Hey there, just a couple questions from a younger investor: 1. How much should I be stressing buying in a “high/overvalued” market in the context of my age? I have at least a 40 year investing horizon, so isn’t it more important to get further in the game now as I establish my portfolio? I’m gonna experience ups and downs, but I can’t benefit from the asset of time if I’m sitting on the sidelines. If I’m investing in strong companies I aim to hold as long-term dividend producers, won’t the initial $1000 purchases I make today represent a negligible effect on my cost basis/risk in the long term? 2. When I see others champion a stock, I try to put it in context how long they’ve been invested and at what period in the lifespan of the company and its growth they experienced as an investor. What are some companies you believe will stand the test of time in our rapidly evolving economy and still have room to grow over the next 30-40 years (Whether it be the proven blue-chips still chugging along or newer ones you expect to join the ranks of the dividend aristocrats in time)? I hope this leads to some debate and a variety of options!
Jimmy Olivier: start from spy and qqq dude then work from that
Brad Betenia: Your time in the market is more important than timing the market. For example, do you think investors who bought KO at an all time high in 1986 ($2.30) are worried now that they bought at the stock’s all time high? Meanwhile all of those dividends have added up over that time too. It is really hard to time the market especially now. Investors have been saying that we are due for a correction for years. Imagine all of the lost money you would have if you listened to them and waited on the sidelines for an entry point.
Milton T Eaton: Investors who paid $2.30/share for KO in 1986 are enjoying a $1.48/share annual dividend today. After 30 years the initial purchase price for the shares is meaningless. Even after 10 years it loses meaning.
Jesse Lebhar: Do you think KO has room to grow over the next 30-50 years?
Brad Betenia: Not without becoming more diversified.
Milton T Eaton: Even if KO went bankrupt today those who invested in 1986 would be way ahead.
Brad Betenia: And with dividend growth investing you are building your dividends and shares over time. Dollar cost average if prices go down on stocks that you feel strongly about.
Milton T Eaton: Time in the Market! Brad Betenia has a great example. All “highs” are temporary.
Milton T Eaton: Look at the SP500. Went from over 1500 down to below 700 in 2008. Now it is over 2300.
Seth William Banks: People have been saying we’re due for a correction since I started in 2013. Just buy high quality companies and don’t get emotional and sell at a low when it does correct.
Avi Tanny: Buy at a low and add to positions; )
Seth William Banks: Yeah, hopefully in the next correction I’ll have enough seniority at my railroad job to avoid being furloughed and be able to afford to just plow money into solid companies. That’s how fortunes get made…
Avi Tanny: Look into cp rail it’s a good stock 😉
Seth William Banks: UNP made me some good money when I held it. Got out before the huge lull hit the rail industry.Right now CSX would probably be the hot stock to grab while Hunter Harrison is there. He’s a vulture capitalist hatchetman fucker who needs to die in a fir…See more
Derek Getz: To your first point, it’s time in the market, there was just a solid article covering that. The worst 30 year time period being in stocks still averaged 7% a year. Waiting for a correction eats into that.For some company ideas, Google, Amazon, Disney, plenty of good fish out there.
Jesse Lebhar: Appreciate the factual reassurance-I’m patient and happy to flow with the market as long as the dividends keep coming in.And I do have DIS! Definitely a company that I believe will continue to thrive as long as our culture exists haha
Derek Getz: I’ll be there next week for some boots on the ground research
Jesse Lebhar: Derek Getz Nice 😎
Avi Tanny: Take a good look at Canadian banks Rbc for example
Seth William Banks: I love the Canadian banks. BNS is currently in my Roth and doing alright. I trust the Canadian banks a hell of a lot more than most US banks. WFC and USB are really the only US banks I’d seriously consider for long term investment, but all of the major Canadian banks seem alright to me.
Avi Tanny: I bought rbc and made 24 % and dividend I won’t sell until retirement
Seth William Banks: I would like to have a little piece of each one whenever a good buying opportunity pops up. Each of the major Canadian banks has something to like about them, from what I remember researching them a while ago.
Jesse Lebhar: Is it true that if you hold Canadian stocks in an IRA you don’t have to pay Canadian withholding taxes?
Seth William Banks: The US and Canada have a tax agreement, so yes, that is true.
Seth William Banks: Same with UK stocks. I have UL and BP shares in my IRA.
Seth William Banks: On the other side of the coin, never hold Switzerland based stocks in an IRA, since there is no such tax agreement. I can’t remember if Bermuda has a tax agreement or not…
Jesse Lebhar: Seth William Banks It’s a shame, since I really like Nestlé
Seth William Banks: Jesse Lebhar Just put it in a taxable account. The US will forego taxing your dividends due to the foreign tax credit.
