Great idea for a thread. I'm sure I'll have some questions for you after I study your post a little more. I could type pages as my strategy has evolved with my age and current income. This post will no doubt be too long to keep anyone's attention. We really need to share what we personally desire from our DGI Port, and when, for it to have much context to others.
I am 56yrs old, and desire income from my port at age 60-61. I prefer to stay out of my "golden goose" until at least age 70. I have fat pensions coming from the US GOV, and a paid off rental house so I have some options here. I'm pretty much debt free. I'd be better off than most even of my portfolio vanished overnight. I drive older autos and many must think I am in financial trouble lol. I need 4% return from here top achieve my goals the next 15 years. I can start setting up some loved ones if I can achieve 6%. I could almost skip investing in stocks, but it's a passion so here I am.
I used a hybrid approach to investing. I do believe 100% DGI could work, but I believe that leads to close minded viewpoint of the investment options available to us. Things change from decade to decade. I know, and/or read of too many people piling up 8-10 consumer non-durable stocks in their port because that has always been safe and worked out fine in recent memory. Bonds were great, then they stuck for decades, now they might be fairly attractive soon. We need to be flexible as Gumby over an investing career. Did I just date myself again?
Anyway, here are some of my general rules, and this is a work in progress so % may evolve over time.
-I start with a crash fund in a money market mutual fund. I can adjust to a harsh market if 20% of my port is liquid and paying 2.1% for now.
-I have a very ST bond fund that yields 2.7% and is not volotile. That is the basket where I transfer my investment income for year 5-6 from now. Hope to keep feeding when I begin to withdraw. This basically ensures I have five years for any bad equity investment idea to recover. It will happen someday. To put a real number on it I'd like to withdraw $50K annually from this "basket". If I get scared this ST bond fund could be an MM fund easy enough.
-About 25% of my port is in index or sector funds. It's diversified and leans toward above average dividends, and some funds dividend growth as well. I do have S&P 500 and a small cap index fund as well. Average DIV of funds will be 3% when I am done. I would hope I can get a few % capital appreciation over time. My mutuals and ETFs are diversified by themself.
-About 40% of my port is in individual stocks, and almost all of them are high current yielders. My stock basket is diversified by itself. I try to own two stocks per sector, and maintain a half dozen sectors. I do research my stocks, but my rules are loose. I value current yield over div growth unless I am HIGHLY confident the growth will be real (AAPL would be an example). V is a great stock, but not a great DGI stock if you are 50 years old when you start a position. Just my opinion. My idea of DGI includes....
Utes and healthcare that are actually expected to grow in the 5% range for years. Add the typical DGI mix of equities like consumer durables and non-durables, telecom which I consider a utility with potential to be more, a financial, transport, real estate and energy. The obvious omission is tech. I'll confine most of that to ETFs. My record with individual techs is great for three years, and mediocre at best over 20yrs with an individual stocks. It's harder than it looks so tech bets will be small when it comes to stocks. My list of trusted techs is very short. Best suited for purchase during the next extreme market pullback, and then wait it out. I consider them speculative rather than DGI plays with VERY few exceptions.
-About 5% of my port is reserved for high flyers, but not baseless MOMO. I prefer a dividend but I reserve the right to swing trade at least part of the position it so the Div is more for the possibility I get stuck in a position much longer than I originally planned. AMZN is the stock currently in this category. Truth is I could close my eyes and it will probably be fine in five years. Reality is it's bit painful to I watch it swing $50-100 per day when I probably should have been trimming and adding on the volatility for months. I like sorta techy stocks for this small part of my strategy, and I have no intent of riding them into the ground and waiting 5 years to maybe recover.
-This year I have begun entering positions by selling puts, and leaving the positions very occasionally when the market forces me too if I sold a call when the stock ran. While it is not my intent to trade excessively, this has been a lucrative. The premiums make my dividends look puny, and I only do it with stocks I love. Mostly they expire worthless (90% lately), and I just make money off the gamblers buying options. Over and over I sell the same options on the same stocks. Occasionally I am forced into stocks most of you own, but at a discount. I won't stop until the market makes me stop. A severe correction will force me into a "proper" DIV stock buy and hold. Until then I ring the cash register every few weeks, even when the market mostly stinks the past 90 days.
A few more random rules I try to adhere to but I have weak moments sometimes.
-Aristocrats are a GREAT place to start, but I am not married to a list, nor any mechanical strategical. Examples are endless. T is not necessarily better than Verizon and it sure as hell is riskier than AAPL, CSCO and perhaps even high PE AMZN five years from now. LOW is not necessarily better than HD. There are better financial stocks not on the list IMO. That's another thread I may start.
- Stock valuation ALWAYS matters in the end. An aristocrat with a PE of 25 and sub 2% yield is not severe market proof. That's just wishful thinking.
-My commissions are next to free, so small buys almost always make sense. I'm rarely as smart as I think I am on a short term basis.
-Buy quality even if it looks somewhat more expensive than a troubled stock in the sector. It's often cheaper for a reason.
