Book Review: The Dividend Mantra Way by Jason Fieber

Imagine this – you’re 22, coming from a low-income family, and you’re financially free in 10 years. Doesn’t sound like something you could achieve? Hold your horses! It is possible, as Jason Fieber proves in his book.

Whut?

If you don’t know anything about investing, or dividend investing, this book is a must-read. Jason Fieber is able to explain difficult investing concepts by bringing examples of well-known companies, such as Coca-Cola, Walgreens, Chevron etc. He also explains why one should invest in them. He’s able to get you to think about your financial goals, fulfilment and life goals by opening up to his readers.

The journey to investing

He opens the book by giving an overview of his harsh upbringing in Detroit, USA. Both of his parents didn’t fare well in life (his father was an alcoholic and his mother a drug addict). His aunt and uncle took him in, along with his siblings when he was only 11 years old.

After graduating from high school, he went to college. Then dropped out, and had a student loan of $30K. When he turned 21, he inherited $60k, which he blew by living a middle-class lifestyle he couldn’t really afford.

He found his way into the investment world when he was at the lowest point in his life. His mother had just committed suicide (in 2003) and he was struggling to cope. Living a lifestyle he couldn’t afford, losing his mother, and with life weighing him down, he was extremely unhappy. He wanted his life to be something bigger, he wanted more freedom, more time, more control.

In a conversation with his mother towards the end of her life, he came to realize that fundamental changes to the way you live are only possible if you truly want them to happen. This was illustrated when his mother made it clear she didn’t want to change her own life, despite her addiction. He decided it was time to turn the tables and start doing something more meaningful with his life.

‘Sacrifice is present in all decisions. Every action in life comes with a unique set of benefits and drawbacks, as every possible action competes with every other action available to you’.

He started making small sacrifices in order to achieve financial freedom. From spending countless hours reading books about personal finance and investing, to eating ramen noodles for a whole year to save on food. A bit extreme, but it helped him toward his goal and that was all that mattered. He also got a job in the auto-industry in Michigan, paying him $30K a year.

Lifestyle changes

Fieber started documenting his path to financial freedom by blogging. Eventually, his gift for writing and documenting his journey made it possible for him to leave the auto-industry behind and pursue his real passions. He was passionate about writing, investing, spending time with loved ones, learning new skills, and keeping fit.

He thinks we as a society identify ourselves through the job we have, although in reality we’re all much more than just a job. He never identified himself like this, and wishes we’d all rethink who we are, beyond our job. Although a job was necessary for him to get started, it was simply to help him ultimately reach his goals.

In pursuit of his financial goals specifically, he started saving. Often more than 50% of his income. During the recession, he got fired from his first job in Michigan and moved to Florida. He managed to get another job in the auto-industry, paying him $40K annually. He started living well below his means. Jason Fieber took public transport to work, lived in a cheap rental apartment, and rarely ate out at restaurants.

Fieber’s mornings?

These lifestyle changes made it possible for him to build a portfolio worth six figures in three years. Think about that for a second – he lived in modern-day America with less than $20k a year. AND proved it’s possible to live a meaningful life. Though, he did define the word ‘meaningful’ differently than most Americans.

He didn’t value an apartment with a pool, an expensive car, or a fancy dinner. Instead, he prioritized relationships, time spent with loved ones, and other intangible values. He had only one goal in mind which he was aggressively moving towards.

Investment Strategy

Fieber is a strong believer in dividend investing. This means he only invests into companies that pay regular dividends to their shareholders. He has chosen this strategy for several reasons.

  1. Dividend investing provides a passive income. The only work the investor needs to do is analyzing the company before investing in it. From there on, it’s all passive income. As long as you’ve made the right choice, you don’t need to worry about the market fluctuations.
  2. The commitment of paying shareholders rising dividends forces a company to grow and the management to make wise decisions with the capital left over.
  3. You’re able to pay for your expenses with passive income. When selling stocks, you never know how much money your sale will generate, as the stock prices fluctuate.

Another belief he has is to invest only in companies which have been paying dividends for a long time. He has therefore purchased shares in Coca-Cola, Chevron, and Johnson & Johnson. These are all ‘dividend aristocrats’ – companies that have paid rising dividends for 25 years or more in a row. Here’s a chart showing how dividend aristocrats have a much higher yield than the S&P 500 Index.

Jason Fieber keeps his portfolio simple. He only invests in companies which produce products/provide services that people all around the world use. If he doesn’t understand the business, he’ll never invest in it.

‘Focusing on successful businesses that produce products and/or services that people all around the world rely on every single day almost ensures you wild success’.

Therefore, most of his portfolio is made up of companies which provide basic services to satisfy basic human needs. Such as food, water and other utility companies.

Index fund investing and the 4% rule

In the book, he also elaborates on index funds. Index funds gather different companies into one fund, but Jason Fieber doesn’t invest in them. Investing in index funds generally provides no voting rights and you’re unable to control what companies you own, when you own them, and at what price.

However, if you don’t want to delve into the specifics of a company’s financial performance over the years, index investing is more suitable for you.

There’s also a widespread 4% rule that he touches upon in the book. This is a rule of thumb (from Trinity Study) used to determine how much a retiree should withdraw from a retirement account each year.

The paper studied withdrawal rates and how much an investor could theoretically withdraw money from the portfolio on a yearly basis without running out of assets. The study concluded that during a 30-year retirement, there was a high chance of success if one were to withdraw 4% per year of the assets.

Jason Fieber isn’t in favor of this theory, as running out of money before death is still possible, and he plans to have a longer ‘retirement’ than just 30 years. He claims that the more stocks you’re selling, the less dividend income you’ll receive from these companies. Why would anyone want to receive less passive income?

His current stock portfolio

The book was written in 2015, and at the time of writing his portfolio was $200K in size. The portfolio has now grown further and can be accessed here. His portfolio is extremely diverse, consisting of more than 118 companies.

Personally, I’d find it hard to manage such a huge portfolio – staying up-to-date on 118 companies would be time-consuming. However, as mentioned earlier, most of his investments are in basic utility companies, where the chance of something completely collapsing is minimal.

He documented his journey to financial freedom here, in his old blog. It might be more relevant reading if you’re a beginner dividend investor.

Finally, one of my favorite questions he asks in the book is:

‘What’s the bigger sacrifice: living below your means or working for most of your life?’

It’s the question each and every single one of us should ask. If you’ve decided not to work for most of your life and are ready to make sacrifices for (financial) freedom, I definitely recommend starting with his book, which you can purchase as an e-book in here.

If you don’t want to read the book, but still want to know about his journey to financial independence, you can check out the interview he gave in October of 2018:


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