Dividend Investing vs Day Trading with Tim Sykes

I recently wrote an article Do You Really Need to Trade With Tim Sykes?

In it I posed the question of how to create wealth and make more money outside of the methods taught by Tim Sykes. While Tim has certainly been successful teaching his methods, a surmounting number of casualties is piling up, mainly those who’ve attempted their hand at the penny stock game and failed miserably.

Tim has over 71k followers on Twitter. So far, he has two known millionaire students. The odds are ever not in your favor.

The truth is that massive wealth does not come overnight. It is earned through hard work and consistency. And even though that is the message that Tim preaches himself, the proven path for wealth does not carry the notion that it can be attained overnight.

While, I don’t completely discourage you from attempting your hand at the day trading game, I’m hear to heed fair warning.

You Can’t Work and Day Trade

I remember talking to my recruiter for Tim Syke’s challenge student course. The biggest question was about day trading while working a 9-5. I mean, I had a good paying job at a great company. How was I going to trade alongside Tim while working for somebody else?

The lie I was told was that most of the 9-5 guys make their trades at night and not during the day.

That sounded great. Except when things started I was getting hit with 50 texts a day from Tim about trades he was moving in and out of. There’s no way I could keep up with him if I had to resort to trading at night when the markets were closed.

Even worse, so much happens between market hours, that making trades after missing a move could lead to disaster.

The truth I learned is that you can’t day trade and expect to keep a full time job. Your employee is paying you for your time to make them money. Not to secretly try to day trade while working for the company.

On this, I encourage you to keep your integrity and only work for the company during work hours. Don’t try to trade the market on someone else’s dime.

If you want to day trade, you’re going to either need to quit your job (a welcomed invitation for some), or take time off from work to do it.

Day Trading is a Fickle Lover

For many seasoned, experienced day traders, they would tell you how it’s the greatest job in the world, and that the income is awesome. You can make a fortune day trading.

But the stories you don’t often hear are the ones that end in lost fortunes, inability to pay bills, and somebody having to go back to work.

Remember in the stock market, with every winner, there’s a loser on the other side.

Day trading can be a fickle lover. One day you are on top of the world with a huge gain. The next, you are at the bottom with an insurmountable loss.

There are hoards of stories out there where folks saved up a huge nest egg, quit their job to day trade full time, found little success, and had to go back to working. They either couldn’t produce enough income to meet the needs of their family, or they lost it all.

They go right back to where they started.

So, why do I bring all of this up? It’s not just to be a Debbie Downer. I am all for your wealth and good fortune. But before you get ahead of yourself with the visions of massive fortune, I want to paint a picture that you probably won’t hear from Tim Sykes.

Believe me, the stories exist.

My goal here is to simply offer an alternative recommendation that you at least consider. 

The important thing in all of this is deciding what’s best for you and more importantly your family. I say, if you’re young and don’t have many responsibilities, then go for it. It’s not going to hurt you to risk $5,000 and possibly lose it all.

But on the flip side, if you have a family you need to take care of, there are a few wiser paths to getting to financial prosperity that don’t involve you quitting your job cold turkey and going for broke.

The #1 method for that is dividend investing.

What is Dividend Investing?

The answer is quite simple.

A dividend is how a company pays its earnings to shareholders. Let’s say you own stock in Coca-Cola. Every three months Coca-Cola is going to pay you a dividend for each share you own.

That amount can vary, usually going up over time. But there’s one thing you can consistently count on: no matter what happens in the market, great company’s are going to continue paying shareholders dividend earnings.

So, the strategy for dividend investing is this: find stocks that pay a high dividend, then buy and hold them.

This is a proven strategy for amassing a ton of wealth over time.

I mainly learned this strategy from a guy named Bill Spetrino. Bill was able to retire at the age of 42 because he had amassed so much wealth in the market, that he was able to provide enough income to sustain his family just off of dividends alone.

Bill just released his first book, which you can find using this link. If you’ve never heard of him, I absolutely, 100% recommend that you pick up this book. It contains a lot of great information pertaining to dividend investing, and how he became successful at it.

For many of my friends, when I talk to them about the market they don’t want to amass some crazy fortune. They also don’t want to lose their shirt.

They just want to put their hard earned money to good use, and invest wisely using a method that works.

Dividend investing is that method.

It is they way of the tortoise, not the hare.

Again, let’s go back to goals. What are your goals? Is it to simply produce more income for your family? Create a reliable alternative form of income in case your job heads south?

Dividend investing does that. Every quarter, I get a paycheck from the stocks I own that pay dividends. As I continue to buy more and more shares of those stocks, the check I get every quarter grows.

It’s that simple. If I lose my job, I know I’m going to have income coming from somewhere else.

Simple Rules for Picking Dividend Stocks

If you choose to follow this method, I highly recommend you do some additional reading before diving headfirst into it.

A lot of crappy companies will offer a high dividend to attract investors. I don’t want you to invest in crappy companies. If the company is complete crap, you will lose money as an investor.

Find great companies and buy their stock. Businesses like Coca-Cola (KO), Apple (AAPL), McDonalds (MCD), Wal-Mart (WMT), and Altria (MO) are all solid companies with great returns. They all pay a very handsome dividend.

My top recommended read is going to be Bill Spetrino’s new book.

My recommended additional reads are:

All About Dividend Investing, Second Edition (All About Series)

Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

Dividends Still Don’t Lie: The Truth About Investing in Blue Chip Stocks and Winning in the Stock Market

Any one of these books will be great reads.

As far as a strategy goes, I have a few simple rules.

  1. Look for broken stocks, but not broken companies
  2. Reinvest dividends
  3. Look for low debt and lots of cash

What do I mean by broken stocks? Anything I buy, I’m looking to keep for a long time. Therefore, I don’t want to buy something overpriced. I want a discount, because the more shares I own, the more dividends I get paid.

So, I look for stocks that are broken. Gas prices have plummeted this winter, so oil stocks are very heavily discounted. It’s not that the oil companies have done anything wrong, it’s all market sentiment and speculation.

That’s a prime opportunity to invest in oil stocks with dividends, because I know I’m getting them at a bargain price.

Why reinvest dividends? Because long term, this is how you’re going to produce astonishing results. Almost all companies offer what’s known as DRIP (Dividend ReInvestment Plan). It’s free to sign up for. As soon as the company pays you the dividend, the money gets used to buy you additional shares.

The best part is that it is free of broker commission fees. The shares are purchased at no expense of your own.

So, those dividends buy you more shares, which pay you more dividends. Over the course of several years, that will greatly multiply your # of shares in the companies, thus creating more and more income.

Why low debt and lots of cash? Well, in the case of a market dip, you still want the company to pay you the dividends. If the company experiences turbulence, they have to pay their creditors before they pay their shareholders. Companies with low debt means they can continue to pay their shareholders.

Lots of cash means that if the company experiences lower than expected earnings, they will still have the cash on hand to pay out as well.

This is one article I would really love to hear your thoughts on. What are your goals for investing? Have you tried day trading? Been successful or not? What other modes of investment have you tried?

Share your comments below.

If you like what you read, get my next post in your inbox! Subscribe to our newsletter and join our 1 277 subscribers.


Leave a Reply

Your email address will not be published. Required fields are marked *