If you’re like a lot of folks, you’re worried about inflation… and the danger it presents for people saving for retirement, or already in retirement.
You might also be worried about another financial crisis wrecking your investments.
If you’re one of these people (and there’s a good chance you are), the “no brainer” decision for you is to own elite, dividend-paying businesses.
Owning an elite dividend-payer is a good inflation defense because its strong brand and loyal customer base will allow it to raise prices along with inflation. Its dividend will often increase at a faster rate of inflation, so the value of your income stream remains intact.
These companies are safer, better places to park long-term wealth than any currency or any government bond. They are better for parking long-term wealth than gold.
There are several major reasons why they’re an incredible vehicle for your money…
- For one, buying a great business is extremely cheap and easy. You don’t get hit with big fees and commissions when you buy and sell them. You can’t say that about real estate or art. Buying a great business through an online broker will cost you less than lunch at most restaurants.
- Holding a great business is extremely cheap and easy. It’s as easy as holding cash in the bank. There are no storage costs. There are no transportation costs. You don’t have to get a safe-deposit box or a home safe, like you might do with gold or diamonds.
- Shares of great businesses are liquid and freely traded. There’s a huge market for these business. It’s open most every business day.
- Elite, dividend-paying businesses also pay out reliable, extremely safe income to their shareholders.
- And finally, great businesses are great inflation-defense vehicles. They have long histories of rising in value when paper currencies decline in value.
This is one of the most important aspects of these stocks…
You see, governments have a long history of debasing currencies.
When they want to pay for big social programs or wars, governments often print up extra currency units (like U.S. dollars). Every currency unit that is printed devalues the existing currency units. This is called “inflating” the money supply.
Inflation is a way for governments to quietly clip small bits of value from your bank account and your wallet.
Inflation is one of the greatest dangers a person saving for retirement faces. It can crush the future buying power of the money you save today.
This is why owning great businesses is so important. Great businesses hold their value through inflationary periods.
The world’s most successful investor, Warren Buffett, figured this out a long time ago.
Buffett urges people who are worried about paper-currency declines to own world-class businesses. He figured out a long time ago that owning great businesses is a better inflation defense than owning gold.
I agree with Buffett on this point. The numbers prove it. Owning great businesses is better than gold when it comes to preserving and growing wealth over the long term.
Consider that from the start of 1995 through early 2019 — a time period that includes booms and busts for both stocks and gold – gold returned 241%.
Now consider during that time…
ExxonMobil (NYSE:XOM) returned 755%.
Wal-Mart (NYSE:WMT) returned 1,007%.
Johnson & Johnson (NYSE:JNJ) returned 1,257%.
McDonald’s (NYSE:MCD) returned 1,963%.
(Note: These numbers factor in dividend reinvestment. Gold, of course, doesn’t pay dividends at all.)
Keep in mind… the companies I just mentioned were well-established enterprises in 1995. It wasn’t like you were buying speculative startups.
The numbers are clear. Owning elite businesses that generate consistent dividends is a better long-term strategy than owning gold.
If you’re concerned about inflation or another financial crisis, I encourage you to think about this idea… and how the world’s greatest investor, Warren Buffett, approaches it.
Sure… own some gold. Own some real estate. But keep in mind the proven wealth-building power of owning the world’s best businesses.
If you achieve great results with other strategies, congratulations. But if you’re one of the many investors who has found lots of “action” — but little success — with exciting strategies, I hope you’ll come around to the idea I’ve laid out for you today.
Once you come around, and commit to a lifetime of accumulating elite, dividend-paying businesses purchased at reasonable prices, you’ll eventually have a beautiful view of your “investment backyard”…
At the end of your investment career, you’ll have a large collection of elite, dividend-paying businesses… throwing off regular cash dividends.
You’ll have an orchard of money trees in your backyard.
The branches of your money trees will be heavy with fruit every year. One “tree” will yield 20% on your original investment… one will yield 25% on your original investment… one will yield 30% on your original investment… and so on.
Broad market corrections won’t concern you. The latest government drama won’t concern you.
You’ll sleep well at night knowing your elite businesses will continue to pay out regular cash dividends.
You’ll have a large and growing portfolio of the world’s best soda companies, the world’s best energy companies, the world’s best food companies, etc.
Instead of a fancy art collection or a car collection, you’ll have a money tree collection.
If you commit to a lifetime of accumulating elite, dividend-paying businesses purchased at reasonable prices, you’re virtually guaranteed to build significant wealth in the stock market. And you will build that wealth safely.
This is the world’s #1 way to invest for retirement.
It’s the closest thing there is to having money trees growing in your back yard.
Regards,
Brian
