25 Years of Dividend Advice in 44 Minutes

I was asking myself some ridiculously simple questions. Has this company been around longer than I've been alive? Yep. Will this company be around long after I'm gone? Yep. Do I want to create a compounding factor that becomes a runaway train? Because remember, I've been doing, I'm in my 25th year doing this. My compounding factor is a runaway train now. And I'm 49. So imagine what that compounding factor is going to be when I'm 65, 75, 85, 95. What are my kids going to be taking over? Is it going to be a significant dividend amount on a quarterly basis? Absolutely. Will my kids care about what the stock price is? No. Because they have no plans to liquidate any of that stock portfolio. If you're already practicing the infinite banking concept, if you've already implemented that in your life and you're curious about dividend reinvestment planning, I'm going to walk you through that. Now we're going to talk about dividend reinvestment program, how it works. And I want to share with you another term, Dividend Champion. Now, Dividend Champion is a company that has paid and consecutively raised their quarterly dividends for the past 25 years or longer. That is what is referred to in the industry as a dividend champion. Now, I just want to give you a quick rundown of how these dividend reinvestment plans work. So let's presume that you own a hundred shares of ABC Corp. And ABC Corp. Declares a dividend of a dollar per share. Well, you could take that dividend in cash and receive a hundred dollars, which is taxable. Or you could reinvest that hundred dollars back into more shares of ABC Corp. Now, let's presume that you did that. The shares are now trading at 10 bucks. You would pick up another 10 shares, which is $100 of dividends divided by 10. You would pick up another 10 Shares. A quarter later, Tom, ABC Corp. Declares another dividend of a dollar per share. You own 110 shares. Well, you pick up $110 in dividends. The stock's now trading at $8 a share. You would pick up another 13.75 shares. So you can see that process and how that would create a compounding factor over an extended period of time. So this is the very first share of stock that I purchased. And this was back in November of 1999. So, so we're talking just about 25 years ago when I purchased my very first stock. And my intention at that time was to initiate my dividend reinvesting portfolio and how I arrived at the companies that I decided to invest money in gradually and incrementally over a period of time is I read a book from Peter Lynch. This book title is One up on Wall Street. And Peter lynch described in the book, he said, you know, if you just take a look around you in your home, for example, if you sort of examine all the goods and all the services that you are utilizing on an ongoing basis, that may provide you with some inspiration about companies that you might want to have a partial ownership interest in as an investor. And so that's what I did. And I picked up stock in a variety of different companies and have been doing this gradually and incrementally over the past 25 years. And I want to show you just a snapshot of some of the companies that I've accumulated, in some cases, a considerable ownership interest in. Now, I'm sure that all of you who are watching can relate to one or more of these companies. I utilize goods and services from all of these companies and there are more in my portfolio. But I ran out of room on this slide here to include them all. But typically I tried to cover the sectors that I was very familiar with, technology, banking, consumer goods and so on, and how those goods get delivered, how energy gets delivered, utilities, and of course, telecommunications. All of these. This variety of companies I was familiar with. I only invest in what I know. I don't invest capital in anything that I don't know. I don't care how appealing the investment opportunity is. If I'm unfamiliar with it, I don't invest in it, period. And I would encourage you to adopt a similar investment philosophy, an investment statement, if you will. In addition to that, I only invest in dividend champions. These are companies that consecutively over the past past 25 years or more, have continued to raise their dividends quarter after quarter, year after year. And it's quite easy to find out information about a publicly traded company. It's not difficult to do if you just hop on to the Googles. I just pulled up one of the companies that I own, and that's Bell. And so on my screen you can see here I just went to the Googles and I typed in Bell stock, while the Bell stock ticker symbol shows up the trading price of the stock. But right down here.

You can see the dividend yield. And the dividend yield on this stock is quite attractive. It's 7.93%. If we were to pick any of the other companies from what I own, here's Enbridge stock. There's the stock trading price, here's the dividend yield, 7.89%. Not a bad day at the office when you've got companies that you have a partial ownership interest in. With dividend yields that exceed 5 plus percent, that's, that amounts to obviously dependent upon what position of stock you own in the company, that amounts to a considerable sum of dividends, especially as you compound your position in these companies over a period of time. And so I want to walk you through a sample dividend reinvestment plan and I wanted to bring this down to a level that makes it a very achievable reality for most people. And so I'm going to look at a dividend reinvestment plan where the stock is, we own a thousand shares of this stock that traded at 10 bucks. So we picked up 1,000 shares. Our initial investment is $10,000. And we're going to get that $10,000 from a policy loan. So we're going to request the policy loan from the life insurance company. And as all of you know, if you're familiar with the infinite banking concept, that is a process. What I'm describing to you is what happens with the product, the dividend paying life insurance policy, which in this case has cash value that is accessible by way of a policy loan. So we request it from the life insurance company. Life insurance company advances that policy loan proceeds in the amount of $10,000. And there was no lengthy nosy credit application to gain access to that money. It was a simple quest to the insurance company. The insurance company asks, would you like that money directly deposited into your checking account or would you like us to mail you a check? That's it. No credit checks, no income verification. The policy loan is unstructured. So the owner of the policy in this example controls the repayment schedule of that policy loan. So purchasing the stock, we now have a thousand shares. Stocks trading at $10 a share. Now what we're going to do is we're going to take a look at what happens over a 20 year period if we do not reinvest the dividends. So for the purposes of this first part of the example, we are not reinvesting the dividends into more stock. Now, assuming that this particular company is a dividend champion, which in this case it is. So we have utilized the life insurance company's money to invest in this particular stock. So we didn't utilize any of our own cash value that remained in the policy growing Tom and uninterrupted by that policy loan balance. So you can see the policy cash value column here.

And you can see this policy cash value increasing, continues increasing uninterrupted by the loan balance. This particular policy loan interest rate, the simple interest, I'm just keeping it constant at 6.5%. Understandably, that simple interest rate will fluctuate. But for the ridiculous simplicity of this example, if you just follow along with me at 6.5%, that is simple interest on that loan balance each year of $650. So if we tally that up over a 20 year window, that's $13,000 of simple interest. The policy owner, again I can't emphasize this enough. The policy owner controls the repayment schedule of that policy loan. So the policy owner can repay that loan at any time. But I want you to see what's happening with that portfolio of stock over that 20 year window. So in the first year, the dividends per share were $0.40. So the income, the dividend income that year was 400 bucks. The dividend was increased to $0.44, $0.48, $0.53. You can see that gradual and incremental increase in dividends, Tom. And you can see the yearly income. And if we tally that up over that 20 year period, that's $22,910 of total dividend income. The initial investment in the stock was 10,000. And let's presume that the stock price remains stagnant for that entire period of time. Didn't go up, didn't go down. Just keeping the example really, really simple. Now.

When you look at the outlay, because the policy owner said, look, I'm going to take the dividend in cash and then I'm just going to pay the difference toward the simple interest on the policy loan. So the policy owner received $400,000 in dividend income and came out of pocket another $250,000 to cover the simple interest on the policy loan. Did the same thing in the second year, third year, fourth year, fifth year, sixth year, and then in the seventh year, the dividend income exceeded the simple interest on the policy loan. So the gross income before taxes is what you see in this column, which amounts to $10,723.

This is no reinvestment of dividends. This is not something I would recommend. But in this particular case, this is what the individual decided to do. Now, I want you to understand some of the key highlights that are going on here. So in year nine, let's go to year nine, that dividend of $857 is 115% of the original.

Original was 400 in dividend income for the year. At year nine, it's 115% of the original. In addition to that, after 10 years, you've collected 63 $74 of dividend income, which is 64% of the original investment. In addition to that, after 20 years, you've amassed $22,910 of income, which is more than double the initial investment. And the total return for that window of time is 129%. And that's during a completely flat market, Tom. So if you were to to do a compounded annual rate that would be 6.4% per year, not too shabby and very achievable. What I'm showing you here is very achievable. If you reinvested the dividends, something remarkable happens and I'm going to show you that now. I'm going to walk you through this, but I'm going to change the scenario just a little bit. In this scenario we're going, I'm going to introduce you to the couple that we're going to be talking about, John and Sandra. Now, When John was 36 years young, John decided that he was going to create his first dividend paying life insurance policy and he was going to pay premium of $12,000 a year. And he knew that he was going to pay that premium until he reached age 65. That was his plan. That's how much money he wanted to pay in premium all the way through to age 65. Now at age 40, John discovered dividend reinvesting. And he said, you know what, I'm going to do that and I'm going to go buy that portfolio. I'm going to take out a $10,000 policy loan from the life insurance policy. I'm going to go buy that portfolio. So now he's 40 and he's going to reinvest those dividends all the way through to age 60 for a 20 year window. From age 40 to age 60, he's reinvesting the dividends. He's not taking a penny of that dividend declared every quarter as income. What he's doing is he's purchasing fractional shares of additional stock for that entire 20 year window. How many quarters are there in a 20 year period? There are 80. So he's reinvested dividends on 80 occasions. And at the end of that 20 year period, what he decides to do at that point is he says, okay, I'm going to start taking quarterly income from that dividend reinvestment plan. I'm going to start taking out the income on a quarterly basis. So let's see how John worked out, how he fared in doing this. And let's see how Sandra's reacting to the fact that they're taking this quarterly income. What you're looking at here on the screen is the number of shares owned after each reinvestment of dividends. You can see in the first year we have four quarters. That's a duplicate column there. And then in the second year we have four quarters. In the third year we have four quarters, so on and so on and so on. Now when we get down to.

