Thanks to a face-to-face Dr Wealth event last Saturday, I’ve been reminded of how much I used to enjoyed speaking to a big crowd. Talking to an audience gives me a “high”, and sometimes I get “high” and disable my filters. So occasionally, I make utterances that might be highly controversial or offensive. For those utterances, I hope that history will never remember them, but sometimes my words resonate with the audience, and I get a spontaneous ovation.
One utterance that worked well with the crowd is:
“Getting dividends is mental wellness”
I had a group of Millenials, Gen X and Baby Boomers, so out of the blue, I decided to critique Gen Z’s obsession with mental wellness because Gen Z’s obsession with mental wellness distinguishes Gen Z from older folks. There are very few Gen Zs to offend in an investment talk on a Saturday afternoon. When discussing mental wellness, I suddenly uttered that getting dividends is a form of mental wellness, and the crowd erupted in applause.
This is all unscripted because it was a spontaneous Q&A, and I’ve since calmed down, so it’s time to examine this idea critically.
For a while, I’ve always been very amused with how Buddhism entered the West. It did not arrive as a religion but as a psychology because white people, who were becoming more individualistic and less religious, began to discard religious dogma for the inner tranquility of meditation.
Similarly, I can imagine what Gen Z has to deal with today. Social media is full of falsehoods like “girl maths” and weirdoes proclaiming that dividend investing is dangerous. If Gen Z wishes to approach investing as a field of study and means of wealth accumulation, like my students, they would have to deal with quite a lot of information. For example, they need to know what a standard deviation is.
From the quantitative perspective, dividends investing has many competitors.
Even AUM-based advisors want to wean you off dividends for their mean-variance-optimised ETF portfolios. If you use maximum drawdown over March 2020, dividends investing is dangerous because some local REIT portfolios lost 45% at the pandemic’s start.
However, if you use Beta or volatility, dividend stocks are safer than some market indices, sometimes lowering volatility by 20-40%. The reality is that dividend investing cannot win in every part of the market cycle. It only outperforms in a downturn.
But from a self-help perspective, dividends rule.
I’ve read a lot of self-help and management books over the years, and I must say that they are designed for employees who had to work during the Industrial Revolution:
- How to Win Friends and Influence People is about getting others to like you by crafting a personality different from your True Self.
- The Power of Positive Thinking is about reframing events at work to put a positive spin on them and always having a sunny outlook.
- Even Grit is about developing conscientiousness.
Bosses love these books because reading them makes you the perfect employee.
But what happens if you do not get the perfect boss? None of these books will show you how to escape a toxic work environment.
This is where dividends rule.
Dividends put money in your bank account even if you are in a coma or have negligible emotional intelligence. Only when I started getting dividends was I able to attain the peace of mind and happiness I craved because I had the freedom to FIRE a toxic employer.
Of course, every idea has its limits.
I hope I don’t come across as dismissive of some Gen Zs who have clinical mental issues. Dividends can’t solve a mental illness directly, but they can pay for therapy and medication. Also, many Gen Z struggle with regular employment as they are young, so their first dividend is still quite far away.
So, let’s work with a more relatable idea.
I play Baldur’s Gate 3 on GeForce Now and pay about $9 monthly for 10 hours of priority gaming. If you visit any page on the Straits Times Index ETF, the current dividend yield is 4.13%.
We take $9 x 12 months and divide by 0.0413. We get $2,615. By setting aside $2,615 to buy Singapore’s largest blue chip companies, you effectively get a perpetually “free” essential subscription to GeForce Now, which is covered by dividends payouts.
I’m glad face-to-face seminars are finally back.
But if you had missed the in-person session, join me next Monday on zoom instead where I’ll be sharing more about how you can make dividends your personal mental wellness elixir.
