Financial Literacy

How an 88-Year-Old Tortoise Won the Investing Game

Last week, The Oxford Club’s Chief Investment Strategist Alexander Green published a column in Investment U titled “What You Need Instead of Income.” And no, he wasn’t talking about love.

Alex’s basic premise is that income-seeking investors are taking on too much risk investing in junk bonds and bond funds. He believes you would be better off buying great stocks, letting them go higher and occasionally selling some shares when you need the cash.

I mostly agree. I believe investors shouldn’t buy risky, overpriced junk bonds and should absolutely stay away from bond funds. Alex is also right that investors who obtain generous total returns can sell shares here and there to obtain some cash.

But I have a slightly different approach…

My ultimate goal is to help readers generate so much income through their investments that selling shares isn’t necessary. That’s a lofty goal, I know. But it can be done.

In fact, an 88-year-old reader who identified himself as Tortoise #1 commented on Alex’s article, stating that he and his wife “are long-term investors in the stocks of corporations with long histories of paying dividends and of increasing their dividends annually. We have never had to sell a stock to meet our living expenses.”

He added that during the market meltdowns in 2000 and 2008, the dividend income helped him tolerate the drawdowns in his portfolio value (note, not the income received). Also that he “enjoyed brilliant recoveries each time.”

Tortoise #1 is the 88-year-old poster child for what I’m working to help my readers accomplish.

But for someone with only a few years until retirement – or already in retirement – getting to this point is admittedly not an easy task. That is, unless you have a large enough nest egg to start with… or you can pare down your expenses (or both).

For younger investors, a small account can grow to produce significant amounts of wealth. In fact, with a 20-year time horizon, there is no reason not to expect a 1,000% total return if dividends are reinvested.

The way to do it is to follow Tortoise #1’s strategy. Buy “stocks of corporations with long histories of paying dividends and of increasing their dividends annually.”

I call these companies Perpetual Dividend Raisers. They’re the foundation of my 10-11-12 System, which I wrote about in my book, Get Rich With Dividends, and use in The Oxford Income Letter.

The objective of the 10-11-12 System is to achieve 12% average annual returns over 10 years. Do this over a decade and you can more than triple your money.

Besides the fact investing in these stocks has been proven over decades to work and make money, there are several other benefits…

  • It’s cheap – Once you buy a stock, you have no other cost associated with it… even if you reinvest the dividend. That contrasts with letting a broker manage your money for a 1% annual fee. (Over the years, that can add up to tens of thousands of dollars in added expenses.)
  • It’s easy – Basically, you buy the stocks and that’s it. If you’re reinvesting the dividends, you’ll accumulate more shares over time. If a position becomes too high of a percentage of your portfolio, you can always rebalance. But otherwise, you don’t have to spend much time managing your holdings. You just want to make sure the companies continue to raise the dividend and can afford to do so.
  • It can be tax-deferred – If you’re young enough to be able to contribute to an IRA or 401(k), your dividends can compound tax-deferred. That can add tens of thousands of dollars to your nest egg over time.
  • Your income goes up – This is a big one. If you have a portfolio of Perpetual Dividend Raisers, your income increases every year as the companies raise their dividends. This will ensure your retirement savings keep pace with or stay ahead of inflation. In fact, this strategy can actually increase your buying power. (If inflation rises 3% per year and your dividend income rises 8%, you now have more buying power than the year before – even after taxes!)

A terrific free resource for finding these kinds of companies is dripinvesting.org. Click on Info/Tools/Forms in the first box on the upper left. Of course, if you’d prefer that I help you, you can learn more about The Oxford Income Letter by clicking here.

I’m so glad that Tortoise #1 shared his wisdom with us (especially because I agree with him). If you’ve learned some lessons on investing that you’d like to share with the Investment U community, please leave a comment below.

And for more on dividend investing, check out my interview with Vita Nelson on this week’s Oxford Club Radio. She was investing in dividends way before they were cool.

Good investing,



A master of the steady, reliable science of income investing, Marc’s commentary has appeared in The Wall Street Journal, Barron’s and U.S. News & World Report. He has also appeared on CNBC, Fox Business and Yahoo Finance. His book Get Rich With Dividends: A Proven System for Double-Digit Returns achieved best-seller status shortly after its release in 2012. He captures the hearts and minds of readers approaching their golden years in his daily e-letter, Wealthy Retirement.


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