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The Anti-Viral Path to Wealth.
Published about 1 year ago • 5 min read
A dividend investing forum will be held on March 5th, 2025, and you can attend for FREE. Details are below.
Warren Buffett just released his 2024 annual letter, and one big takeaway was how the United States and Berkshire Hathaway became incredibly wealthy—and how you can, too.
Fun fact: From 1965 to 2024, Berkshire paid only one cash dividend. On January 3, 1967, it disbursed the sole payment – $101,755 or 10¢ per A share.
Warren said of the dividend payment, "I can’t remember why I suggested this action to Berkshire’s board of directors. Now it seems like a bad dream."
From 1964-2024, Berkshire Hathaway's gain is an incredible 5,502,284% vs the S&P500's gain of 39,054%, with dividends included.
Warren highlighted how, over the past 235 years, while some borrowing was required, America grew because early Americans consistently saved and wisely deployed those savings.
He said, "If America had consumed all it produced, the country would have been spinning its wheels."
This hits home because I was spinning my wheels until my late 30s. I spent almost all I produced and had a 1% savings rate for much of that time.
The United States, Berkshire Hathaway, and yours truly grew financially because we underspent our income and wisely (for the most part) deployed those savings.
One of my all-time favorite books, The Richest Man in Babylon, written in the 1920s, mirrors this core lesson. The tale of Arkad teaching his "seven cures for a lean purse," the first of which is "Start thy purse to fattening—save 10% of earnings."
But it doesn't stop with saving. The fictional character uses examples of unwise ways to deploy those savings and the proper path to take - invest savings wisely with experts and avoid get-rich-quick schemes.
Warren has been passionate and has put his money where his mouth is. He is betting on America (and, as of 2019, Japan) by investing in the capitalistic and internationally intertwined companies of the United States.
We can do this too (and he recommends it for most people) by buying low-cost, broad-based index funds like VOO or VTI.
VOO is buying the 500 largest publicly traded companies in the United States, while VTI is buying every publicly traded American company—almost 4,000 of them!
Both have an expense ratio of 0.03%, meaning it would cost an investor $0.30 for every $1,000 invested annually. That is the definition of "low-cost", I think.
But, remember that the market generally goes up, just not every day, week, month or year as seen in the following chart going back to 1870.
TalkMarkets.com
I love that meme shared initially: People will always want to get rich quickly. We tend to follow the crowd, which can lead us to be taken advantage of by swindlers promising "get rich quick" schemes.
I remain skeptical and far away from the Yieldmax funds!!
Getting rich slowly by betting on America may not work, as the future is unknown, but we have a good shot at keeping this up for another 100+ years.
And if the trend holds, then getting rich slowly is just a matter of a simple mathematical formula: Saving + wise allocation + time = wealth building.
The United States did it. Berkshire Hathaway did it. I'm doing it.
One last note about wealth before we end this: We should help those who share a planet with us.
Being the richest person in the cemetery, lying beneath a gaudy and grandiose monument is an absolute waste of money.
As detailed in this USA Today article, Warren Buffett will give away 99.5% (about $149.7B) of his wealth to charity.
A few years ago, I noticed this, looked at our charitable giving, and found it embarrassingly low.
My wife Jena and I chose a few charities and automated monthly contributions, which equal just over 1% of our annual income.
We decided to automate this process on the first of each month. Often, we are so busy that we forget about it until we see our financial statements.
We went from a 1% savings rate to over 30% and a 1% charitable giving rate.
It feels good and helps make the world a little bit better!
(I'd love for you to reply and share your general thoughts about how you're building wealth and how you balance between investing and giving to charity. I'll respond to every response!
😁THANK YOU to all who responded to the last newsletter!!
Great TCAF conversation with Chief Investment Strategist Brian Belski, who touched on a surprising statistic about dividend stocks. One in particular is Canadian, which Floridians (and almost all of us in the US) see daily!
🎦If you missed it, how I lost 11% of my 401k chasing dividends!
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Speakers: Steven Bavaria, Steven Cress, Rob Isbitts, Scott Kaufman, Samuel Smith and Dividendology.
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Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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