08-18-2014, 10:37 AM
David Van Knapp has written a few articles on Seeking Alpha about ETF's and I think Tim McAleenan has written about mutual funds.
From memory, neither did very well at replicating a DGI portfolio as the fees hurt the funds yield and re-balancing of positions keeps them from producing a consistent growth in income.
I could see the argument for worrying about diversification if you were near retirement and a big drop in an individual stock would be a disaster to your income, but at 29 and with many years to go till you will be relying on the portfolio, I'd suggest just starting with $1000 positions and build your portfolio as different stocks are at good values. Get up to 15 or 20 positions, or whatever you are comfortable with diversification-wise and then add to your positions when new money becomes available to keep things somewhat balanced.
From memory, neither did very well at replicating a DGI portfolio as the fees hurt the funds yield and re-balancing of positions keeps them from producing a consistent growth in income.
I could see the argument for worrying about diversification if you were near retirement and a big drop in an individual stock would be a disaster to your income, but at 29 and with many years to go till you will be relying on the portfolio, I'd suggest just starting with $1000 positions and build your portfolio as different stocks are at good values. Get up to 15 or 20 positions, or whatever you are comfortable with diversification-wise and then add to your positions when new money becomes available to keep things somewhat balanced.