You learn something new every day, if you're paying attention. For example, the other day, as I was passing through the Fool's Get Organized discussion board, I learned from board denizen BklynBorn about an old saying that goes, "If the first thing you do when you wake up in the morning is eat a live frog, then nothing worse can happen for the rest of the day!"
I love that. It's rather true. And it's applicable to our financial lives.
Think about your financial to-do list. It probably includes things like these:
- Set up contributions to your 401(k) plan at work.
- Contribute to an IRA this year.
- Look into estate planning and get the ball rolling.
- Start saving more, to pay off credit card debt sooner.
- Select some dividend-paying stocks in which to invest.
Now think about how you deal with this list. Many people will prioritize it and then just keep spinning their wheels, not wanting to really do the most important item. Others will look at the list and do some of the items but will just keep putting off the ones that seem more difficult.
If you have trouble checking off all of the items on your list, keep in mind that most of them are not that hard to do. You can probably set up your 401(k) in an hour at work, for example. You'll get some forms and fill them out. You'll choose some funds in which to invest your money. To address your estate-planning needs, ask around for recommendations of good financial advisors. Talk to a few and get some ideas and see whom you feel comfortable with.
Chasing dividends
For dividend payers, a simple stock screen will give you candidates for further research. At MSN Money, for example, I screened for stocks with a dividend yield of at least 3%, net profit margins of at least 10%, and expected average annual earnings per share (EPS) growth of 10% over the coming five years. Here are some results:
|
Company |
Dividend Yield |
Net Profit Margin |
Est. EPS Growth |
|---|---|---|---|
|
GlaxoSmithKline |
4.7% |
22.4% |
46.3% |
|
Quality Systems |
3.3% |
21.5% |
21.9% |
|
Nokia |
3.3% |
12.9% |
13.3% |
|
Harley-Davidson |
3.6% |
14.9% |
10.6% |
|
Philip Morris Intl. |
3.7% |
11.7% |
13% |
|
Capital One Financial |
3.8% |
16.8% |
14% |
|
Unilever |
4.7% |
11% |
10% |
Source: MSN Money.
Of course, if you don't have the energy to dig up your own strong and growing dividend payers, consider letting us point you to some. Our Motley Fool Income Investor newsletter features plenty of promising stocks with yields topping 6%. (Try the newsletter free for 30 days.)
Easy items
Contributing to an IRA and crossing that off your to-do list is also easy. You can get an IRA application or contribution form from your brokerage's website. Print it out, fill it out, and mail it in, with a check. (If you don't have a brokerage, or you aren't thrilled with the one you have, learn more about finding a good one in our Broker Center.)
You can invest your IRA money in individual stocks or in mutual funds, or a combination of the two. To maximize your money, consider parking income-generating investments in your tax-advantaged accounts. Bonds, for example, pay interest that's often taxable at your top marginal rate. Having dividend stocks in your IRA means you can put off paying tax on the dividends -- or, with a Roth IRA, not pay taxes on them at all.
The bottom line
Remember that most or all of the things on your financial to-do list are critical. Your future depends on them, to a significant degree. Ignore them or keep putting them off, and you may have a yuckier retirement than you'd like. Tend to them now, and you may end up able to dine on steak and vacation more often than you expected in your golden years. You may even end up discovering that some of the items are fun to do. Investing in and following stocks, for example, can be exciting.
Your days can be very pleasant and rather aggravation-free, if you eat that frog first thing in the morning and then get on with more pleasurable things.
