Shoebox Investor

What is a shoebox investor? An investor who generally pays himself first. The idea is that any money you can store in a shoebox or piggy bank, should be invested in the market. It is not how much you invest, it is the time value of money you should focus on. The earlier you put the money in the market, the longer you keep it in, the higher the chances of reaping the benefits of accumulating dividends. The reinvested dividends will buy you more shares.

Pay yourself first

Friday, April 25, 2008

Fund your retirement

An investor who picked up $10,000 worth of Altria in January 1970 initially acquired 277 shares, a stake that would have started by paying out a mere $69 per quarter at the time.

That wasn't much then, but after 38 years of stock splits, our hypothetical investor now has 26,592 shares of Altria, another 26,592 shares of the recently spun-off Philip Morris International (NYSE: PM) and 18,402 shares of the earlier spin-off of Kraft -- altogether worth $2.5 million today. Perhaps, more importantly, our investor would be receiving about $100,000 each year in dividends. (It should also be noted that these figures would be even larger if the investor reinvested dividends over the years.)

(from Motley Fool)

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