Saturday, February 2, 2013

Investments That Pay

by Andrew Cromwell

When you own shares in a company that pays dividends, you receive a dividend payment four times a year. This payment is in direct proportion to the size of your initial investment. It usually is not a very large payment, but long-term investors know that the dividend is an important piece of the investment equation.

Shortsighted investors will often take that dividend payment and go and spend it. But smart, long term investors will usually plow that dividend right back into the market. In this way, they turn these small investments into big returns. After 10, 20, or 30 years, they build themselves a significant portfolio that can help them in the years when they most need it.

Relationships are the same way. Your relationship with your spouse, your kids, or your valued friends and family are like investments that pay dividends. There is always a cost to “buy in” to the relationship. When you marry someone, there is a significant investment of capital that changes hands, and I’m not just talking about the cash for the rings and the wedding. You choose to invest your emotional energy, your time and your life into the relationship. It is the same, in varying degrees, with all relationship investments.

And there are generally dividends that are paid (at least in most healthy relationships). These are the small positive exchanges that we receive as a result of our investment. In a marriage, these dividends for guys usually involve physical intimacy, for gals usually emotional support and physical presence. In parent-child relationships, the dividends generally come in the form of those special moments when your child acknowledges that you are important in their life.

These little exchanges are wonderful little reminders of the investment we have made. And far too often, we leave it at that. Or worse yet, we simply expect that these little dividends will just keep coming our way because we paid that initial investment way back when.

But the smart ones among us — the long-term value investors — they leverage those dividends into continued investments that result in incredible relationships. Where many take those positive interactions for granted, they keep plowing more into the relationship. They keep writing notes, they keep going on dates, and they keep seeking out the other person in small ways and big. They know that they are in it for the long haul because they want to have a great relationship with their spouse and their kids and their friends in 10, 20 and 30 years.

The truly good relationships, the ones we look at and wish they were ours. They don’t happen overnight. They happen small investment by small investment. But the payout at the end of the day is incredible.

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