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Investing Isn’t Very Exciting… At First

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In my last article, I wrote about how the journey to early financial independence involves a lot more effort than most realize. Having energy, motivation, and big dreams is great for getting started, but it won’t be enough to get you to the finish line. The reality is, investing for early FI takes quite a bit of work, and it requires even more time before you start seeing noticeable results.

I’m on Year 3 of the journey to early FI, and I’m slowly approaching the finish line. On a good month, my semi-passive income easily exceeds my monthly expenses, with ample room to spare. I’m getting closer, and it’s a wonderfully liberating feeling. However, I’ll be the first to admit that things didn’t always come so easy. There was a stretch of time, when I first got started, where I felt like I was making almost ZERO progress…

Early FI… What’s it Feel Like?

Do you want to know what investing for early FI feels like? In my mind, watching your investments grow from ZERO to SOMETHING is a lot like watching grass grow…

Sure, investing can be extremely fun and exciting the moment when you decide to take that first step… But just like with starting a new hobby, or running a marathon, the initial surge of energy soon gets dissipated and gives way to monotony. For most people, I would estimate that buying stocks is fun… for the first 5 minutes or so. Afterwards, it”ll feel more like a routine than anything else.

But maybe you get excited about the little things? Perhaps you have the right personality for investing? If you enjoy seeing small dividend deposits being made to your brokerage account (a few dollars here and there when starting out), you’re PLENTY cut out for the investing game.

For myself, when I first got started in dividend growth investing (DGI), I’ll admit that progress came pretty slow at first. However, seeing increasing income being routinely routed into my brokerage account each month NEVER got old. I LOVED seeing the dividend distributions on a regular basis, and the incremental progress made got me super excited.

Dividend Milestone: First $200/month Payout: September 2012

Do monthly payouts (no matter how small) get you excited?

Unfortunately, not everyone will have the same viewpoint when it comes to investing. Some people are less patient, and don’t like taking the tortoise approach to wealth building. For these folks, investing in growth stocks almost seems like a better idea since the inherent volatility of these investments can potentially get you there so much faster…

Growth stocks can help you become wealthy… and you can get there quickly if you keep hitting home runs with your stock picks. But unless you later transfer your capital gains into investments that pay you back actual income, you’ll never be financially independent. Growth stocks themselves will never actually put any food on the table (without you having to sell the underlying asset).

Progress…

And this is how it goes… for awhile, or a very long while. You keep on investing and re-investing your capital into buying more and more income producing assets. Month after month, year after year. There really are no shortcuts to building wealth. Again, like running a marathon, or climbing a mountain, most of your journey will be spent simply covering more ground.

These days, I invest my capital into buying rental property. In a good year, I might be able to purchase 3 homes (2013). Since it typically takes one month to close a property, you could say that investing is only “exciting” for me three months out of a given year. So, 25% of my year is fun and the other 75% is nose-to-the-grindstone hard work… 3/4 of the time, I’m simply saving up more funds for the next investment.

How exciting, right? 75% of the time I’m just watching grass grow… And any fruit that springs up from my garden, I’m not even allowed to eat! Nope, I can’t touch it until the time is right…

Over Time

Like I mentioned in the last article, getting to early FI requires a lot of consistency and patience. You have to keep on investing, rain or shine. It can take years before you start to notice any substantial returns, so it’s no wonder why so many aspiring investors quit prematurely.

If you can’t learn to become a disciplined investor, you’ll never make it to the finish line. But if you can even get just half way to your endgame, it’ll be totally worth it.

Trust me, once the compounding has been given enough time to season, investing can become a total addiction — it becomes THAT much fun!

Today, I own five rental properties and seven units. I always look forward to the first of the month because I know that I will be receiving two deposits from my Bay Area properties (2 units) that total $4,280 in gross rents. Not to mention, I’m still working the 9-5 gig, so I also get those bi-weekly paychecks. Towards the end of the month, I receive two additional paychecks — one for my Chicago properties (4 units), and one for my Indianapolis investment (one unit).

Here’s Chicago for April 2014:

chicago_statement

Almost $4,000 in semi-passive income

For April 2014, I’m expecting $3,939.20 in semi-passive income from Chicago. This net income doesn’t account for PITI (principal, interest, taxes, insurance), but to me, it’s still a large chunk of change coming in.

