02-20-2014, 07:55 PM
First, to atone for my mea culpa for referring to the author as a "he". The bio clearly states that the author is a "she". Now, back to the topic . . .
I don't think the author was trying to say that being 100% invested in stocks is better than other strategies. At least I didn't think she did. I think the point she was trying to point out is that, yes stocks can be risky but with a long time horizon, the rewards outweigh the risks. I think I saw an article on Morningstar or MarketWatch in the last week essentially saying that holding stocks for the long term is the same or less risky than other investments.
As far as other investments in the mix, I think she pretty clearly stated that with 20 or more years to go, she felt she would get the most bang for the buck by sticking with stocks. I've got 10 years to go (give or take a few) and I still feel the same way.
Sure there's going to be ups and downs. I think (at least I hope) that I've finally grown up enough that during the next downturn I'll still be able to stay on course.
She chooses index funds and I choose individual dividend growers. Of course, she never mentioned which indexes and wouldn't be surprised with a variety from market cap to foreign indexes.
As to the cash, I've mentioned many times I'm a lousy market timer. I got lucky during the Great Recession because I was only in cash for personal reasons and not because of the market. I was also learning about DGI then. Once the clouds began to lift in my mind, I made a lot of purchases. Nowadays it's around the edges. I don't keep much dry powder on hand unless it's backing up a cash secured put or waiting for a limit order to trade. I put new money to work when I find something worth investing in although it's getting a little slim lately. That's why sometimes I take small positions and add later. I'm beginning to see the early effects of compounding and can't wait to see what happens 10 years from now. I imagine that in the last couple years, I'll build up some cash just to smooth the cash flow as I wait for dividends to roll in.
I think cash holding is a very personal matter and there is no right or wrong answer. You need to do what makes you feel comfortable.
I don't think the author was trying to say that being 100% invested in stocks is better than other strategies. At least I didn't think she did. I think the point she was trying to point out is that, yes stocks can be risky but with a long time horizon, the rewards outweigh the risks. I think I saw an article on Morningstar or MarketWatch in the last week essentially saying that holding stocks for the long term is the same or less risky than other investments.
As far as other investments in the mix, I think she pretty clearly stated that with 20 or more years to go, she felt she would get the most bang for the buck by sticking with stocks. I've got 10 years to go (give or take a few) and I still feel the same way.
Sure there's going to be ups and downs. I think (at least I hope) that I've finally grown up enough that during the next downturn I'll still be able to stay on course.
She chooses index funds and I choose individual dividend growers. Of course, she never mentioned which indexes and wouldn't be surprised with a variety from market cap to foreign indexes.
As to the cash, I've mentioned many times I'm a lousy market timer. I got lucky during the Great Recession because I was only in cash for personal reasons and not because of the market. I was also learning about DGI then. Once the clouds began to lift in my mind, I made a lot of purchases. Nowadays it's around the edges. I don't keep much dry powder on hand unless it's backing up a cash secured put or waiting for a limit order to trade. I put new money to work when I find something worth investing in although it's getting a little slim lately. That's why sometimes I take small positions and add later. I'm beginning to see the early effects of compounding and can't wait to see what happens 10 years from now. I imagine that in the last couple years, I'll build up some cash just to smooth the cash flow as I wait for dividends to roll in.
I think cash holding is a very personal matter and there is no right or wrong answer. You need to do what makes you feel comfortable.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan