Podcast 250 - ACCUMULATING NOT SPENDING MAKES YOU WEALTHY

Welcome to Safe Dividend Investing's Podcast 250 (November 22, 2025)

It is interesting to investigate what motivates investors to invest in the stock market. Do they believe that once their portfolio achieves a specific dollar amount the they will the be "wealthy". Will they recognize that spending money unnecessarily and thoughtlessly can quickly destroy the wealth they may have spent years accumulating. The reality is that if you spend all you earn, you are not getting wealthier, you are just living high.

How much do ego and envy influence the spending habits of investors? Hopefully this week's podcast may help you with your investment priorities. 

I write my investment books for those who fear that they will lose their life savings by investing in the stock market My books show  investors  an easy, safe way to select financially strong, safe, growing companies who pay high dividends .  I have been successfully investing this way for more than twenty years . My portfolio of strong dividend stocks not only provides me with a reliable, growing six figure income but over time has continued to increase the value of my portfolio by many multiples.

For more information on self-directed investing go to my website www.informus.ca or  listen to the previous 249 weekly podcasts. The first 160 podcasts are devoted to answering questions from investors just like you. Some of the remainder give you an opportunity to practice choosing stocks and introduce new relevant topics

Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
New York Telephone - 929-800-2397
imacd@informus.ca

Transcript

Podcast 250

SAFE DIVIDEND INVESTING

Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast # 250, on November 22nd of 2025.  My name is Ian Duncan MacDonald, and I am an author of six investment books. 

I always find it interesting to investigate what motivates investors. For example, why are you investing in the stock market? What is your objective? Is it to own a portfolio worth a specific dollar amount? Will you be “wealthy” once that dollar objective is achieved? 

Wealth has been described as what you have minus what you need. Many high-income earners feel broke because their lifestyle requires $300,000 and they are only earning $200,000? Every unnecessary expenditure they make holds them back from ever achieving financial independence. They have not learned or accepted that achieving financial independence requires patience and discipline to slowly and methodically pursue this objective of true wealth.

Investing has little to do with the gamble of making exciting stock purchases that you were so certain would make you instantly wealthy. An investor’s ability to endure the boring methodical harvesting of profits as paid in dividends from the companies whose shares they buy is far, far more likely to provide the financial independence many investors seek than speculating.

You don’t need to be super intelligent or extraordinary in any way to achieve financial independence. Your consistent patterns of disciplined behavior will result in achieving that objective. 

If this lack of risk and excitement sounds boring, consider who sleeps best at night, patient boring investors or impulsive, impatient, speculators?

Suppose over many years you slowly built your stock portfolio to a value of $800,000 by investing in the conservative stocks of 20 financially strong, diversified, safe companies generating an average dividend payout of 6%. These dividends would give you $48,000 a year to live on. 

Most years, the share prices of these strong stocks will also gain on average about 10% or more in value. As their share value increases the management of many of these companies often increase the dividend payouts to maintain their traditional annual 6% dividend yield. Their shareholders have been conditioned to expect such annual increases. Such a strategy removes the motivation to sell their stocks. Dividends investors like it because these annual increases will keep their dividend income well ahead of inflation. 

Over the last one hundred years the inflation rate has averaged about 3.5%  If retirement is still many years away and you do not need this dividend income now to live on; you can “invest that income back into more shares of your 20 stocks. Doing this you can expect to see your portfolio’s value doubling within five years because as you are reaping the compounding benefits of dividend income realized from the dividends you were paid.

In most of the world, $48,000 a year is enough to live well. However, living on $48,000 requires the discipline of remaining as free of debt as possible. Once investors have a stock portfolio large enough to give them financial independence, a change then takes place in their attitude to money. No longer do ego and envy have the same influence on their spending habits. No longer do they feel a strong need to spend money to impress their friends and neighbors. They have come to recognize that spending money unnecessarily or thoughtlessly can quickly destroy the wealth that they may have spent so many years carefully accumulating.

Due to the decades, I spent in assessing commercial credit risk, running commercial collection operations and dealing with insolvent companies, I am very aware of the dangers of allowing your expenditure to exceed your income. Dangers that have impacted many of my friends who I had thought were wealthy. I would be approached by them with questions of how they could avoid bankruptcy. These friends were now drowning in debt. 

One of them had a house so large that it required two furnaces to heat it. His wife loved to brag about her husband fulfilling her lifetime dream of owning a Cadillac.

Another had sea going yacht, a ski chalet in Whistler and a luxury car he had bought from the factory in Germany to drive around Europe and then have it shipped back to the US. He has now been reduced to needing food stamps to survive.

Another incredibly was once the chief executive of a large national trustee in bankruptcy firm. Upon retirement he opened his own firm. A few years later he was overextended. He asked if he could borrow several thousand dollars from me. This was a man who loved monogrammed dress shirts and $1,400 Gucci Loafers.