Jesse Lebhar: Seth William Banks Ah okay, so would I just be paying the Swiss withholding taxes? Presumably higher than in the US
Seth William Banks: Don’t hold me to this, but I THINK the Swiss tax is 15% as well. Nestle is a perfectly good company and worth having even if it means a little extra tax on the dividend, though, as long as it fits in with your overall goals and portfolio construction.
Jesse Lebhar: Seth William Banks Gotcha, appreciate the insight. And definitely want to look into the Canadian banks more (only US bank I’m interested in is WFC)
Seth William Banks: WFC made me some money when I held it for a while. Only reason I sold it, along with the rest of my taxable account at the time, was to gather up money for shorter term trading.
Terry Row: Just start. Contribute a percentage from every paycheck.
Terry Row: As a dividend income investor, I try to balance my portfolio such that each constituent is responsible for about an equal share of portfolio income.For example, we can buy 20 different stocks with our $100,000 in such a way that each constituent generates equal amounts of annual income.A $100,000 portfolio with an overall average current yield of 6% would look like this:20 stocks generating $300 of annual income each = $6000 annual incomeSome of the stocks in the portfolio might have 5% yields when purchased, while others might have starting yields of 6% or 7%. If the investor takes care to buy the right amount of shares so that each portfolio constituent is responsible for producing $300 of annual income, he will have diversified his income portfolio to protect it from total income failure.With dividend income balanced like this, the occasional dividend cutter or even eliminator can only have a small and temporary effect on the overall portfolio income.Using our example of the portfolio generating $6000 of annual income, let’s suppose that one of our 20 stocks reduces their dividend in the next recession by 10%. This would mean that instead of paying us $300 in annual dividends, this company would pay us only $270 going forward. With this $30 reduction in portfolio income, our portfolio would now be producing just $5970 of annual income.So, our current dividend yield would drop, temporarily, from $6000 to only $5970. Our new portfolio yield would now be:$5970/ $100,000 = 5.97%Instead of a 6% yield, we’d have a 5.97% yield and be receiving $30 less per year in income.Meanwhile, most of your 20 stocks, if chosen well, will continue to pay their usual dividends like clockwork, and some will even increase the dividend, even during recessionary environments. It is these increases during down times that will make up for the few reductions the investor will face. If he’s fortunate, those increases by the many will constantly outweigh any reductions by the weak few, and the investor will not suffer a loss of income for long, or even at all.I invest in Registered Investment Companies (RICs), which include Real Estate Investment Trusts (REITs), Business Development Companies (BDCs) and Closed End Funds (CEFs). I invest in monthly dividend payers rather than quarterly payers, so any drop in dividend can be detected and corrected for more quickly.My brokerage is Robinhood, where trades cost $0.00.A good starting point and useful website is https://m.dividendchannel.com/monthly-dividend/ although this list also contains Canadian stocks.A RIC must derive a minimum of 90% of its income from capital gains, interest or dividends earned on investments. A RIC also must distribute a minimum of 90% of its net investment income in the form of interest, dividends or capital gains to its shareholders. Otherwise, the company may be subject to an excise tax by the IRS.
Jesse Lebhar: Appreciate the detailed response! And I like and agree with a lot of what you say. Trying to find the balance between dividend growth and dividend income. At this stage of the game I’m looking to leverage some of the higher yield players to help genera…See more
Terry Row: Re-investing the dividends provides that balance. Every month, I deposit $300 and add the cash value of dividends received and invest that sum in the stock with the lowest total return. It’s usually a different stock from the previous month. Robinhood has no automatic DRIP program (no fractional shares), but performing the task manually is well worth the $0.00 fees.
Terry Row: I also buy a $500 60-month CD every month at whatever bank has the highest interest rate, to keep my overall portfolio in balance.
Jesse Lebhar: Terry Row Yeah I’m currently dripping everything (except PUSH) since I have such small positions. I have plenty of time for my holdings to compound and grow..
Robert VanScoy: Oh good! The Cult of the Monthly Dividend is back.
Michael David Lewis: Look at the poll that Greg Williamson did. It was a poll of the top stocks that everybody in this group is into. It’s in the files at the top of the page.
Jesse Lebhar: Thanks will do!
Jesse Lebhar: I own O, OHI, DIS and SBUX. Particularly interested in JNJ, T, SO but there’s plenty more I’d like to own from this list
Michael David Lewis: Looks like you’re on the right path
Jesse Lebhar: Michael David Lewis Thanks! Wish I had more money to invest but staying consistent putting money in monthly
Michael David Lewis: It looks like you’re doing it right just don’t get greedy. That’s when you lose
Michael David Lewis: I wish I had your mindset when I was your age. As it is I lucked out and came away with a boatload. Baby steps that’s what it’s all about. At 60 years old you’ll be thanking yourself
Michael David Lewis: I think Microsoft is going to be big in the future not that it’s not now. But I think it’s really going to go places.
