What if I told you that you may invest to your bills to pay for themselves? I came upon an interesting article from one of the bloggers (link here) and I became curious how it would look like in my scenario.
The idea is to invest to the companies that are billing you for internet, mobile phone etc. If the company pays dividends, you would eventually enter the point when you receive more dividends than your monthly bills.
E.g. my monthly mobile phone bill is EUR 10.89 and “Telia” is the service provider. “Telia Lietuva” is listed in Baltic market list and usually pays dividends once a year. This year it paid EUR 0.03/share (EUR 0.0255 after applying 15% dividend tax). It means that I would need 5125 stocks to cover my cellphone bill by dividends from Telia (10.89*12/0.0255). With the current price of EUR 0.941/share, I would need to invest EUR 4822.35 to achieve that. That’s quite a lot! On the other hand you would hold some solid stocks and they would pay for your phone bill at the same time.
I made a table with the bills I am paying. It shows how much I would need to invest in respective companies if I wanted their dividends to cover their bills.
Above table shows the actual dividends that were paid during 2017 and the price of relevant stocks on the 27th October. Of course, the dividends and price may change in the future. E.g. ESO had record dividends this year and I am pretty sure that the amount will be smaller in 2018. But let’s consider that the dividends did not change and stay as they were this year. It shows that I would need to invest almost EUR 28k to cover my bills!
The table also shows how important it is to try to keep your expenses at minimum. Less expenses = less investments needed to be able to live off them. We should have a look at our monthly expenses and try to think where we could save some money and reduce the amount of investments we would need to cover them. E.g. if I got rid of my TV bill, I would need almost EUR 8k less to cover the bills! I think I should leave this topic for another blog post as it could take a while to dive into those numbers.
You could apply the same for a lot of things in your life. If you are buying Gillette razors, Ariel laundry products, OralB toothbrushes – you could also buy stocks of Procter & Gamble because all of those brands belong to it. E.g. this year I am going to receive $17.27 in dividends from Procter & Gamble. This would buy me a 4-pack of Gillette razor-heads I am using and I would keep some change.
Of course, not all things you pay for are coming from companies that pay dividends. For example, we are renting our flat from an individual. We could still try to find an equivalent and invest to a REIT (Real Estate Investment Trust) or some real estate company that best suits our investment criteria.
You could even make it into a game/challenge. For example, if you have a car, you could try to achieve to only drive it when you get enough dividends from an oil company to cover the petrol/diesel expenses. I can see three positive sides of this:
- You would try to limit the amount of driving. Perhaps you would choose to cycle/go on foot when it’s possible instead of jumping to your car.
- It could work as a motivation to save more and therefore invest more.
- It makes investing so much more fun. Personally I like to make everything to some sort of game, be it investing, learning something, reading, working etc. It helps me stay motivated on something I am working on.
Since I am planning to buy something from my home market, I will be looking for an investment opportunity shortly when I have some cash available. Who knows – maybe it will actually be one of the companies that is charging me?
Have you ever thought about your investments this way? Do you prefer companies whose products you are using or you only evaluate the financial ratios/reports? As always, don’t hesitate to leave your comments below.
P.S. This is just a thought experiment. I wouldn’t recommend this as an investment strategy by any means. Usually, you may find better investments and in the end you are getting the same cash so it does not matter where it is coming from. But it’s nice to see how it would work 🙂