So How Are You Going To Make Finance Work?

So how are you going to make your finance work?

Hello and welcome to Making Finance Work.

This particular piece is fairly lengthy, but I hope to make it as digestible and as readable for you as possible. There are lots of avenues to cover, but before we do, I think I should offer a few home truths.

Firstly, there is no magic formula in the upcoming text. No Peasant to Private jet instantaneous riches that are hand delivered by a cash fairy one morning. The methods to financial freedom that we concentrate on at this site are the basic fundamentals of:

Commerce
Dividend
Investment

Commerce is your business, or put better; the business of being you. It may be your multi million empire; it may be your e-bay business, online venture or your current job. You may not be the boss within your organisation; you may even be unemployed and not have a penny to your name. But you have you.

You are the dot com domain name; you are the sales team and marketing manager. You are the CEO. Your business may not be trading yet, or it very may well be verging on the brink of bankruptcy so you must learn how to steer the business of you to success and reap the financial rewards. We will be doing this together, right here at Making Finance Work.

The Dividend is the payment you will receive for the successful running of your business. It is your salary at the end of the month for cleaning those cars, being a keynote speaker, shining shoes or running the country.

The Investment is where you will place your dividends after you have earned them. To digress for a moment, it is now perhaps a beneficial time to explain dividends that are paid to shareholders that own a stock in a particular company.

You may recall our conversation about Disney NYSE DIS. As mentioned, the long term hold in Disney has been worthwhile, but also of importance is that Disney pays a dividend. Disney pays it twice a year, at the current time of writing the dividend is 35 cents per share. So if you own 10 shares of Disney, you will be paid $3.50. This is on top of share price increases, and a good stock will also increase its dividend on a yearly basis. So effectively once you have purchased a good stock that pays a dividend, you will be paid merely as a “thank you” to investors.

It gets better.

Take a company such as Pengrowth Energy Trust NYSE: PGH. Pengrowth pays $1.10 per share in a way of dividend every year.

And guess what? The share price is only around $8, compared to Disney’s $15 or so (at time of publication). So you get more bang for your buck.

$1000 spent on Disney Shares gives you 66 shares X dividend of 0.35 = $23 per year

$1000 spent on Pengrowth Energy Trust shares gives you 125 shares X dividend of $1.10 = $137.50 per year.

You see the difference.

You must remember however that there is much, much more to a company that pays a dividend and the yield returned to you. There are so many fundamentals to a company that have to be reviewed before you commit to buying shares or a piece of that company. We will deal with this at a later date.

So back to the original point of the dividend that you receive; you should reinvest this back into your commerce. Your money will then compound, and build a nice sum for you.

The commerce pays the dividend that pays for the investment that goes back to the investment.

I hope that this makes sense for you and once you grasp the concept you really will be able to make finance work.

Next time we will be looking at the all important how do I make my commerce work? How you can really make money with the business of you.


Speak soon


Oliver Jones
Making Finance Work