01-19-2014, 11:14 PM
(01-19-2014, 09:35 PM)CritMass Wrote: So what's better? Invest when the shares are above the averages and are considered high and start receiving the dividend right away? Or hold off for a period of time ( a quarter or three or longer) before purchasing and miss out on dividends? Further, does the answer matter if you are 35 years old or 55 years old or 65 years old?
I wouldn't recommend starting a position in anything that is grossly overvalued but I think if something you want to own is within range its good to get in and get the compounding machine working. I suppose it depends if you are planning on investing all in one lump sum or if you have continuous contributions being added to the portfolio.
In the case of my retirement account I currently hold 50 positions and have new money coming in every month which allows for a new purchase about every other month. Some of the stocks I bought were slightly overvalued (CHD, GPC, CLX) but I liked the companies and wanted to start a position. Since then I've been adding to other positions (DE, DLR, PM, IBM of late) as contributions to the account allow for new purchases. If CHD or CLX ever drop and provide a good opportunity I will add to them down the road. In the meantime I am reinvesting dividends in the companies that pay them which also gives me some dollar cost averaging on the stocks I own.