Talking about money and DGI

Last week I was talking with a colleague about money. He told me that the interest rate of his savings account was ridiculous low (less than 1%). And he read that this year the interest rate would probably be negative! He was worrying that his savings would be less at the end of this year.

I agreed with him and told him that money in a savings account will not make you rich these days. Even if the magic of compound interest kicks in. With an interest rate of about 1% it takes 72 years!! to double your money. He was really startled. He asked me what I did with my savings. I told him that I had an emergency fund of € 10,000 and the rest of my money is in my broker account. β€œ But it is very hard to make money in the stock market” he replied.

I told him what my strategy is with stocks, Dividend Growth Investing. Not only do I own Dutch stocks, I also own US stocks. I only buy dividend stock that has been paying at least 10 years of uninterrupted dividend. In the Netherlands are not that many companies. In Europe there are more (see also the article of my Belgium friend – No More Waffles. Click here). Both in Europe and The Netherlands most dividend is paid once or twice a year. In the US there are much more stock that pay regular dividend. And most of them pay on a quarterly base.

My colleague was really interested by now. So I told him that dividend-paying stocks have a better return on investment than non-dividend-paying stocks. Studies showed this again and again. If you bought $1,000 in S&P 500 stocks just after WWII, it would be worth more than 1 million today! (of course only when you reinvest the dividend). If you did not reinvest the dividend you would have earned something like $ 100,000. I told him that this difference could all be accounted to compounded interest! The eight wonder of the world.

And another advantage of dividend-paying stocks is that they perform better during a bear market than non-dividend-paying stocks. During the bear market of the beginning of this century non-dividend-paying stocks decreased in value with an average of around 30%. Dividend-paying stocks only declined around 10% on average.

He was firing question at me, with the speed of light. Which stocks to buy? Which broker do I use? How do I select stocks? Etc. I told him he has to do his homework. You can’t only rely on advice from others. Make your own choices and be accounted for it. He was really enthusiastic.

Because I try be anonymous as much as possible, I did not told him of my website. He has to find out for himself that there is a great community, here on the web about DGI.



6 thoughts on “Talking about money and DGI

  1. roadmap2retire

    Hahaha…I wonder if he would stumble on your website and see this post and figure out if thats you. Good on you for opening someones eyes and educating them. You have opened the door and he can now explore the world of investing and hopefully find something that works for him.


  2. Dividend for Starters

    Hey Pollie,

    Well done there!

    My collegues are not half as interested unfortunately.
    They prefer to buy a €25k+ new car instead of DGI.
    Hopefully I’d be able to buy such a thing every year, with dividends.. πŸ™‚

    However, that will take at least one or two more decades.

    Best wishes,

    1. polliesdividend Post author

      Hello DfS,
      When people notice that their savings are in trouble, then and only then they will ask some questions. Momey is still not a normal subject to talk about.

      You keep up the good work and your new car will be there sooner than you think.


  3. weenie

    Hi Pollie
    I’ve just come across your blog and look forward to catching up on your old posts.

    Great to hear that you were able to educate your colleague and hope he follows your example.

    Aside from their company pensions, none of my immediate colleagues are saving for their retirements or for financial independence – the bulk of their money is tied up in the properties they live in. I guess the good thing is that none of them are into buying new flash cars (most of them have company cars) but when I mention ‘retiring early’ to them, they think I’m talking about winning the lottery!

    Good luck with your investment strategy.


    1. polliesdividend Post author

      Hello Weenie,
      Thanks for stopping by.
      I hope you like what you read and maybe learn something.
      I think it is always nice to educate people and to learn from people.
      So i like to hear/read your opinion too.

      I hear what you say how people look at their retirement and i reconize it. Only a company pension is not enough nowadays. Here in The Netherlands there is a convesation just starting about pensions and that a company pension alone is not enough.
      Maybe this will help people.

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