Don’t kill the hen that lays the golden eggs

A lot of us have heard this story since we were kids and here is a refresher.

A man had a hen that laid a golden egg for him each and every day. The man was not satisfied with this daily profit, and instead he foolishly grasped for more. Expecting to find a treasure inside, the man slaughtered the hen. When he found that the hen did not have a treasure inside her after all, he remarked to himself, ‘While chasing after hopes of a treasure, I lost the profit I held in my hands!’

How does this relate to Financial Independence?
Dividend stock = Hen
Dividend Payments = golden eggs

When you own good quality dividend stocks, they pay out a portion of their profits in the form of dividends. Most companies pay them out every three months or quarterly. Great companies have a long track record of paying and increasing their dividends annually. These companies are known as the Dividend Aristocrats.

Main purpose is for your money to earn more money forever. If you sell your stock for capital gains (kill the hen), then you loose the ability for the stock to pay you ever increasing dividends (golden eggs). Once you sell the stock, it’s gone and no longer produces income.

Would you rather have capital gains to buy something like a house or car or would you rather have increasing income coming in to your bills forever?

My goal is to figure out how to get more hens laying more and more golden eggs.

Thanks for stopping by and hope the post has been helpful.

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2 Responses to Don’t kill the hen that lays the golden eggs

  1. Alex Vinson says:

    Good analogy!

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