Is my plan too complicated? Perhaps, but I only work part-time so I got time to manage it, and it's a labor of love to do so. I have that in common with many of you I suspect
I am 56yrs old, and desire income from my port at age 60-61. I prefer to stay out of my "golden goose" until at least age 70. I have fat pensions coming from the US GOV, and a paid off rental house so I have some options here. I'm pretty much debt free. I'd be better off than most even of my portfolio vanished overnight. I drive older autos and many must think I am in financial trouble lol. I need 4% return from here top achieve my goals the next 15 years. I can start setting up some loved ones if I can achieve 6%. I could almost skip investing in stocks, but it's a passion so here I am.
I used a hybrid approach to investing. I do believe 100% DGI could work, but I believe that leads to close minded viewpoint of the investment options available to us. Things change from decade to decade. I know, and/or read of too many people piling up 8-10 consumer non-durable stocks in their port because that has always been safe and worked out fine in recent memory. Bonds were great, then they stuck for decades, now they might be fairly attractive soon. We need to be flexible as Gumby over an investing career. Did I just date myself again?
Anyway, here are some of my general rules, and this is a work in progress so % may evolve over time.
-I start with a crash fund in a money market mutual fund. I can adjust to a harsh market if 20% of my port is liquid and paying 2.1% for now.
-I have a very ST bond fund that yields 2.7% and is not volotile. That is the basket where I transfer my investment income for year 5-6 from now. Hope to keep feeding when I begin to withdraw. This basically ensures I have five years for any bad equity investment idea to recover. It will happen someday. To put a real number on it I'd like to withdraw $50K annually from this "basket". If I get scared this ST bond fund could be an MM fund easy enough.
-About 25% of my port is in index or sector funds. It's diversified and leans toward above average dividends, and some funds dividend growth as well. I do have S&P 500 and a small cap index fund as well. Average DIV of funds will be 3% when I am done. I would hope I can get a few % capital appreciation over time. My mutuals and ETFs are diversified by themself.
-About 40% of my port is in individual stocks, and almost all of them are high current yielders. My stock basket is diversified by itself. I try to own two stocks per sector, and maintain a half dozen sectors. I do research my stocks, but my rules are loose. I value current yield over div growth unless I am HIGHLY confident the growth will be real (AAPL would be an example). V is a great stock, but not a great DGI stock if you are 50 years old when you start a position. Just my opinion. My idea of DGI includes....
Utes and healthcare that are actually expected to grow in the 5% range for years. Add the typical DGI mix of equities like consumer durables and non-durables, telecom which I consider a utility with potential to be more, a financial, transport, real estate and energy. The obvious omission is tech. I'll confine most of that to ETFs. My record with individual techs is great for three years, and mediocre at best over 20yrs with an individual stocks. It's harder than it looks so tech bets will be small when it comes to stocks. My list of trusted techs is very short. Best suited for purchase during the next extreme market pullback, and then wait it out. I consider them speculative rather than DGI plays with VERY few exceptions.
-About 5% of my port is reserved for high flyers, but not baseless MOMO. I prefer a dividend but I reserve the right to swing trade at least part of the position it so the Div is more for the possibility I get stuck in a position much longer than I originally planned. AMZN is the stock currently in this category. Truth is I could close my eyes and it will probably be fine in five years. Reality is it's bit painful to I watch it swing $50-100 per day when I probably should have been trimming and adding on the volatility for months. I like sorta techy stocks for this small part of my strategy, and I have no intent of riding them into the ground and waiting 5 years to maybe recover.
-This year I have begun entering positions by selling puts, and leaving the positions very occasionally when the market forces me too if I sold a call when the stock ran. While it is not my intent to trade excessively, this has been a lucrative. The premiums make my dividends look puny, and I only do it with stocks I love. Mostly they expire worthless (90% lately), and I just make money off the gamblers buying options. Over and over I sell the same options on the same stocks. Occasionally I am forced into stocks most of you own, but at a discount. I won't stop until the market makes me stop. A severe correction will force me into a "proper" DIV stock buy and hold. Until then I ring the cash register every few weeks, even when the market mostly stinks the past 90 days.
A few more random rules I try to adhere to but I have weak moments sometimes.
-Aristocrats are a GREAT place to start, but I am not married to a list, nor any mechanical strategical. Examples are endless. T is not necessarily better than Verizon and it sure as hell is riskier than AAPL, CSCO and perhaps even high PE AMZN five years from now. LOW is not necessarily better than HD. There are better financial stocks not on the list IMO. That's another thread I may start.
- Stock valuation ALWAYS matters in the end. An aristocrat with a PE of 25 and sub 2% yield is not severe market proof. That's just wishful thinking.
-My commissions are next to free, so small buys almost always make sense. I'm rarely as smart as I think I am on a short term basis.
-Buy quality even if it looks somewhat more expensive than a troubled stock in the sector. It's often cheaper for a reason.
Is my plan too complicated? Perhaps, but I only work part-time so I got time to manage it, and it's a labor of love to do so. I have that in common with many of you I suspect