Still being quite young and with a long investment horizon, I have been thinking about how I can combat inflation as I grow older and eventually retire. There are many ways to do this, but my favorite so far is buying dividend stocks. This strategy may not be suitable for everyone as it covers a time frame of 45 years.

If I invest an initial amount of $30,000 into some dividend stocks, and add $400 monthly over 45 years, and grow the money by 7.3% yearly (The Dow Jones Industrial Average (DIA) had appreciated by 6.2% yearly from 1960-2010. Assuming that it appreciates the same way over the next 45 years, and that dividends of the portfolio will be sustained at around 3%, returns averaging 7.3% should be achievable.

Source: Seeking Alpha

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