There’s an old fairy tale about how a pot of gold awaits a lucky person at the end of a rainbow.
In reality, no such pot of gold exists.
Yet, I’m sure all of us are diligently building our funds to achieve the wealth that can help us to retire comfortably.
For all you music aficionados out there, you probably remember a famous band called America (yes, it’s spelt the same way as the name of the country).
They had a huge hit in 1982 called “You Can Do Magic”, and the lyrics should be a huge inspiration to you as you build your retirement funds.
You can have anything that you desire
The key to any endeavour is not just knowing how to succeed, but also having the right attitude and temperament to do so.
America belts out the lyric “you can have anything that you desire” in their number-one hit song.
Although the lyrics are pointing to a woman of the (singer’s) dreams, it can also relate to what you are seeking when growing your wealth.
I am sure many of you have read stories of ordinary people getting rich through investing.
Through their daily grind, they have saved up enough money and socked it into shares that you and I are familiar with.
Lo and behold, this simple act of just parking money in great businesses and then leaving it to compound has made them millionaires many times over.
Your “every day” millionaires
A great example is janitor and gas station attendant Ronald Read.
When he died in June 2014 at age 92, he had amassed a stunning US$8 million fortune from doing just two simple things – living frugally, and investing in stocks that he knew.
These included dividend-paying companies such as AT&T (NYSE: T), Deere (NYSE: DE), and General Electric (NYSE: GE).
His long-time blue-chip stalwarts included Procter & Gamble (NYSE: PG), Johnson and Johnson (NYSE: JNJ), and CVS Health (NYSE: CVS).
Another amazing example is that of Anne Scheiber, who worked as an auditor for the IRS (the US version of the Inland Revenue Authority of Singapore).
She retired at the early age of 51 in 1944 and by the time she passed on at the ripe old age of 101, she had built an impressive portfolio of dividend stocks worth US$22 million!
Her largest positions in 1995 (at the time of her passing) included dividend-paying names such as PepsiCo (NASDAQ: PEP), Coca-Cola (NYSE: KO), and Exxon Mobil (NYSE: XOM).
A magical journey
In the Disney (NYSE: DIS) movie Aladdin, the prince takes princess Jasmine on a “magic carpet ride” where she discovers many unbelievable sights.
Similarly, your investment journey can be just as magical as what the couple had experienced.
By simply buying and holding on to great companies, you can compound your wealth many times over and achieve the millionaire status that both Ronald and Anne enjoyed.
Singapore also has many examples of dividend stalwarts that have doled out consistent dividends over the years.
Take Singapore Exchange Limited (SGX: S68), the country’s sole stock exchange operator.
The bourse operator has been paying out an annual dividend since 2001.
The REIT sector is also ripe with examples of consistent dividend payers.
Parkway Life REIT (SGX: C2PU) has consistently increased its core dividend since 2007, for a fantastic run of 16 years of consecutive dividend increases.
Let the magic take root now
It’s important for you to not just believe that this magic can happen to you, but to take action to make it come true.
If you haven’t already started, you can begin to park some money in strong REITs and robust dividend-paying stocks.
Start your investing journey as soon as you can and let the magic of compounding take root.
Who knows?
In time to come, you could be the one who is enjoying the same level of riches as Ronald or Anne.
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited.