The 20th year, I want you to see something. The initial investment was 10,000.

The portfolio of that one particular stock, the account value is now $94,880. The stock price didn't change at all over that 20 year window. Now, of course, we know that that's not going to be the case. The stock price is going to go up, the stock price is going to go down. I just wanted to keep this example ridiculously simple. The accounts valued at 94,880. I want you to see that quarterly income is now $5,468. That's $21,000 a year. Assuming taxes of approximately $7,825, that's net $14,048. Now what John and Sandra decided to do was to take that quarterly income, income for the next 30 years. That's $421,000 after tax. Whose money did he use to buy the stock? Used the life insurance company's money to buy the stock. He decided that he was only going to take out a policy loan for $10,000 at age 40. But I want you to see John's policy. When he turned 40, he had 47,000 in total cash value in the policy. So he took out this policy loan for $10,000. The insurance company placed a lien for $10,000 on the total death benefit of the insurance policy. His total cash value of $47,823 continued increasing. He continued paying the premium. We take him out to age 65, which is when he decided to stop paying the Premium. He's got $743,000 in cash value, a death benefit of 1,355,000. He's got the stock portfolio, which at age 60 was valued at 98 grand. And him and Sandra have been taking quarterly income because they decided to use that money to fund their travel. They didn't want to come out of pocket any additional capital outlay. They just wanted to use the quarterly dividends to take care of their travel and their leisure. And they decided to do that for 30 years. Years. Now, I want you to see what happened in this scenario. Because at age 65, John and Sandra decided that they wanted to retire. He paid a total of $346,000 in premium into that policy from age 36 to age 65. The annual retirement income from all of his existing sources, him and Sandra, their household retirement income, their CPP plan. They had some additional retirement income resources. It amounted to $50,000 after tax each year. Additionally, John drew another $36,588 a year tax free from his cash surrender value line of credit, because at retirement, he pledged the policy in exchange for a cash surrender value line of credit from his conventional bank. The conventional bank said, John, we're going to lend you a minimum of 90% of your total cash value for the rest of your lifetime. And you don't have to pay anything back to the bank until you die. Death benefit can wipe out whatever you owe at death. So they utilized for a period of 26 years a total of $951,288. So in total, they spent 2.251 million in retirement. Their DRIP portfolio generated $5,468 in dividends quarterly. Assuming the dividends never went up again. I'm assuming that there was never an increase in dividends for the next 26 years. What is the probability of there not being an increase in dividends? Very low, but it could happen. So let's just presume that the dividends remain flat. They're getting 5,468 according to quarter after tax for the year. They've got about 14 plus thousand to spend to fund their travel and their leisure. The portfolio was worth 94,880, a significant increase, obviously, from the initial $10,000 investment upon his death. When John died at 91, the portfolio, the stock transferred to his spouse and the policy's net Death benefit was 622,000. Because, remember, they had to pay the bank off, right? So the insurance company wrote two checks when John died. One check was payable to the conventional bank to pay off the cash surrender value line of credit. And the remaining 622,000 of death benefit, which is tax free, was paid to Sandra. And Sandra still owns the stock portfolio, which is still paying dividends every quarter. Now, if John had followed the traditional retirement planning path and invested money in A retirement account. He would have been broke at age 87 even if he earned consistently 5% after tax after fees every single year from the moment he started investing money till the moment he died. What's the probability of John earning that in a retirement account every single year from age 36 to age 91? Low. Here are some things I want you to think about. The net death benefit of the policy was $622,983 that was paid to Sandra income tax free. Did Sandra get back all the equivalent of all the premium that John ever paid into that insurance policy plus more? The answer is yes. Did they both benefit from $951,000 while John was still alive? The answer is yes. The drip portfolio paid them $421,000 after tax for all their travel and leisure. Could they have traveled anywhere they wanted to in the world? Yes. Is Sandra financially secure and is she worry free about money? Yes. Is the stock portfolio still paying Sandra with quarterly dividends? Yes. Can Sandra use those dividends to get to cover some or all of her long term care or assisted living costs? Absolutely. Did Sandra