I Gave Myself a Raise

In these economic times, many people feel lucky to still have a job. But, this month, rather than sit around and complain that I’m not making more money, I decided instead to give myself a raise. Let me tell you how.

My boss doesn’t know that I did this, but I did it anyway. In some of my past posts, I’ve said what a great stock I think National Grid is (The latest was June 7 ‘NGG Impresses Me‘.) Well, on June 2 they had paid a dividend of $1.774 per share (about 4.33% of their share price, something they have been doing biannually, but well above their typical 2% or 3%) and then, on June 15th I was pleasantly surprised to notice that they paid an additional dividend of $4.233 per share (or, 11.05%).

So, those of you who have been paying attention will notice that, in June 2010, National Grid paid a dividend of about 15%. Not bad for a company with a state-sponsored monopoly which sells a product that most people would rather cut off a limb than do without.

My point here isn’t exactly to suggest that you should purchase shares of National Grid (NYSE: NGG). No, that would involve talking about you. I’d rather talk about me. So instead, my point is to note that in the past month National Grid has paid me about $600 in dividends. That’s not a bad amount considering that I only own a few thousand dollars worth of their stock. (In fact, I’d love to own more of their stock, but the amount I already own accounts for too much of my portfolio. I don’t want too much in any individual stock, even if I think that stock is a great buy.)

It’s also not bad considering that to earn $600, after taxes, from my own labor would mean that my boss would have to give me a raise of about $1000/year. So, rather than sit around a wait for him to give me a raise, by just buying a few thousand dollars worth of stock, I managed to increase my income as if my salary had been increased by $1000.

Many people think of saving money as if they are saving for their retirement, a day which will come far in the future. But the way I see it, every amount put into a stock is the equivalent of giving yourself a raise today. Has your company frozen your wages? Is it going through a round of layoffs? Are you self-employed and business is stagnant?  Then buy a few thousand dollars worth of a dividend-paying stock and it will be as if you’ve gotten a raise.

The problem, I think, is that financial planners try to goad people into saving for their retirement as if their retirement will start many years from now. In fact, your (partial) retirement can begin today if you just choose to give yourself a raise.

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