|How Much Are You Saving?|
If you're like me, and you're seeking financial independence at a relatively young age, you're looking for the most efficient and reliable way to the promised land. I've found that the best way to financial independence is to save large parts of my net income by living below my means, staying out of debt and investing said savings wisely. But, while "investing wisely" can be somewhat subjective, saving a large part of your income is not.
Investing In Dividend Growth Stocks
I choose to invest my savings into dividend growth stocks. I like to purchase shares of high quality businesses that have a long history of being efficiently run and returning value to shareholders. I like investing in businesses that provide society with needed services and products that people crave. These companies have "wide economic moats", or strong defenses against competition. They usually have large distribution and supply networks, household brand names and pricing power which allows them to raise prices on their products or services over time. These increased prices drop down to the bottom line and allow these businesses to raise dividends over time. I also like to invest in these companies at attractive prices, which provide me a margin of safety against market downturns.
Savings Rate Vs. Investment Returns
This is all well and good. Investing your hard-earned money in high quality companies that pay rising dividends at attractive prices is a surefire way to success. But, as much as I consider myself an astute investor, the most important consideration to your journey to financial independence should be your savings rate first, and your investment returns second. So, you need to be a saver first and an investor second.