The fact these friends burned through so much of their money should not have been a surprise to me. Many years ago, I read a famous 1996 book by two university professors Doctor Thomas Stanley and Doctor William Danko called “The Millionaire Next Door”. In 1976 they had set out to study how people became wealthy. They started their surveys in what they thought was the most logical place, the upscale neighborhoods across America. They quickly found out that many wealthy, financially independent millionaires do not live in upscale neighborhoods, nor do they invest heavily in rapidly depreciating assets like luxury cars. 

If you spend all you earn, you are not getting wealthier, you are just living high. It is what you accumulate that makes you wealthy, not what you spend

Friends often teased me about having the first dollar I ever owned.  Yes, I am careful with my money. My careful money habits were mostly derived from when I worked my way through college as a laborer in the mines and smelters located in a far northern mining town. If I had not saved that money and carefully doled it out for tuition, books and living expenses, I would never have graduated. There was no one else that would have paid for my education. I did not realize it at the time, but I had achieved financial independence in my desire to sacrifice for future benefits.

 I further became aware of how careful you must with accumulating and expending money when many years later I naively handed over a very large sum of money to a friend who was president of a securities firm. At least, I thought he was a friend. Knowing little about investing I had accepted the conventional wisdom that such a large sum required professional management. He put all of the money into what he told me were safe mutual funds.

 I remember asking him how much his effort on my behalf was going to cost. He replied, “So little that I would not even notice it”. I should have realized that this was just a salesman’s clever empty response to a naïve client.

 He also broadened my investment education by telling me that mutual funds were the safest form of investment I could make. When I retired all, I would have to do was to sell off 4% of my portfolio each year to pay that year’s living expenses. I was assured that with this careful liquidation of my investments to pay my expenses this  mighty sum would last until I was 90. Back then, in my early fifties, the age of ninety seemed an impossible age to ever reach. Now, thirty years later, 90 is not that far off.

Three years later these mutual funds that were supposed to cover my future retirement expenses had shrunk by $300,000. I withdrew all the money that was left and put it in a self-directed investment account at my bank. I then set out to learn how to invest that money safely and profitably. I figured I could not do any worse than what the professional had done with it. 

The friendship with the investment advisor was lost. No longer each summer was I wined and dined at his private island resort. Could it be that he never was a friend and that I was just another pigeon to be plucked.

For decades I had been employed in the commercial risk industry, I now decided to approach investing in a company’s stocks the same way I would approach any commercial risk like a loan or credit purchase. Before buying a stock I first used free tools to select the best companies to add to my portfolio. Then I studied each company’s past and present financial information. I then chose the 20 best companies with long histories of profitable, growing operations. I could see this in their ever-rising dividend payouts, operating margins and share prices. To help me with this selection I built an easy-to-use stock scoring computer program. 

Within two years I recovered the $300,000 that the professional I had lost. That portfolio which is now worth several multiples more is still growing.  I also often consider the hundreds of thousands of dollars I have saved as a self-directed investor who is not paying commissions, fees and charges to investment professionals over these decades.

 I am my own proof that a careful, disciplined approach to investing and managing your money works. Many who have read my books tell me it has worked just as well for them. 

I started to write those books after a friend had asked me to show her how to invest. She too had lost hundreds of thousands of dollars placed with an investment advisor. She quickly recovered what she had lost and doubled the income she had been living on.

Careful money management never ends. While I can afford to buy any car. I recently bought a Toyota Rav Four with only 2,000 miles on it.  A Rav Four car is known for its reliability. The fact that the car still had a year and a half left on its warranty was a bonus. I calculated that I saved at least $10,000 over buying a new Toyota Rav. 

Since I paid cash for the car, I also saved thousands on what I would have paid in interest charges if I had financed the car. I had also paid cash for the previous car I had bought 13 years earlier. 

Paying high interest rates is not how you accumulate wealth. I pay off my credit cards in full every month. Once your expenditures are under control, your wealth grows without any great effort.

Unlike my podcasts, my books provide the opportunity to show in detail the merits of hundreds of dividend stocks I identify and analyze. With more space I can fully explain exactly how my free, easy-to-use stock scoring software helps you select and then manage the stocks in your portfolio. Numerous warnings about the investment industry trickery you will encounter are also provided.   

You will find none of the usual financial investment industry jargon and complicated strategies that investment advisors use to try to impress and intimidate you. My books show you that plain common sense, discipline and patience is all that is required to achieve financial independence.

This is Ian Duncan MacDonald, hoping that I have motivated you to become financially independent through self-directed investing. If you wish to learn more about my approach to investing enter my full name into a Google search or go to my website www.informus.ca. The books with sample chapters and reviews are available at www.amazon.com