Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

Buying $1 in Assets for $0.90

You’re probably familiar with mutual funds. Those are investments where your funds are pooled with other investors’ money and the fund manager buys a portfolio of stocks, bonds, or other assets. The price of the fund is equal to the value of the assets in the fund divided by the number of outstanding shares.

For example, if the Marc Lichtenfeld Dividend and Income fund (which I operate out of Marc Lichtenfeld’s Authentic Italian Trattoria’s back office) has $10 million under management and there are 1 million shares outstanding, the fund is worth $10 per share. If tomorrow the stock market rises and the value of the assets goes up to $10.5 million and the share count remains the same, the fund will be priced at $10.50 per share.

Anyone who wants to own the fund buys it directly from the fund company and pays $10.50 per share. The mutual fund company will create new shares as a result of the purchase. The price per share will not change because the price now reflects the new money that just came into the fund.

For example, a buyer purchases $100,000 worth of fund shares at $10.50 per share. That means the buyer buys 9,523.8 shares. The fund, which had $10.5 million in it, now has $10.6 million due to the $100,000 of new money that the investor gave to the fund.

The Marc Lichtenfeld Dividend and Income fund now has $10.6 million in assets divided by 1,009,523.8 shares (the original 1,000,000 shares plus the newly created 9,523.8 shares). The price per ...