New York, NY – Many investors focus on unrealized gains as a measure of success, but recent events shed light on the risks associated with this approach. John Foley, former CEO of Peloton, once boasted a net worth of $1.9 billion, primarily from unrealized gains. However, Foley’s fortune quickly evaporated, highlighting the importance of realized gains in investment strategies.

Foley’s experience serves as a cautionary tale for those who rely solely on unrealized gains to assess their wealth. Until gains are realized through selling investments, they remain as potential gains that are subject to market fluctuations. The volatility of the market can easily erase paper profits, as demonstrated by Foley’s rapid loss of wealth.

The Income Method offers an alternative approach to investing, focusing on generating income rather than relying solely on price appreciation for returns. By prioritizing dividends, investors can secure a steady stream of cash flow that is not contingent on market fluctuations. This strategy provides a more stable path to wealth accumulation, regardless of price movements.

Relying on dividends for income can insulate investors from the uncertainties of the market, offering a dependable source of returns. For example, Royce Small-Cap Trust, a dividend-paying investment, has delivered consistent returns through its dividend payments, even as its share price remained relatively flat over the years.

The power of dividends lies in their ability to provide a steady stream of income, regardless of market conditions. By reinvesting dividends and focusing on income-producing investments, investors can grow their portfolios without relying on price growth for returns. This strategy allows for consistent wealth accumulation over time, reducing the impact of market volatility on investment performance.

In conclusion, the key to long-term financial success lies in prioritizing realized gains over unrealized ones. By focusing on generating income through dividends, investors can build a more stable and resilient investment portfolio. The Income Method offers a practical approach to investing that emphasizes the importance of cash flow and income generation in securing financial independence.