Over the last five days, the Dow Jones Industrial Average dropped about 2,000 points, approximately a 2.6% decline. This is a significant drop. If you have an investing system or plan, these are the times that will test your resolve. This is why my system is dividend income investing.

In dividend income investing, you’re not primarily looking to make gains through the price of any individual stock. Instead, you choose companies you believe have solid fundamentals and will perform well regardless of current economic conditions. You also hold a diverse set of stocks in different market sectors so any downturn in an industry or individual company doesn’t affect your entire portfolio. My main goal is for the principal amount of my portfolio to remain relatively the same while my income increases over time.

Since last week, my portfolio has declined in total value by about 2.79%, which is about the same as the Dow overall. However, my income has increased by a little over $100 per year. That may not sound like a lot, but that increase alone can cover a streaming subscription for a year, an extra night out for dinner, or some gifts for my grandchildren. That’s not the only increase I’ll experience this year. So far, my annual income has increased by over $2,600.00. That’s no longer chump change. You get the picture. I’m not sweating the overall decline as long as my portfolio maintains a relatively consistent value and my income is increasing.

Over the last year, my income has grown by about 4%, which at least keeps pace with inflation. Market downturns like today’s have no effect on my ability to hold my portfolio together because I’m not dependent on the stock price itself. I never draw down on the principal and instead live off the dividends. That also means the 4% rule of thumb for retirement withdrawals does not apply to me. I’m maintaining the total value of my portfolio while reaping the dividend rewards.

If you have a solid plan, it should account for days like today. While it is hard to watch a portfolio be reduced by $30,000 in a single day, I know I’m holding, and the market will swing back in my direction over time. The only thing I monitor closely is the risk of a dividend cut, and I’m confident that at least 96% of my portfolio is safe over the next 12 months.

Having a robust and well-thought-out investment strategy is crucial, especially during turbulent market times. Dividend income investing allows me to focus on steady income rather than short-term market fluctuations, providing peace of mind and financial stability. By maintaining a diverse portfolio and concentrating on long-term gains through dividends, I can weather market downturns without panic. It’s essential to stay committed to your investment plan and remember that the market’s ups and downs are a natural part of investing.