By: Dividend Sensei
Tomorrow is Thanksgiving, so I thought it would be appropriate to take a moment to reflect about the many things today’s investors have to be thankful for.
If you take a moment to consider the world we live in, especially when it comes to investing, it truly is the best time to be alive…ever…in human history.
1. Low cost brokers
In the 1980’s the average brokerage commission was $45 but it could rise to thousands of dollars depending on the order size. Today? Discount brokers abound with Option House offering $3.95 commissions, and they are one of the more EXPENSIVE brokers around. Interactive brokers will let you pay as little as $0.35 per trade, and Robinhood will even let you trade for zero commissions.
The beneficial effects of falling trading costs simply can’t be overstated. As I explained in an earlier article, saving as much as 2% in per transaction costs can really add up over the decades, because the money you save gets to compound for you. Over a 50 year period? Saving 2% in commissions means an extra 2% annual return, which if you invest $1,000 a month into the S&P 500 can mean an extra portfolio value of $5.4 million for you, which comes to an extra $213,200 a year in dividends.
Or to put another way, discount brokerages have made it easier than ever for almost anyone to become a millionaire, and achieve financial freedom.
2. A wealth of low cost, (or FREE), high-quality investing information
Thanks to the internet there has never been a better time for the average person to learn about the long-term wealth building effects of investing. I myself spend my days pounding the table about all the academic studies done over the years that show that not just is long-term buy and hold stock ownership the best, fastest, and easiest way for you to get rich, but that dividend growth investing is the best way to accelerate that process.
And thanks to wonderful sites highlighted on here, such as The Motley Fool, Seeking Alpha, and A Wealth of Common Sense, today’s investors have access to some of the highest-quality information about individual companies, market history, behavioral finance, and personal finance that you can find; absolutely free.
Truly today anyone can learn how to master the markets, and if you are patient, consistent, and disciplined enough, there literally is no limit to the fortunes that can be made by anyone, from the comfort of their own home.
3. The market system itself
I marvel every day at the fact that we live in a society in which everyone is able to take their savings, and buy a piece of a quality company, and earn exponentially growing shares of that corporation’s profits.
Think about it for a second. When in human history has it been possible to convert your labor into a future ability to live a potentially unlimited, and exponentially better lifestyle (over time) without working?
It truly allows for the potential for responsible, hard working, and disciplined individuals to live a Utopian dream in which material want becomes a distant memory and you can devote your life to whatever higher pursuits most leave you fulfilled and happy. I myself have a plan for a perpetual charitable trust that will support a cause near and dear to my heart, and thanks to the incredible wealth, and INCOME building power of long-term dividend growth investing, I have no doubt that my plan will ultimately succeed.