25. What is Income Investing

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Download Preston’s 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

http://www.amazon.com/gp/product/0982967624/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0982967624&linkCode=as2&tag=pypull-20&linkId=EOHYVY7DPUCW3WD4

http://www.amazon.com/gp/product/1939370159/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1939370159&linkCode=as2&tag=pypull-20&linkId=XRE5CA2QJ3I2OWSW

In this lesson, students learned the importance of Income Investing. By employing the techniques of income investing, one can prepare themselves properly for retirement. Since income investing is the process of picking stable stocks and bonds that pay decent dividends and coupons, the investor can benefit from the cash flow that’s produced by these securities.

The first way income investing provides benefits to the investor is through liquidity. Since the investor will continually receive dividends or coupons, they then have the opportunity to reinvest that cash flow into the most undervalued asset each month. This compounding cash flow is truly the essence of investing like Warren Buffett. With an ever increasing cash flow, investors can take advantage of market conditions during spikes and valleys.

The second way income investing provides benefits to the investor is during retirement. Since most retirees may need to sell their investments in order to pay their monthly lifestyle expenses, income investing offers an alternative approach. Since the retiree will receive quarterly and semi annual payments from these types of investments, they will continue to have a steady cash flow to meet their lifestyle expenses. Although some retirees may need to pull from the principal, income investing will minimize that withdrawal.

In the end, Income Investing creates more cash flow for the individual employing the technique. It’s Warren Buffett’s opinion that purchasing dividend paying stocks is a very wise decision because of the continued and consistent cash flow that provides liquidity to reinvest your earnings.

Comments

Darryl Lobo says:

This is a great channel. Just commenting to thank you man, this stuff is
awesome! Surprised more people aren’t watching this.

TruthWil says:

You’d be broke by 80…Good thing the average lifespan is 79!

Manny onsase says:

thank you. God bless you

JaeS Tan says:

hello sir… been watching your vids and have been a huge help. just wanted
to ask if there is a part 26?

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givemetoast says:

Do we have to pay capital gains taxes on dividends that are reinvested? 

b davis says:

No

getmirkedbitch says:

think of it like coins. .28 is 26 cents. And .5 is 50 cents. 5 cents would
be .05 because it is 5/100. one decimal place is 10ths and two decimal
places is 100th and so on.

yan7190 says:

im watching all your videos. its very helpful since im only gonna start
investing. thanks!

Preston Pysh says:

Kevin, a dividend is simply a payment that a company provides to it’s
owners. Most company’s pay a dividend 4 times a year. If you own shares of
a company, then you’re an owner.

rist98 says:

0.28 is lower than 0.5..

Preston Pysh says:

Yan, you can look on msn money (or any stock ticker platform) and there’s a
location where it says “Dividends Rate”. If nothing is listed, then the
company doesn’t pay one. If it does pay one, you’ll also see a tab for
“Dividend yield”. This is nothing more that the dividend rate divided by
the market price. I hope that helps

kevin chirles says:

I still don’t understand what dividends are?

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Preston Pysh says:

mendacium, I’m not sure how to answer your question….by .22?

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Soni Bros says:

Preston, I know I have already mentioned this, but damn! Your videos are
great. Realistic example, realistic and exceptional results, all done by
following a value strategy. Although my videos are presented in a different
style, I hope one day they will be up to par with your videos when it comes
to quality. Keep it up Preston.

Preston Pysh says:

Thanks Yan7190

Preston Pysh says:

MrSonibros, I really appreciate the compliment! It really means a lot. Keep
up the great work with your channel. It’s impact is definitely helping
people with their approach!

yan7190 says:

how can i define companies that pay dividends from those who dont? thanks!

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