leave behind a significant tax free inheritance and could she transfer the stock portfolio to her adult child so that she could continue receiving dividends after Sandra passes away? The answer is yes. My question to you now, Was there anything stupid about what John did? No. Now, what if John started his drip portfolio with a $30,000 policy loan instead of a $10,000 policy loan? My question is, would the quarterly dividends and the portfolio value be higher or lower? Absolutely it would be higher. Which numbers would John and Sandra like more? The higher numbers or the lower numbers? Now here's the next question. What if John paid 24,000 a year in annual premium versus 12,000? John and Sandra were doing really well professionally, but John only chose to pay $12,000 in premium. Somebody was talking to him about retirement planning, traditional retirement planning, and saying, well, John, you could put $28,000 a year into an RRSP. Why don't you do that? So what if John just put $24,000 in premium into a policy each year versus 12. Would the total accessible cash values and the total net death benefit be higher or lower? Absolutely higher. Next question should be obvious. Which numbers would John and Sandra like more? The higher numbers or the lower numbers? The answer is higher. Of course they want the higher number. Now if you just visualize walking around your home, your garage and your garden shed, are you going to spot a lot of products that you consume on an ongoing basis and you have been consuming them for as long as you can remember. The answer is yes. When you turn the light switch on, power has to be delivered by some utility company. When you flip ignition switch on your vehicle and you drive down to the gas station, that fuel had to be refined somewhere and it had to be delivered from somewhere in order for you to pump your gas tank full of fuel. When you pick up that smartphone that you own, there's a lot of technology in that phone that was manufactured by some company and intel had a big part of it. When you work with this computer that you're viewing zoom on, Microsoft might be powering your system or Apple. Both companies I own stock in. When you get a bill from your phone company each month, it likely came from Bell, Telus, or if you're joining us from the United States, perhaps it came from T Mobile or Verizon or one and the same. I own interest in all those companies. When you get stuck at a railway crossing and you are late for the meeting, CN Rail is delivering a lot of those goods and services across the country. I have an ownership interest in that company. When you transact by swiping your debit card, the retailers that you do business with, they likely have accounts at one of the big banks, rbc, td, Scotia, Manulife, et cetera. I have an ownership interest, bmo. I have an ownership interest in all those banks. So you can see the logic and the rationale as to how I assembled a portfolio of champions, dividend champions. And all that I showed you was a portfolio that began with 10,000. I was doing that when I was in my early 20s. And so when I decide that it's passive income time and I'm going to take those dividends from all those companies quarterly in the form of income, I. I won't need money from any other retirement income source. And then my plan is to transfer that portfolio to Rebecca. And then Rebecca already knows the plan to transfer that portfolio to the kids. Now we have our estate planning in place with our family trust and our irrevocable spousal trust and all of that. So if, God forbid, if something happened to me and Rebecca readjusted and for whatever reason that relationship didn't go so well, then that individual is not going to have a hope in hell of getting access to any of that money. And if I'm not worried about my kids, I'm worried about who they end up marrying. And so if they end up in bad relationships, those individuals are not going to have a hope in hell of getting access to any of that money so you can structure your affairs in such a way. Now let me ask you this question. Do you think Johnson and Johnson is still going to be selling Tylenol long after all of us are gone? You think Pfizer is still going to be manufacturing pharmaceuticals long after all of us have graduated and passed away? You think CN Rail is still going to be delivering goods? Do you think Bell's still going to be sending people phone bills every month? You think the banks are still going to be transacting in whatever the medium of exchange is, and those companies will still be paying quarterly dividends, and those dividends are going to come to the family in perpetuity. The family has very clear instructions that stock portfolio is never to be liquidated. There's a website that you may want to visit that'll give you some. Some additional insight. DirectInvesting.org you can visit that website. If you're really fascinated by this, much like I am, then you can visit the Oxford Income Letter. It's a subscription. It's not much at all. It's. I think it's like 70 bucks a year or something.

