Getting rich doesn’t have to be hard, or shady, or even particularly slow.
In fact if you go those routes, you’ll find true wealth impossible to find.
This applies to financial wealth and all other forms.
Greed is Good?
“Behind every great fortune lies a great crime.” – Honore de Balzac
This is a statement I happen to disagree with. Despite what many people seem to think – that you can’t get rich without cheating somebody – I would say it’s more true that you can’t get rich without helping somebody.
The media is full of stories of shady dealings reaping profits, but most of them are just that – stories. Karma is real, ladies and gents.
Following on from my post on investing in dividend growth shares with leverage, (and the best investments beginners guide) I’m going to go into a bit more detail, and incorporate it into a review of an online broker called de Giro.
Why de Giro? Well, for a start, their commission rates are low. Unheard-of low. But we’ll get to that.
Time to Get in the Game
In my post on making money at home online by blogging, I outlined how you can make cashflow which can potentially not only replace your job, but far surpass it over time.
There was a great book written about this kind of investing, called The Single Best Investment, which I absolutely recommend everybody read.
But even this book doesn’t quite tap the full potential of the method. It doesn’t deal with leverage, and still talks about buying in order to sell, which is something you just don’t do if you’re serious about income.
But what do I know?
You might be wondering, how do I know this stuff? Do I use this method, and if so, am I rich yet? And if not, why believe me?
Well, I only started my el Digger campaign back in October 2016. I discovered it almost by accident, as I started by buying a share for my newborn son. I have a background in futures trading, so I did some research on buying shares for income and growth. Then I discovered the margin facility, which, given my trading background, got my mind whirring. A couple of spreadsheets later, el Digger was born and I can already see the results coming in.
For example, last month I found myself purchasing new shares nearly every day – without adding a single penny of my own money.
Hundreds of dollars worth.
It was all down to capital appreciation (prices going up) and dividends buying me extra margin to trade with. See, after a year my effective dividend is already substantially higher.
The following is a snippet from a napkin-calculation spreadsheet I created, outlining the growth of a portfolio when you start with 100, add 100 per month, and reinvest everything with 250% margin and 10% capital appreciation.
So you can see that by year 10 you’re getting something like a full-time income from the portfolio.
But what this spreadsheet doesn’t include, because I simply haven’t figured out how to do it yet, is 2 things:
- Rising dividends
- Daily compounding (reinvestment)
From my rough calculations so far, it would seem to me that when you add the above 2 to the mix, your portfolio grows at least 30% faster.
Meaning you get your full-time income by year 7.
I have a hunch it’ll actually be way faster than that. Daily compounding versus annual compounding isn’t even the same ballpark.
But only time will tell, right?
How I’m doing right now
Here’s a snippet from my trading screen at month 15:
As you can see, that’s a portfolio of 5,098.89 with only 1,506.59 of my own money. So far my profit is 211.98. But I figure I’m “owed” quite a bit by the market in capital appreciation, because I haven’t seen much of that yet, in fact the portfolio is a loss without dividends. I was showing an overall loss until just after the year mark. It was the November and December rally that got things looking perkier.
And really this is going exactly how I expected. The first year is always going to be quite flat, especially since you’re paying interest on the margin. I expect this year to be very interesting.
And I would like to encourage others to take this journey. Get yourself an online broker and go.
Best online broker beginners recommendation
Regarding the best online trading broker for North America, I’m looking at US brokers at the moment, and will review the best sometime soon.
In the meantime, if you’re in the EU, you’ll want to go with De Giro. It’s who I use. I like them. A lot.
Their transaction fees are low, I like their trading interface, all my executions have been done as required, and I can’t even think of any downsides to report, although if I come across one I’ll let you know.
De Giro are a Dutch discount broker. They’ve won high-profile awards recently, and you can also trade options and futures with them.
(Sometime I’ll describe how you can use a covered call strategy to add to your income, if you can stomach it!)
They’re execution-only, which is great for me, because I don’t need any technical analysis or advice.
And neither do you, if you do more or less what I do, keep it simple and don’t bother with the fundamental analysis trap (aka everyone’s got an opinion).
There’s no minimum deposit, and the account opening process is seamless.
Oh, and did I mention the fees are super low? Lookee:
The significance of this as you build, accumulate and leverage should be pretty clear to all.
Nice charting and tools as well.
Plus they’ve got a mobile app for smartphones which works well.
All told, although it might sound funny, I don’t really have anything negative to report. As I say, I use them, and I like the service.
Perhaps, if you’re a “day trader” (ie gambler) you might find that their interface is not built for speed. But that doesn’t concern us, of course. We’re in it for the long haul. And we don’t do CFDs.
It’s not timing the market, it’s time in the market.
As a plan B, or if you would rather go with a quality “established” broker, I’d recommend Hargreaves Lansdown. At the moment they’re doing a deal where you get your first share deal free, until the end of January.
Happy supercharged investing!