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

Chapter 2. The Case for Investing in Stocks

October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.

—Mark Twain

As detailed extensively in Chapter 1, we all have practical living needs that generally must be purchased with cash. At some point, typically in retirement, you will need a pool of cash to supplement your other sources of income. Unless you are independently wealthy, hit the lottery, or inherit a fortune from Great Aunt Sally, your options for growing wealth are fairly limited; in short, you will have to invest. As with any major venture, those who begin with achieving a specific goal or outcome have a much greater chance for success. Investing is no different.

The biggest mistake investors make is committing hard-earned money to investments, with absolutely no idea of why they are making those investments. Some of you are no doubt saying to yourself, "This guy must be thick. People invest to make money!" Let's agree among ourselves that that is a given. Now let's drill down to the heart of the issue: Money for what; money for whom; and, money for when?

Investment Needs

These questions are important; the answers are critical to your success. Simply plunging half-cocked into the markets with only a nebulous concept of making as much money as possible is an invitation to disaster. Minimally, you need to know two things: how much and when. Knowing ...