do it for free.
If you don’t need the cash you get from your dividend payments, you have no reason not to do this.
This strategy of buying into capital efficient companies and holding them for the long-term means the odds are stacked in your favour to succeed in the long run.
By reinvesting your dividends, you’re making the most out of the power of compounding.
Over time, reinvesting your dividends can drastically amplify returns. And it’s a way for you to build wealth in the stock market. But you need to be patient, because it takes time.
So there you have it, an investment strategy that can safely boost your wealth.