Do you want to work until you die ?

Could buying dividend shares be the key to financial freedom?

 Provided by The Motley Fool

By Charlie Keough

I want to build my wealth by buying dividend shares. I think it’s one of the simplest ways for me to reach financial freedom. After all, creating a stable cash flow that allows me to stop worrying about money is the dream, right?

Compounding gains

I could go on about why I think shares that provide income are an effective way to build wealth. But there is one key reason. That’s because they allow investors to benefit from the power of compounding.

With the dividends I receive, I use these to buy more shares in the companies I own. Through this, it means that I earn interest on my interest. It also means that I’m able to build up my investment pot a lot quicker.

Warren Buffett once said: “If you don’t find a way to make money while you sleep, you will work until you die”. That’s a quote I’ve tried to heavily instil into my investment strategy.

A favourite of mine

In my attempt to achieve financial freedom, I’m turning to the FTSE 100. The index is home to market-leading companies that have stable cash flows and, as a result, rising yields. That sounds perfect.

That said, there are plenty of companies out there that offer a meaty yield. But I only want to buy the best. I don’t want to buy shares today only for the yield to be reduced or cut in the times ahead. There is always that risk with dividends.