The above statement is provided to the reader purely as a visual aid. This is the EXACT statement I monitor on a monthly basis, and what gets me excited near the end of the month. As mentioned above, if you stay consistent and patient with your investing, the numbers start to add up over time… If you keep on acquiring and stacking more assets, the cash flow just gets larger and larger… What better feeling can you experience as an investor, than to have your bank account constantly being bombarded with income checks coming in throughout each month?!?

Indianapolis should bring in $967.50 before PITI. Adding up the five rental properties, this is over $9,000 in gross income. On a good month, after all expenses, the cash flow should total over $3,000.

Positive Reinforcements

As someone who’s getting closer to becoming financially independent, I am simply sharing my own datapoints to give readers an idea of what’s possible if you stick to your gameplan. I don’t claim to have all the answers… I most certainty don’t. However, I do know that real, tangible results do start to manifest themselves into something more substantial if you just keep on investing…

Before long, investing will no longer feel like watching individual blades of grass sprouting from the ground up. Instead, you’ll have a garden full of fruit trees at your disposal; each one giving off more fruit than you know what to do with each month. That’s a wonderful problem to have, and one that I hope to run into myself someday.

So, just keep at it! Stick to your investment plan and know that better days are just around the corner. Success breeds more success. Like a positive feedback loop, the amplitude of your gains will just keep magnifying themselves until your results are off the charts.

Lately, I’ve been networking with other more successful investors who have goals of acquiring a new rental property each month… For some investors, the goals are even loftier, and these people want to buy one new property each week! I know I have a long ways to go before I can reach that level of success, but even my mild victories are encouraging me to keep on investing.

Summary

Like most things worth accomplishing in life, progress always starts SLOW. Financial freedom is no different, and it’s because the initial results come so agonizingly slow that most people end up quitting prematurely. In today’s instant gratification society, everyone wants results YESTERDAY! It takes a whole different type of mindset to succeed as an investor; you must learn to be patient! Good things come to those who wait. If you can train your mind to enjoy the small, individual victories (those initial dividend payouts coming in each month, for instance), you’ll have a much better chance of enduring the grind and reaping all the BIG rewards later. Yes, investing is slow and boring at first… but keep at it, and you’ll become wealthy and financially free. Then, the real fun will begin!

{ 25 comments… add one }
  • Stefanie @ The Broke and Beautiful LifeNo Gravatar April 15, 2014, 1:04 am

    The dividends I get on my investments are pretty pitiful, but the return has been pretty exciting, even with “boring” index funds.

    • FI FighterNo Gravatar April 16, 2014, 8:55 pm

      Stefanie,

      Yeah, returns on most index funds have been stellar these past two years thanks to the up direction of the markets. The dividends may be small now, but the total returns are probably quite large. And those dividends will add up over time. Just keep at it!

      All the best!

  • Retire Before DadNo Gravatar April 15, 2014, 4:10 am

    FIF,
    For me, investing was very exciting at the beginning and I loved receiving the interest. I’m talking about my first passbook savings account when I was 8 years old or so. When I first learned that the bank paid me to put my money there, I thought that was awesome. When I got more serious into investing, it was still exciting, until I took my first big loss. That sucks. Once you have a big loss, the excitement tones down a bit, realizing your are taking a significant risk with the money you earned. I take more risk now with more money, but its less risky because I am more diversified.
    -RBD

    • FI FighterNo Gravatar April 16, 2014, 8:56 pm

      RBD,

      Yeah, I’m with you and always loved receiving interest, even when I first started working and only received interest from a checking account. Never enjoyed paying it, however, so that’s why paying down a mortgage just never resonated with me.

      We can’t hit home runs all the time, unfortunately. Diversification is always so important to help mitigate risks. Whether it’s rental property or stocks, never put all your eggs in one basket.

      Cheers!

  • BrandonNo Gravatar April 15, 2014, 10:52 am

    Who did you use for the account you kept your dividend stocks in?

    Thinking I may go this route as I save up funds for a rental, that way maybe they’re doing a little more than just sit in the bank.

    • FI FighterNo Gravatar April 16, 2014, 8:57 pm

      Brandon,

      I personally use Tradeking and I like their customer service and low transaction fee ($4.95/trade, I believe).

      Dividends are excellent for earning passive income! I’m going to get back in myself, sooner rather than later.

      All the best!

