One Reason Why Everyone Should Participate in the Share Market

The late Ernest Hemingway was an author and journalist who had a great influence on modern day fiction. Many of his works like the Old Man and the Sea are considered classics of American literature. In 1954, he won the Noble Prize in Literature.

What is perhaps a lesser known fact is that Hemingway was also a pretty good income investor.

Hemingway the investor

As Hemingway passed on, he left behind gross estate holdings of US$1.4 million to his widow. Of the amount he left behind, about 30% of it was in stock and bond holdings. Hemingway had bought positions in blue-chip securities such as General Motors and American Telephone and Telegraph Company which provided him with dividend income.

I was surprised to learn that his stock holdings apparently provided him with more income compared to his published works – five years before his death.

It goes to show that even a well-known writer like Hemingway was able to diversify his source of income that quietly compounded into a strong stream of dividend income. Eventually, this dividend income would even exceed his illustrious work as an author.

Closer to home, the sprawling interconnected conglomerates of Jardine Matheson Holdings Limited (SGX: J36) and Jardine Strategic Holdings Limited (SGX: J37) have increased their dividends for the past ten years. Jardine Matheson, for instance, has increased its dividends from US$0.25 in 2003 to US$1.37 in 2013. This stunning five-fold increase in dividends is the kind of performance that might lead the individual investor to achieve what Hemingway did; that is to have dividend income which may one day exceed our own primary source of income.

Foolish take away

Regardless of the job or passion you pursue, finding a space for holding shares for the long term may benefit the dear reader. If Hemingway can do it, I would venture that everyone else could also consider it as well.

Holding on to shares of well-run companies tenaciously over time can yield compounded returns which may provide us with valuable income in our later years. And as Hemingway has shown – if we do it well enough, it may even exceed our own primary source of income.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.