Michael David Lewis: Might want to throw a little AT&T in there
Rich Krohley: He did. See the third ranking.
Michael David Lewis: I was telling Jesse
Michael David Lewis: Every sector has its pullbacks even in a up market. Keep your eye on the ones that you want and wait for that pullback. AT&T was at 36.50 back in November. There’s a chance you might get it in the 38’s soon.
Misha Shen: Re #1: it depends on your tolerance to losses. When I was your age I invested in technology and dot com companies, then in 2001 I lost over 70% of my investments. Slowly started building up again. The market today is quite overheated and 50% drop is not unlikely. Yet, if you build your portfolio slowly and intelligently (what I mean by this is doing your own research and not following the herd) then you’ll be alright. Nobody can answer your question #2: with the current and future advances in robotics, bio and nano technology and AI it is difficult to predict future market leaders even for 5 years and you are asking about 30-40 🙂
Michael David Lewis: I think Microsoft Google Amazon and a lot of other companies have a long way to run
Robert VanScoy: The singularity – where humans transcend biology. But also medicine… cancer could very well be pre-diagnosed and treated with a prescription.
Michael David Lewis: Look at TER,SYK
Michael David Lewis: They don’t pay a high dividend but they’re growing. But the stock is growing quickly. If I was a young man I would put a little bit into this
Jesse Lebhar: Robert VanScoy It’s interesting to think about. So many things we can’t even fully put in perspective now just because of how quickly it’s gone. Think of even just how cellphones have evolved. I imagine having that tech implanted. As well as nano-tech helping to regulate our bodies and fight issues. The ability to transplant almost everything. Growing even more efficient food in labs. Etc.
Robert VanScoy: Absolutely. And the cell phone is going o go extinct. Calls will be made through our intelligent home or our cars.
Michael David Lewis: Just keep in mind that what us older guys are doing as far as investing is not necessarily what you should be doing. A little bit is true but you should be reaching for growth in the stock as well as the dividend. And what I mean is the dividend should be growing along with the stock.
Michael David Lewis: There is a mindset about dividend investing that is different at different ages. Just be conscious of that.
Jesse Lebhar: Michael David Lewis Exactly. What are your favorite dividend growth stocks?
Robert VanScoy: Yes Jesse – don’t necessarily do what those old guys are doing. 😜
Michael David Lewis: Dog. Lol
Michael David Lewis: I stay in the 3 1/2 to 4 1/2 percentage range for my dividends. I have AT&T Verizon Coca-Cola Microsoft Phillip Morris Southern Company Exxon Mobil I think you get my drift.
Michael David Lewis: Sorry those are not growth companies as far as your question was
Jesse Lebhar: Michael David Lewis All good, all strong companies
Robert VanScoy: My (primary) taxable portfolio is still DGI stocks and not yet imcome stocks (JNJ, HD, MMM, etc.). I’m yielding about 3.8% on cost. Options are actually returning about 50%. (90% of the portfolio is DGI and 10% options around those DGI stocks).
Michael David Lewis: The reality is you want to stay diversified between REITs and diversified within REITS, Equities that pay dividends. And utilities. And as a young man get some growth stocks
Michael David Lewis: And as you probably already know drip everything
Jesse Lebhar: Michael David Lewis I love REITs! Looking into what I want to make my 1st utility..SO and D look appealing. And yes all about the DRIPs!
Michael David Lewis: And sounds like you’re on a track to make millions
Michael David Lewis: Wish I would be alive to see how your story comes out
Jesse Lebhar: Michael David Lewis Haha thanks for the encouragement!
Michael David Lewis: When I was younger I gambled my money. I was up and down came out about the same. It wasn’t until I got into dividend investing if I truly started to make money.
Michael David Lewis: And here’s a piece of advice that others may argue with. Keep some dry powder I think we’re about to experience a downturn.