  • SavvyFinancialLatinaNo Gravatar April 15, 2014, 11:10 am

    Starting to dive into investing. It’s small, but it’s cool seeing the $30 dividend every quarter. Not a lot! But pretty cool. My car doesn’t make any money, I spend money on it.

    • FI FighterNo Gravatar April 16, 2014, 8:58 pm

      SavvyFinancialLatina,

      Great progress! I remember my first dividend from Walmart, it was like for $10 or so and even that felt wonderful.

      Exactly, your car is a liability and won’t pay you. But dividends do since they are assets. Start small, and just keep adding more. It’ll pay off in the long run.

      Take care!

  • Dave @ The New York BudgetNo Gravatar April 15, 2014, 1:54 pm

    I definitely try to appreciate the small victories. Back when I assumed I would be working into my 60s, the one thing that was easier was the set it and forget it technique. I put money into my 401k, IRA, and a taxable account. It was still boring, but it wasn’t painstaking because I didn’t have a destination that I wanted to get to faster.

    I will say though, with my current mindset, I don’t think I will ever want to acquire a new property every month, much less every week!

    • FI FighterNo Gravatar April 16, 2014, 9:00 pm

      Dave,

      Definitely, the set it and forget it technique wonders and I employ that myself even today. Even though I blog about investing, I don’t like to focus too much attention/effort on it… When I’m not buying a new rental, I kind of just go on auto-pilot and just keep saving without monitoring it all the time…

      Yeah, buying a rental every month/week is intense! I’m not sure that’s something I want to do either, but it would be so nice to have that choice! And that’s what’s inspiring to me… If you keep at it, the sky really is the limit… That would be a great place to be!

      Take care!

  • Even StevenNo Gravatar April 15, 2014, 1:57 pm

    In the beginning, which is where I’m at, it’s great to see things happen. It can be the 401K going up, a raise at work, a debt payment going completely away forever, or a dividend statement. Gotta have those small victories to keep you going along the way.

    • FI FighterNo Gravatar April 16, 2014, 9:01 pm

      Even Steven,

      Definitely, the small victories should be the focus when starting out. They really do build up and add up to a lot more later. Keep investing into dividend stocks, build up the 401k and earn raises at work while eliminating debt. Sounds like a winning strategy to me!

      All the best!

  • TomNo Gravatar April 15, 2014, 3:00 pm

    Waiting for the payoff can be agonizing at times. I’m still at the very beginning stages but will start to see the payoff soon – the first student loan being paid off in July of this year, the next in November.

    We have a wedding to pay for which slows us down a bit, but I get excited just thinking about the day I don’t see an automatic deduction from my checking account for a student loan. Then hopefully not long after that we’ll start seeing dividends and hopefully rental income down the line.

    But it takes patience, I cant wait for those milestones to get here. In the meantime I feel like I have to remind myself to enjoy the ride. Life doesn’t start at FI, it just gets a whole lot better.

    • FI FighterNo Gravatar April 16, 2014, 9:04 pm

      Tom,

      Yeah, progress can be slow at first so the slow and steady approach is what you have to remind yourself of… It’ll all happen in due time.

      Sounds like you got a great plan there! And the upcoming wedding sounds so exciting… these are the things that make life worth living. Just stick to your plan and focus on accomplishing one goal at a time.

      Yup, life is more than just the destination. Enjoy the ride as well!

      Take care!

  • No Nonsense LandlordNo Gravatar April 15, 2014, 3:57 pm

    It all takes time… I am investigating some additional opportunities in RE too.

    You should have been a shareholder back in 2000… Daily account swings of up to $40K, (yes, make or lose $40,000 in a day) it was a real ride!

    • FI FighterNo Gravatar April 16, 2014, 9:05 pm

      Eric,

      Yes, it definitely takes time to get to financial freedom… I wasn’t a shareholder back then, but I’ve heard all the stories from my older co-workers. Seems surreal to me, but it’s crazy to think that such a time did exist once…

      All the best!

  • The First Million is the HardestNo Gravatar April 15, 2014, 6:01 pm

    It’s amazing what happens with time. My dividend stocks are finally reaching the point where the dividends I receive are adding up to something noticeable each quarter. Hopefully I’ll be buying my first rental property sometime in the next 12 months and get the ball rolling in that area as well.

    • FI FighterNo Gravatar April 16, 2014, 9:07 pm

      Jay,

      Congrats on the dividend progress! Yup, time and compounding go hand and hand. Just keep at it and it’ll keep growing and snowballing.