Artist Challenge is picking the right stock.

If I'm just being completely honest with everyone. When I purchased an ownership interest in. And I'll just share this again. So when I decided to have an ownership interest in these stocks, and this isn't my entire portfolio, okay. But when I decided to own stock in all these companies, you know how much attention I paid to the stock price at the time? None. Is that an approach that I would recommend everybody do? Of course not. But I didn't buy the stock to speculate on the price. I purchased the stock for the dividend yield. I wanted the yield. So I decided how much capital, not how many stocks I was going to buy, how much capital I was going to put into that particular stock. So if I said, look, I'm going to put $5,000 of capital into Bell, and I didn't care what the stock price was. I wanted to know what the dividend yield is and historically, what has it been and does it meet my criteria of being a dividend champion? That was my process. And I had to know what I was investing in. If I didn't know, I didn't invest. It didn't. The stock could have a dividend yield of 12% and I wouldn't invest in it if I didn't know the business, the inherent nature of the business. And I was asking myself some ridiculously simple questions. Has this company been around Longer than I've been alive? Yep. Will this company be around long after I'm gone? Yep. Do I want to create a compounding factor that becomes a runaway train? Because, remember, I've been doing. I'm in my 25th year doing this. My. My compounding factor is a runaway train now, and I'm 49. So imagine what that compounding factor is going to be when I'm 65, 75, 85, 95. What are my kids going to be taking over? Is it going to be a significant dividend amount on a quarterly basis? Absolutely. Will my kids care about what the stock price is? No, because they have no plans to liquidate any of that stock portfolio. Isn't that good? And I got to share this. I got to tell you this. So this is funny. Years ago on television, there was a commercial that would run for the money paper. It's exactly what you're seeing here on the screen. And you could order a copy of the money paper in the mail. And in the money paper, it would have all of the companies that had dividend reinvestment plans. And I was fascinated. So I was at that time, I was 12 years young, and I saw Warren Buffett talk about his ownership interest in Coca Cola. Well, I'm 12. Did I like Coke?

My guess is yes.

And did I understand what dividend reinvestment plans were?

Probably not.

But did I hear Warren Buffett say that he owned Coca Cola and that I could do that, too? Well, my mom and dad laughed. Oh, my God. They thought that I was a lunatic at the time. So I get this money paper, and I still have this money paper. I still have it. And I said to myself when I was 12 years young that one day I was going to own Coke. And I'm surprised that some of them. I didn't put that on my PowerPoint. But I do own shares in Coke. Full disclosure, I'm a Coke shareholder. So, again, you never know where this can all begin. So I want everybody to imagine for a moment if you started a $10,000 portfolio for the benefit of your children, and imagine what that would look like when they reach your age and how you can utilize it for the rest of your lifetime and then leave it behind to them when you're no longer here, and you could do something for your kids that they can't do for themselves. Now, I couldn't buy a share of Coca Cola when I was 12, but the very first thing that I wanted to do when I was old enough was to go out and buy stock And I didn't know how to evaluate a stock price and the enterprise value of the business and whether or not I was paying a reasonable price for the stock. That didn't matter to me when I first got going. It doesn't matter to me to this day. Is that right, wrong or indifferent? Hey, look, if you're an expert in pain picking stocks, I wish you well. But I'm not a gambler. I'm purchasing more stock by reinvesting dividends. And I just literally look at the statements that I get every quarter from all these companies. That's all I do. So let me go back here because I want you to see a few things. It takes 43 quarters when we're reinvesting the dividends. It takes 43 quarters to double the number of shares, only 13 more quarters to triple the number of shares. This is how compounding becomes a runaway train. It only takes eight more quarters after that to quadruple the number of shares. After that, ownership goes up by another thousand shares every year. At least that's the compounding factor. In addition that, after 20 years, your initial $10,000 investment is growing in value by $5,000 a quarter. That's a 200% annual return. You may think I'm nuts. I'm here to tell you that that is absolutely an achievable reality. Your $10,000 investment goes up 800% in 20 years through the power of reinvesting dividends. We're not trading in stock, we're reinvesting dividends. Invest in great companies that raise their dividends every single year and don't do anything else. And if I was to explain to my firstborn son, 15 year old son, I would say Jackson, and this is what I, he would tell you. I've told him that invest in great companies that raise their dividends and don't do anything else. In several years you have many times more money than if you attempt to trade the market or put it into an actively managed account or mutual fund. Compounding dividends is like a runaway train. And once it gets going, it's the key to building wealth. And that's one of the reasons why I have so many policies as well. And why I take those dividends and chunk them right back in to buy more paid up additions. This is a behavior. Policy owner's behavior is far more critical than the behavior of the life insurance company. The drip portfolio owner's behavior is far more critical than the behavior of the company that you're invested in. Keep reinvesting Those dividends into more stock. Now this is a truth and I'm just going to tell you, if you're bothered by this, I'm not going to make any apologies for it. It's the truth. You're just not as good of an investor as you think you are. And neither are the overpaid mutual fund and hedge fund managers that you may have experience dealing with. You're just not as good of an investor as you think you are. If you're trying to time the market or speculate, hey, you may get lucky on occasion, but you're not as good at it as you think you are. Buy quality companies, reinvest the dividends and don't do anything else is the advice that I would give to my kids. By giving you that advice, I'm just sharing with you what I would say to my kids. You take that for whatever you want it to be.

