Is Money the Best Superpower?
Updated: Oct 4
"Following's not really my style." - Tony Stark
People who have seen the Ironman movies know Tony Stark is a genius inventor, billionaire, former playboy and majority owner of Stark Industries. CNN Money estimated Tony Stark's wealth at $12.4 billion, one of the richest superheroes.
Again based on the movies, Stark Industries is primarily a defence company that develops and manufactures advanced weapons and military technologies. It is a publicly traded company listed on the New York Stock Exchange so anyone can buy shares. According to the comic books, the company did pay a regular dividend.
Tony makes money off dividends and if the stock price goes up (capital appreciation). Tony wakes up every day and does whatever he wants. Inventing new gadgets, weapons, modifying his Ironman suit then racing in his Audi to his private jet to a cool party somewhere in the world.
I don't see him waking up at 6am, cooking breakfast, making his lunch then driving to work while getting stuck in traffic, sitting in a cubicle or in boring office meeting while dealing with an angry boss.
Dividends from large well known companies (let's say Stark Industries) tend to be more stable than their stock prices. This is because even during down markets, many companies will continue to pay and even grow their dividends.
The key is to be diversified and own many companies in different industries. That is why we own BCE (Telecom), Bank of Nova Scotia (International Banking), Starbucks (Global Coffee Retailer), Enbridge (Pipeline), GlaxoSmithKline (Medicine & Healthcare) and CN Rail (Transportation).
Most of these stocks yield over 6% right now and have a strong history of raising dividends.
The Bank of Nova Scotia pays less than 1% interest if you leave money in their savings account for a year. However, if you buy their stock today, you will receive on annual dividend of approximately 7%. This is 7x more than the saving account at the same bank. Also the shares could increase in value like they have been doing for the past 25 years.
Dividend income is more tax efficient than salary income. This is important because taxes suck up so much of your money.
The average Canadian makes just over $50,000 a year ($26 per hour) working full-time.
If you made $50,000 a year working full-time at a job then you would pay at least $11,000 a year in income taxes. There are also work related expenses such as a second car (car payment, insurance and gas) and professional clothes that are not cheap. This could be another $10,000 in work related expenses a year. You now have $29,000 left over to cover all your expenses. Not much money left over.
Someone getting $50,000 in dividends (Canadian stocks) in Canada essentially pays no income tax and if you don't go to work you have no work related costs. This person has $50,000 to cover all their expenses.
The government encourages you to earn dividend income. Just ask an Accountant to confirm.
Let's look at another example. $1,800 in dividends in a month doesn't sound like much.
Someone working full-time at Wal-mart for $15 per hour would have to work for a full month in order to generate that much income after deducting taxes and work related expenses.
We all can't be Tony Stark but we can all invest in publicly traded companies and collect dividends.
Money is a superpower because it gives you the freedom to do what you want. You wake up everyday and focus on what makes you happy. You can work at a job you like, which may pay less, instead of a higher paying one you hate but need in order to pay your monthly bills.
Anyone can become a shareholder. The key is to start early, invest in large companies you know, be diversified and think long term.