      Best of luck on the rental! That’s what I focus on these days, and the cash flow through rentals can add up pretty quickly… Buy right and good things can happen!

      Cheers!

  • Jon @ Money Smart GuidesNo Gravatar April 15, 2014, 6:27 pm

    Great post. I can remember when I started investing, it felt like me balances were hardly moving. But in time, they continued to grow and I kept investing more. Fast forward to today, and I chuckle when I think back to that original $20.

    I was lucky enough that I knew that in time, those small investments would pay off. Sadly many others don’t understand this and give up way to early. Stick with investing for the long term and you will see results!

    • FI FighterNo Gravatar April 16, 2014, 9:08 pm

      Jon,

      Thanks! Yeah, it’s amazing what can happen with time. When I look back, I’m shocked at all the progress I’ve made as well… Seems slow at first, but now when I look back, everything seemed to happen pretty rapidly.

      Yup, just gotta stick to your gameplan and keep investing, rain or shine. Good things will eventually happen.

      All the best!

  • JasonNo Gravatar April 16, 2014, 3:50 pm

    Great article – sometimes it does seem like watching grass grow.

    There’s two problems I have run into with growing a passive income stream. It’s great to see something coming in, but seeing that isn’t as good as seeing *growth* of the income. So, how far you’ve come is ignored in favor of what’s to come.

    Secondly, when it’s being built up, there’s years and years of delayed gratification involved since all of the income is being reinvested. So there’s no visceral feedback, life doesn’t get better or easier, things are exactly the same. It’s just numbers on a spreadsheet and a vague notion that somehow at some point, this will end in freedom. I feel like I’m pretty tough-minded, but everyone has their limits and some days you just get exhausted.

    I think the secret is to somehow turn your mind off of it for a time, let it sit on the background and try to have some sort of life before FI. But, you can’t ignore it too much, because then you’re not setting up the next move and there’s no forward motion. I’ve been basically trying to treat it mentally as just a part-time job. I give myself a few goals to be done short-term, knock them out, then reassess my position for course-correction and do it all over again.

    • FI FighterNo Gravatar April 16, 2014, 9:11 pm

      Jason,

      You make an excellent point there… It takes a lot of focus and dedication to keep on investing and defer the gratification part… For some it’s easier… and for myself, I’ve found ways to be happy without spending money… I’ve altered my mentality so much that I don’t miss not spending money… Or rather, re-investing the funds doesn’t feel like a sacrifice.

      For others who want to spend now but are postponing it, yeah, I would imagine it can be really difficult… Lots of temptation to just spend the excess cash flow.

      I think you’re absolutely right about that secret! I do that myself all the time. If I focus too much on investing, it can become a drain… After I close a rental property, I go out to celebrate and stop thinking about investing, or saving for the next deal… Only after a few months do I re-engage and get focused again… Otherwise, yes, it can be torture waiting for the funds to become available! 😉

      Thanks for stopping by!

  • JC @ Passive-Income-PursuitNo Gravatar April 18, 2014, 9:44 am

    It reminds me of the quote about the best time to plant a tree. The best time was 20 years ago, the next best time is today. Progress does come slow in beginning. Especially with DGI where your dividends really only increase due to new investments. The growth part of dividend growth doesn’t have time to really get working over a short time period. Plus what’s a 7% increase on $50 in dividends? That’s only $3.50 extra. But $3.50 is still extra which is the key. Eventually though you can reach the point where your investments are churning out more income than you could ever hope to save from your regular job. That’s when you know you’ve got it made.

    • JC @ Passive-Income-PursuitNo Gravatar April 18, 2014, 9:46 am

      Also, I still get excited to see my dividends increase through growth even if it’s just a few extra dollars per year for a position. Add it up across all of the companies I own and it turns into a pretty significant amount. I love dividend payment day!

  • A Frugal Family's JourneyNo Gravatar April 19, 2014, 9:54 am

    Great article…I completely agree. The needle moves pretty slow at first but once it gets going, I have to admit it is pretty exciting! In fact, once you see a decent amount of traction, it really keeps you motivated to add to your investments so you can grow even faster.

    Our family has only been investing for about 2 years, now exclusive in dividend paying stocks, and we are now finally starting to see some progress. We currently average approx. $125/month in dividends. Have to admit, it’s pretty exciting to see the dividends each month!

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