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If you own solid individual stocks that pay a good dividend, you don’t have to worry about ‘”withdrawals”. Provided your stocks all continue to pay, you can just take your dividends and not worry about the nominal price of the stock. When it comes to investing, I am a HUGE fan of putting savings on automatic pilot, especially if you can max out a pre-tax plan which has an employer match .
I am opposed to investing in funds, such as the S&P 500 EFTs. While this is better than nothing, there are a number of flaws that will undercut this strategy for many investors. It helps to find indicators of fear in market participants and then investing more heavily when fear is present.
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That being said, the best way to mitigate this sort of risk is to reign-in spending. The less you need, the less a potential crash or slow decade will affect you. Your social security or other pension will go further. 5) If and when interest rates rise, and it will have to eventually, borrowing may slow a little, our national debt becomes choosing the right forex broker more expensive, etc. etc. Hi Jerry, you might want to dig into the Betterment article I linked to if you’re into the details. You probably know it, but i havent found you talking about Nassin Nicolas Taleb, on The Black Swan – The Impact of the Highly Improbable, says, to me, that a lot of planning is not the way to be sure….
I order to see what my stock performance is, I have to back out the cash/CD component of my portfolio. Let’s say I average 40% cash/CD during this 10-year period, and am only 60% invested in the stock market. Let’s assume I average a 1% return on the cash. That would make my total return on the stock portion about 6.93%, compared amana capital broker review to the S&P average of 6.46% during the same period. I have been investing in individual stocks for over 30 years, and I’ve learned how to design a portfolio that will produce consistent returns over long periods. It may not go up as much as the market as whole during booms, but I sure get my money’s worth when the market crashes.
- Think of it this way, compare two stocks where one pays a 2% dividend and appreciates 5% the other one doesn’t pay a dividend but appreciates 7% a year.
- Over 30 yrs, I think the market will be fine, but for the next few years (esp. after a 7 yr bull), I’m willing to keep a little out of the market to see what happens .
- Personally, I have been using my investments to lower my cost of living (e.g. solar, geothermal,electric cars).
- Tough to change the mentality that’s inherent within many people.
- But by removing emotion, you will overall make the right choice.
It is true, for instance, that Buffet recommends that the average passive investor simply buy and hold index funds. But he also spends much of his time advocating against buying overpriced stocks. So obviously, these two ideas are not mutually exclusive. When you’re buying stocks, you’re buying the earnings, assets, and likely future earnings and assets of a company. This article is obviously just a repetition of the oldest of investing knowledge.
Clearly you can try to time a rebound, but midto long term German utilities do not have a lot of upside unless we get a surprise ice age within the next few years,.. I guess Joy Global will never see the old highs again, but even if the coal price stabilises on a fairly low level and they manage to survive this might be a good investment. IT’s all there and I don’t want to write it twice. I honestly got confused by all the reorgs they made.
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It is tax efficient and over long periods of time managers can not beat the market. Everyone who buys individual stocks and says how they do so well have to be taken with a grain of salt. The time they spend on it and accuracy of their stated returns? For the average investor Vanguard index funds provide a great wealth building path. Also check out Paul Merriman .com he does extensive research on indexing and withdrawal strategies.
…If you are actually buying VTI instead of VUN though – are you putting enough in at a time to make the currency exchange costs worthwhile (like, at least a few thousand $), and using Norbert’s Gambit? Be honest with yourself and see that a majority of your readership would be much worse off than yourself if they were to lose 50% or more of their stock value over a year and a half. History shows we are irrational and sell low and by high. You might be able to hack it, but most will not.
The markets gotta suck for a few years before I have a real loss compared to giving money to uncle Sam. I’m pretty conservative and don’t like having debt so that’s why I’m trying to pay it off as soon as I can under my circumstances. Maybe once I start working and earning more, I’ll go (now it’s more like 70 % on mortgage and 30 % in index funds). I’m a single mom living in northern Europe and due to our country’s very good social security system, I’m able to only work part-time , leaving me enough time to be with my 2-year old.
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I applied this same logic to gold and literally made 600% on a $2000 JNUG position, though holding a safer asset such as GDX or GDXJ would have resulted in 100% gains in a couple months. When you take the cyclically adjusted value of the market in aggregate It happens every time. Almost everyone who takes a reasoned, value-based approach was able to do this. Unfortunately, we’re a fairly small portion of the investing public, but we shouldn’t be. You can do nothing and end up better than people who do something.
Of course, the problem is that when assets become overvalued, they may stay overvalued for some time before the market “wakes up” to this fact. Once this happens, the market for that asset tends to swing hard the other way, overshooting fair valuation and going into undervalued territory for some time. Where they expensive when Dow was 3,000 or 10,000? Buy now and the market could be 100,000 in 10 years.
He shows real life examples of 4,5 and 6% flexible and fixed withdrawal rates. It really is interesting and put my mind at easy when I need to pull from my portfolio. I have a medium size stash that I moved into cash about 6 months ago due to fear. I am hoping that the next market route comes soon. I would get back in and probably stay in for the forceable future. I have a really hard time imagining that the market will take off and I’ll be left in the dust.
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They need to be watched very closely, which I’m not a fan of, but for someone who both knows and follows the market very well, they can be used with reason and judiciousness. This is the exact topic he won his Nobel for, and it does hold up to scrutiny. I think this is a case where the logical thinking doesn’t match the evidence.
I’m not Jason, but I use Vanguard’s VWIUX (“Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares”) as my muni bond fund. Vanguard also has Short- and Long-Term options , and also Investor class shares of the three. In addition, there are a couple of ways to hack into your 401k if you plan on retiring early . But what if it never drops anywhere close to that low? It could bump along like it is, continuing to pay dividends and eventually go up. Or it could roar up to 2000s valuations and stay there for a decade.
Chances are they are not as capable as they think and they will only learn this lesson a couple decades too late. First of all, the first 20 years I invested, I just dabbled and made all kinds of bonehead mistakes. I was only running relatively small amounts of axitrader forex broker review money in the market, about $50-200K, while the bulk of my money was getting nice returns in short-term cash. I really missed a lot of opportunities, and if I knew in 1991 what I know today, I’d have $20 million now. I agree with you on the individual stock idea.
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Some of them are there, for now, more than 10 years. Once a year I do short summaries of my positions, the posts are called “My xx stocks for 20xx”. You might want to look at the last one to see which positions I am very comfortable with and which positions are shakier. The tax differences are a bit smaller now that dividend tax rates are the same as long term capital gains, but they are still real.
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As the headline says it shows the current portfolio. I invested in a company that semms to be bargain, although I would like to have your opinion. I am a value investor and I have been following your blog. Regarding Germany I’d really like to find a boring, hard-working mid cap still with a strong family presence but many of these are private companies, unlike in UK/US. Our experience in Burgundy is that coopers can dictate prices.
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It also makes it harder to spend money frivolously. Beyond lowering cost of living it is very difficult to determine how to invest. I’ve been trying to put money into things that have some intrinsic value (real estate/commodities/etc), but even these have obvious risks.