Dividend Growth Monitor
In a recent article written for Seeking Alpha, “You’ve Accumulated $1 Million For Retirement”, I touched briefly on the concept of setting small, interim, achievable goals.
Behavioral economics has borrowed and studied some essential psychological concepts to examine behaviors and how they relate to investor’s behavior in their financial lives.
The importance of positive feedback and positive reinforcement should not be minimized. Behavioral economics gives great credence to these concepts and we'd be wise to incorporate these principles into our retirement investment plans.
I have succeeded in incorporating these concepts into a new stock market digital tool called the Dividend Growth Monitor.
The intuitive interface of this tool makes it easy for the investor to enter dividends received as they appear in his brokerage account. Organized by stock ticker, share count and month of receipt, the user can quickly locate the exact cell where to input the new dividend data.
Actively Monitoring and Inputting Data
The user could look at his online brokerage account on a daily, weekly, or monthly schedule. He would then use the dividend received data from his account and enter it into this new digital tool.
With each new input of data, the user gets automatic positive reinforcement in three different locations of this tool. Monthly totals in the green row running along the bottom reports total dividends received from the portfolio during that month, and changes automatically each time a new dividend is recorded.
The pink column on the right side of the tool automatically totals and reports the accumulating total of dividends received on each ticker on an annual basis. This sum also increases automatically when new dividends are recorded in the tool.
The third location that supplies automatic positive feedback to the user is found in the blue column all the way to the right. The algorithms in this column automatically total the dollar income the investor is receiving from each ticker, then automatically totals up his entire portfolio annual income for him at the bottom.
Positive Feedback/Positive Reinforcement From Reaching Interim Goals
The investor benefits most from this tool by initially setting small, achievable goals for himself in terms of growth of dividend income. A new investor just starting out might set a goal, for instance, of reaching $50.00 per month in dividend income.
He can track his progress easily by monitoring the Annual Income column on the right. Once it indicates an annual total of $600.00 ($50 X 12 months), the investor will immediately get reinforcement from having reached this first, interim goal. Instant gratification!
He might then set his next interim goal at $75 per month, or whatever level he is comfortable with, as long as it is also reachable and achievable without too much extra effort. Remember, it is the act of reaching these interim goals (positive feedback) that become the positive reinforcement that spurs the investor onto reaching greater and higher goals.
Annual Report Card
At the end of a year of recording and monitoring, the investor can make a full analysis of his progress by simply looking to each month’s totals, his annual total of dividends received and his annual total of dollars of income received.
This monitoring tool comes loaded with five years of algorithms with which to record five full years of progress toward the investor’s goals.
Every month, the user can inspect his progress by comparing the current year with past year’s performance. Examination of monthly totals helps to keep the investor on track and will give positive reinforcement whenever these totals are increasing.
Annual income totals for each ticker will automatically give feedback as to which companies are meeting the investor’s goals for raising dividends. And, annual income totals for the overall portfolio will give the user positive feedback each time this number increases.
Again, interim goals can be set for increases in monthly or annual dividend income. It is then quick and easy for the user to see at a glance if each ticker and the overall portfolio are achieving the goals that he has set.
If, for instance, a goal of 5% increase for the total portfolio has been set, and an annual examination reveals that the increase has been only 4%, the investor can find the laggard equity by comparing monthly and annual totals for each ticker. It would then be up to the investor to use this information as he sees fit. Perhaps sell the stock and replace it with a faster, more reliable grower? Perhaps hold, if the investor believes changes in management or service or product offerings seem promising for greater earnings and dividend growth going forward.
Consistent Input And Monitoring Bring Results
Taking an active role in one’s investing is what brings results using this tool. The act of inputting the dividend when it arrives combined with the monitoring of goals and reaching those achievable goals is the secret sauce. This brings constant positive reinforcement to the investor’s plan of growing his dividend income.
Once the habit of active management becomes ingrained, it brings its own positive reinforcement, continually spurring the investor on to bigger and greater growth of portfolio income.
If this sounds appealing to you and you think that active participation in your investments can enhance your performance and dividend growth, then this digital tool is for you.
This tool works on pc, Mac, tablets and smart phones that have Excel or the free Open Office spreadsheet available at openoffice.org
#1 Ranked Retirement author on Seeking Alpha