Simplicity is the ultimate sophistication.
Simple: take 2 investment strategies that work really well, combine them and get exponential results.
Dividend (RE)investing works
Have a look at the calculator results below of the S&P500 In 25 years you would have multiplied your initial investment by 8,5 times if you reïnvest all the dividends. If you didn’t reïnvest, you would only have multiplied your initial investment only by a factor of 4.5
PUT option writing
The red line in the chart below shows the PUT option writing index compared to the S&P 500 index. In 25 years the PUT index almost beats the S&P with a factor of 2.
Putting A & B together, it is not hard to see the exponential results you can achieve with this strategy.
The 3rd pillar: Multi-Dimensional Compounding
Most people think of compounding in one dimension. Basically reïnvesting interest and dividends they receive.
Multi-Dimensional compounding takes advantage not only from the present but also of future cashflow (think dividend income, % of savings, commisions, rental income, etc) I wrote a separate blog post on Multi-Dimensional compounding here.
How are we doing Multi-Dimensional compounding practically?
“Cashflow” covered put option writing
“Cashflow” covered put option writing is how we call it
The third pillar of the super snowball strategy
Cashflow= your anticipated dividend income +other sources of reliable income + the amount of money you can save each month (and put on automatic recurring payment)
We will be writing out-of-the money put options on dividend paying stocks for the amount of the Cashflow or capital that is not invested yet.