Michael David Lewis: I’m not saying not to invest just don’t invest everything
Michael David Lewis: If this market hits the skids you’ll be sitting pretty
Jesse Lebhar: Michael David Lewis Exactly. I’m not chasing hot stocks and “get rich quick” ideas like the day traders. I’m here to hold investments I believe in and build my future. Also why I won’t freak out during the downturns..stick to the game plan, reinvest the dividends and make smart pick ups. As long as the dividends are paying and growing I’ll be a happy guy
Jesse Lebhar: Michael David Lewis also some inspiration http://www.mymoneyblog.com/ben-franklin-compound-interest…
Benjamin Franklin and Compound Interest: “Money makes money.…
Michael David Lewis: Damn this is the son that I never had LOL
Jesse Lebhar: Michael David Lewis Feel free to leave me a piece of your portfolio in your will-I’ll take good care of it 😉 hahaha
Michael David Lewis: Unfortunately there’s a daughter that’s in front of the line
Jesse Lebhar: Michael David Lewis The idea of being able to leave something significant behind for my family and community is appealing…
Michael David Lewis: I thought of how great it would be if my daughter would continue the legacy and build upon our portfolio so that future generations would have more money
Robert VanScoy: Jesse – I would recommend not letting any one stock get to be more than 5% of your total portfolio or any one sector more than 20%
Jesse Lebhar: Robert VanScoy Definitely something I’m working on! Should smooth out over time as I increase my holdings
Michael David Lewis: Jesse, do you own a home
Jesse Lebhar: Michael David Lewis Not yet, I’d like to down the road
Michael David Lewis: This is a very debatable subject but I believe that homeownership will not only give you quality of life but will also improve Financial situation
Michael David Lewis: When buying a home try to live within your means. When I went for a home loan 30 years ago they were willing to give me more money than I could possibly pay back easily. Know your own financial situation and by all means live below your means.
Michael David Lewis: Did I use the word means to many times. LOL
Jesse Lebhar: Michael David Lewis As some who was raised and lives in a house but have lived in condos and apartments, I agree. And you add a future family into the equation, it’s ultimately what I’d want.And don’t worry, living below my means is the name of the game and the only reason I’m able to pursue investing (I don’t make an incredible income yet)
Michael David Lewis: I like that yet part
Michael David Lewis: What do you do for a living now?
Michael David Lewis: I think most of us guys here that are older would love to see younger guys take our accumulated wisdom at this time and make a fortune
Michael David Lewis: I’m sorry but that was a very sexist statement. That applies to all women also
Jesse Lebhar: Michael David Lewis I’m a research analyst for a young company that helps people mitigate their flood risk/get removed from the flood zone to save money on their insurance premiums. I also get commission on any of my leads they close. Huge market/poten…See more
Michael David Lewis: Wow I can only partially understand that
Michael David Lewis: I’ve been a home-improvement contractor all my life. That explanation is very simple yours is very complicated
Jesse Lebhar: Michael David Lewis Haha not as crazy as it sounds but yes contracting is a little more straightforward!
Michael David Lewis: Is this a job that you intend to have a future with?
Jesse Lebhar: Michael David Lewis Yes..no guarantees but looking at this for the long haul and definitely has the potential to be a huge company. I used to work for Publix, and while I succeeded there I just couldn’t see myself working in grocery retail the rest of my life..though I’ll be forever thankful that they sparked my interest in and appreciation for investment (starting with a 401K and buying company stock).
Michael David Lewis: Misha Shenfild, what you did was not dividend investing. Getting quality companies that don’t cut their dividends in down markets you continue to get paid to wait for the market to come up again which it always has. Not only that if you dividend reinvest you’re buying companies at lower prices
Jesse Lebhar: Exact reason I love it as an investment strategy..rewards patience and steady investment/reinvestment. Would love to live off dividends some day..
Robert VanScoy: Jesse – It is definitely possible. We retired in our mid 40s. Our dividends and options cover our expenses each month.
Michael David Lewis: Damn you’re like a Old man and the young man’s body. LOL
Jesse Lebhar: Robert VanScoy Congrats!
Robert VanScoy: Michael David Lewis – absolutely. I’m even eating dinner around 4:00 now. 😜
Michael David Lewis: The key is if you have quality companies don’t sell in down markets. Only sell if they cut the dividend
Pravin Wade: http://www.myfinance.ga/…/8-home-loan-charges-you…
8 Home Loan Charges You Should Know
Pravin Wade: http://www.myfinance.ga/…/8-home-loan-charges-you…
8 Home Loan Charges You Should Know
Craig Smith: If I could go back in time I’d tell my younger self to invest in a combination of large and small-cap market index funds, and an emerging market index fund. Drip feed into them every month and just monitor them until the funds have grown in a decade or so. Then top-slice them and buy some high-dividend blue chip stocks with the profits. If you’ve got 40 years of investing to go then I’d ignore the state of the markets last year, this year or next year. 40 years is long enough to smooth out any short-term bumps. And don’t try to time the market – the more boring you make investing the better.
Robert Freeman: put it into a fund tied to the performance of the s+p 500 as long as its fees are low. and dont touch it
Jesse Lebhar: I have a chunk of VTSMX that’s done well for me so far
Robert Freeman: my former employer had matching contributions up to 3% and I did what I just told you and contributed up to 15%. I retired last fall at 56. I know for a fact that this works. and I am funding my retirement using the proceeds.