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05-13-2014, 04:45 PM
(This post was last modified: 05-13-2014, 05:27 PM by cannew.)
It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.
Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.
The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.
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Thanks cannew. I've been reading the SA articles mentioned previously in this thread, and the "Fool's Errand" article was especially helpful. The F.A.S.T. graphs are great visual aids. Would you recommend paying for the basic membership?
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I agree with you 5o. Since I'm (early) in the accumulation phase, I feel more comfortable having at least some funds invested for total return. I have about 10% of my portfolio invested in DG stocks for now, but I'd like to work up to 25% or even 50%. With all the talk of a pending correction, or worse, it doesn't hurt to have some DG investments to help at least smooth out an otherwise rougher downturn that a total return portfolio would feel.
What's your ratio of equities to fixed income for the index funds? Since I'm in my late 20s, I think I'm at about 10-12% bonds (45% 5-year duration, 45% new markets income, 10% corporate high-yield)
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I've been thinking about getting out of bonds, especially the corporate grade and total bond but I like having something to balance out of. I guess time will tell with the tapering of QE! The new market income is pretty enticing, especially with the turn around it's made the last couple years.
Have you been to the Bogleheads' forum at all? It's tough being on both their forum and this one because since they are so gung-ho on indexing, they pretty much mute and poo-poo DG'ers..which can lead to some over-thinking.
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Ain't nobody got time for that! I use AGG, the iShare's Total Bond Market ETF. Easy peasy. However, now may be a questionable time to start getting into them with the tentative rate increases in the next year or two.