If your stock dividend automatically reinvests, does it trigger any taxation follow up? Question is, how do you keep records on the cash basis for all the additional shares purchased through the dividend reinvestment for tax purposes if you ever wish to sell the shares?

Well, that's a really good question. I use a platform where all of that data is tracked for me so I don't have to maintain tracking of it and I get the proper tax filing forms every year and so I don't have to request it or try and put it together. That's all supplied and provided to me.

How does all this work inside of a tfsa? Would holding the dividends in a TFSA be advisable? To save on the tax, you would.

Reinvest the dividends right back in for fractional shares of more stock. And you're not triggering a taxable event because all of that growth is happening inside of your TFSA tax free. I've maximized my tax free savings account in that exact fashion and so has my wife Rebecca. That's the reason why we do it. And then we just chunk in. I think it's like six grand a year or I don't know if they raised it or something. I honestly don't know. I just once a year I asked my accountant, hey, let me know how much room I have in the tax free savings account.

Same for Rebecca. And then we just put the cash into the account and then I go back in and I expand our positions in all those great companies that we own. I don't even bat an eye at the stock price.

How do you find the dividend Champions. And then a follow up question is, is the dividend champion title for Canadian stocks only?

Dividend Champions is for both Canadian and American stocks. And if you go to the directinvesting.org website, you'll find a list of Dividend champions there. And you can, you can download it in an Excel format and so on. There is an abundance of resources online that is ridiculously easy to dig up that I didn't have access to when I first got started way back in 1999. At that time the organization still exists. It's named Motley Fool. That organization still exists today. I was just a bit of a fanatic in the sense that I loved to read about the companies that I had an ownership interest in. I was just quite curious about how the companies were growing, expanding and so on. But to give you a sense around stock price, let's have somebody do this just for fun. I want you to look up Microsoft and tell me what it's trading at today. Okay, we've got 406 bucks. Like back in 99, 2000, I was buying a lot of Microsoft stock at $23 a share. Intel at that time was trading at 19. What's it trading at now? Maybe double that. I don't know. Johnson and Johnson. I was buying that at about $40 a share. It's gotta be north of 120, 130.

Right now if I start with a 10k investment, do I have to commit to that same amount every year?

So two things for clarity. The investment was a one time $10,000 investment. That's it. There was the only thing that got reinvested after that were the dividends. There was no additional capital invested. Was the policy loan repaid. Absolutely right. Because the policy owner said, look like I'm not going to carry that loan balance in perpetuity and just paid it out and paid it out on his terms. And so this is no different than what I'm doing for my kids. Right. Because like I shared with you, that's not my entire portfolio. There's some things that our kids have chosen based on products that they use on a regular basis. And I've built little portfolios for them that are going to transfer to them. They don't. They have no earthly idea how enormous those portfolios are going to be. And could I just have purchased, you know, birthday gifts and you know, know, toys that require batteries and that sort of stuff? Sure, I could have done that. But I just took money and set it aside and put it into life insurance contracts. And stock that they are going to own and they're going to own it for a purpose. Right. They're going to want passive income income, dividend income.

Are you saying by a group like mutual funds or single stocks? No.

So mutual funds.

Like I'd rather stab myself in the face with a ballpoint pen than do that.

There are many companies that all of you are very familiar with who will enroll you in their direct dividend reinvestment plan at no cost. So you can look up companies that have free DRIPs dividend reinvestment plans. You, you can buy the stock directly from the company in many cases. And these companies have a minimum quantity of stock. Right. So you may have to purchase as little as one share to get going. Some of them have a minimum purchase quantity of 10 shares. So you just have to dig into it based on the stocks that you're interested in, but do not put them into a mutual fund because you're not receiving those dividends directly. This is about you being in a position of ownership and selecting those stocks, not buying a basket of mutual funds. That is not what I would do personally. Am I recommending to everybody that they do or don't do that? No. I'm not a mutual fund advisor. No interest in being one. You can go lose money all on your own in mutual funds. You don't need my help. This, this is about putting together a dividend reinvestment plan. And you're not paying fees. You're not paying management expense ratio fees that are going to erode your wealth. I don't pay, I pay fees on the dividend reinvestment transactions, but they're absolutely minimal. Like they're just negligible. They just don't even matter.

How do you tweak the process if you're late in the game? Can more invested provide more passive income in the short term?

For sure, yeah.

Okay.

Absolutely. I was just reading a great story and I'm actually going to see if I can interview the individual who lost a few hundred thousand in the markets and then was five years away from retirement and decided to get going on a dividend reinvestment plan. Was very aggressive with it for a five year window and now has a substantial quarterly dividend income and followed the premise and the process of stock selection based on what I shared with everybody earlier. Look no further than all of the goods and services that you consume and then just ask yourself, if I'm consuming all of these goods and services, is there a high probability that there are many other people in very close Proximity to me that are doing the same not only in my town, but my province, my country. And is it the same for folks who reside south of the border in the United States? Are there people shaving, shampooing, using deodorant, eating cereal, driving cars, using smartphones? Right. The list goes on and on.

What portion you choose to purchase dividend stocks versus buying more premium.

For me, I just select an amount that I want arbitrarily, if I'm being completely honest. So I max out my tax free savings for that purpose only. There's not a single stock in my tax free savings accounts for my wife Rebecca and I that are not there for the purposes of dividend reinvesting. And so that is a fixed amount because you can only put so much in each year. And then outside of that, I just, I arbitrarily select an amount of capital to expand our positions in particular stock. I pay attention to things that are going on with a company where maybe I know they're getting beat up and they're going to be beat up for a little while, but they're going to be just fine. Like Bell Bell just announced they're laying off a whack of people. I know that they're going to get kicked in the teeth a little bit. Their stock prices come down. I'm not speculating on the price short term. I just know that I can pick up some more shares because I know they're getting kicked around a little bit right now, but that company is going to be just fine. Does that make sense? So I pay attention to what's going on, but I don't speculate. This is why Nelson named the infinite banking concept infinite. It is impossible to place boundaries around infinite. All that I'm doing is utilizing our family's money pool to do this. I don't take capital out of my pocket. I use the life insurance company's money to go and do what I just described to you. And then on my schedule, nobody else's, I'm repaying the policy loans back into the money pool. But our total cash value continues growing and I've got dividends buying more and more and more stock. And then eventually I'm just going to draw those dividends in cash. I'm not going to reinvest them in more stock. And then when we're no longer here, we're going to ask the kids, don't do anything other than turn the dividend reelection back to buying more stock. And then when you're all ready to retire for passive income Then use the portfolio for passive income and then pass it on to the grandkids and make sure that they reinvest the dividends until they're ready to retire and so on. I hope you found that a ridiculously simple B very helpful. And I'm going to do some more investigation into whether or not we can somehow structure this and offer this as a service. Because again, the interest from people reaching out to me was just unbelievable when I put that post out. So many private Facebook messages and LinkedIn messages, hey, what are you investing in? And those are all common questions, right? Can you show me your portfolio and what you're doing? And it's like, well, I'm not suggesting that you repeat what I'm doing, but I'm quite confident that you're going to be very familiar with most, if not all, the companies that I have an ownership interest in. And so that that might be appealing to you. If you haven't subscribed to our AI newsletter, you're missing out on an opportunity, especially if I'm going to start adding this to it.

Thanks so much. I wish you nothing but the very best in everything that you're doing with your journey on Infinite Banking. Get with your advisor, grow your program, talk to them more. Get into conversation about how to radically improve anything that you're already doing financially and anything that you're contemplating doing. Get connected with the right advisor, the right advisor on my team, and you'll be glad you did. Thanks so much, everybody.