6 Years of Investing: 3 Things I Wish I Had Known Sooner

Hello, this is YuTo.

I started investing in 2020, back when the stock market was experiencing significant volatility due to the COVID-19 pandemic.

It has been about six years since then. While keeping index investing as my foundation, I have also continued to invest in high-dividend and dividend-growth stocks in both Japan and the U.S.

When I first started investing, I think I was too focused on high dividend yields and the stock prices right in front of me. However, after actually experiencing both bull and bear markets, I began to see things that weren’t apparent just by looking at the numbers.

In this post, I will write about the “three things I wish I had known sooner,” which I can only say now that I have been investing for six years.

1. Don’t choose stocks based solely on high dividend yields

When I first started investing, high dividend yields looked very attractive.

At the time, I would sometimes use the stock screening features on brokerage websites to search for stocks by sorting them in descending order of dividend yield. This was because I felt that if I were investing the same amount of money, it was more profitable to choose stocks that paid out more in dividends.

However, if you invest solely because a dividend yield is high, things may not go as planned.

There are stocks where the apparent dividend yield has become high as a result of a significant drop in stock price. If business performance deteriorates, there is also the possibility that the dividend cannot be maintained and will be cut.

Today, I almost never use screening features to search for stocks by yield. Instead of just dividend yield, I place importance on the following points:

• Is the business performance growing over the medium to long term?

• Is the stock price rising over the long term?

• Are they consistently increasing dividends?

• Is the financial condition such that they can pay dividends without strain?

Even if the current yield is a bit low, if profits and dividends grow, the dividends you receive in the future will increase.

Instead of “looking for high-dividend stocks,” I should have been “looking for companies that can continue to increase their dividends.” I wish I had understood this difference sooner.

2. Dividends and shareholder perks provide support to keep holding even in a bear market

If you continue to invest, you cannot avoid situations where stock prices drop significantly.

Unrealized gains can decrease, and sometimes you may even face unrealized losses. If you only look at the numbers, you might feel anxious and want to sell.

Even so, the reason I find it easy to keep holding high-dividend and dividend-growth stocks is because there are tangible returns like dividends and shareholder perks.

Of course, I don’t just buy more of any stock if it drops. I review my position if the premise at the time of purchase collapses, such as due to deteriorating business performance or dividend cuts.

On the other hand, if there are no major issues with a company’s performance or dividend policy, a drop in stock price can be an opportunity to buy more. Being able to wait while receiving dividends is a great support for continuing long-term investment.

Shareholder perks are the same.

With the Otsuka Holdings perk, in addition to familiar items like Pocari Sweat and Bon Curry, I also received new SOYJOY products that I rarely buy myself. I also receive shareholder perks from KDDI.

Being able to try products I wouldn’t normally choose with my family is a joy that cannot be measured by monetary value alone. When such experiences are appreciated by my family, I feel that wealth building is not just for me.

Dividends and perks are not just ‘extras.’ For me, they are support for continuing to hold companies even when the market is bad.

3. Cash is not ‘uninvested assets,’ but assets waiting for the next opportunity

When the market is rising, it feels like a waste to hold cash.

This is because it seems like assets would grow more if I invested as much capital as possible.

However, if you don’t have surplus funds when the market drops significantly, you cannot act even when a buying opportunity arrives.

In March 2023, there was a period when Silicon Valley Bank (SVB) in the U.S., which had many dealings with startups, collapsed and financial stocks became unstable. At that juncture, I bought more Bank of America stock.

Also, during the so-called Trump tariff shock in April 2025, on a day when the Nikkei Stock Average fell by about 2,600 yen in a single day, I bought more of several Japanese high-dividend stocks.

In both cases, I could not accurately predict the subsequent price movements. However, it was precisely because I had cash available in advance that I was able to act when the market collapsed significantly.

This is where ‘plus-alpha cash’ in addition to emergency funds becomes important.

Keep money for living expenses and sudden expenditures separate from investment funds. On top of that, leave some spare capacity that can be used when the entire market drops significantly or when a target stock reaches an attractive price.

Just having this plus-alpha changes how you view a falling market.

This is because you can think, ‘I can buy if the conditions are met,’ rather than just ‘It’s scary because the stock price is falling.’

Admittedly, my own cash ratio also tends to be lower than expected recently. It’s not a state where I’m in trouble with my daily life, but it has become a source of worry in terms of whether I can act sufficiently when the stocks I want to buy drop.

Holding too much cash means missing out on investment opportunities. On the other hand, investing too much means losing options during a market downturn. I am still experimenting with this balance.

My biggest regret over the past six years is not taking profits when prices surged.

Looking back on my investments, I also have regrets about ‘not buying’.

However, the moment I feel I missed the biggest opportunity was when I failed to lock in profits on growth stocks I held when they skyrocketed.

If it is a stock that rises long-term along with earnings growth, there is an option to keep holding it.

However, that stock moved more based on supply and demand or hype rather than earnings, with price action similar to a so-called ‘pump-and-dump’ stock. Even so, I hoped it would ‘go up even more’ and missed the timing to sell.

The opportunity for stocks that surge in a short period is fleeting. Unlike high-dividend stocks, you cannot wait for the next opportunity while receiving dividends.

From this experience, I learned the importance of deciding ‘why I am holding it and under what conditions I will sell’ before buying.

You need to separate your exit strategy for long-term holdings versus stocks you are targeting for capital gains.

What I want to tell my 2020 self

If I could say something to myself before I started investing, I would tell them these three things.

Review your living expenses

Before looking for investment products, check your monthly fixed costs. For example, just switching from a major mobile carrier to a budget plan can increase the money you can use continuously.

Rather than one-time savings, reviewing fixed costs that occur every month has a longer-lasting effect.

Start investing even with a small amount

If you wait for the perfect timing, you will never start.

You don’t need to invest a large amount from the beginning. Even with a small amount, actually investing helps you understand stock price movements and your own emotions.

It was important to gain experience with an amount that doesn’t strain you, rather than waiting until your knowledge is perfect before starting.

Invest in yourself as well

Stocks and investment trusts are not the only forms of investment.

Money spent on knowledge, skills, health, and experiences necessary for your work also increases your future options.

Do not focus solely on increasing your financial assets; set aside money to enhance your own value as well. This is something I feel more strongly now that I am in my 40s.

Summary

In the six years since I started investing, I have learned the following three things:

1. Look not only at dividend yield, but also at business performance, stock price growth, and a track record of dividend increases

2. Dividends and shareholder perks provide support to keep investing even in a falling market

3. In addition to an emergency fund, ensure you have cash available to act when buying opportunities arise

Furthermore, from the experience of missing the timing to take profits on a surging stock, I learned the importance of considering exit conditions before making a purchase.

Even after six years, I haven’t stopped having doubts about investing. I am still struggling and adjusting things like my cash ratio.

Nevertheless, reviewing my living expenses, starting with small amounts, and continuing without overextending myself—I believe sticking to these basics has led to my asset formation.

If I could tell someone starting to invest today just one thing, it would be: “You don’t have to wait until you are perfect.”

First, get your life in order and gain experience with small amounts. Then, just as you do with financial assets, invest in yourself.

That is what I would like to tell my 2020 self.

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*This article summarizes my personal investment experience and thoughts and does not recommend the purchase or sale of any specific financial products or stocks. Please make investment decisions at your own risk.