ONLY INVEST IN THINGS THAT MAKE MONEY!

About 15 years ago I worked as a certified dietary manager in a nursing home that catered to quite a few well-to-do seniors. My head cook and I had been discussing stocks and investing quite a bit and he took it upon himself to ask one of the retired businessmen in residence the secret to his retiring as a millionaire. His reply was, "Only invest in things that make money."

When he related the story to me later in the week, my genius response was, "Well Duh!" However, having had a great deal of experience with investing since then and lots of time to study making money work for you, I think I've come to understand just what he was trying to say. He wasn't being cryptic or putting my fellow co-worker on, he was sincere in his advice. I believe now that what he truly meant was to buy assets that generate income. Or only to invest in things that put money in your pocket.

This could be just about anything really. Buying equipment for your business that will generate a return beyond the cost of the purchase. Investing in rental property with positive cash flow. Or, as in my case, investing in dividend paying stocks. I choose to invest mostly in dividend stocks, rather than growth stocks, for the simple fact that dividends are money in your pocket. A stock may or may not go up in price, but a well chosen dividend stock can generate cash flow for years to come.

So his advice was much more valuable than it seemed at the time. It just took me a while to figure it out.