Dividend Growth Portfolio - Objective: Retire by 50

[Dividend Watcher]

(02-16-2018, 02:47 PM)Rasec Wrote: For a while I was excited I could beat the market but... next time around I'll just go with ETFs (saving on taxes and ... well, the market may as well just beat me).



In any case, the amount of wealth (dividends + growth) generated in such a short period of time has been staggering! It was better than all my expectations at the start of the process!

Rasec, you indeed did well but I am a little confused . . .

Were you disheartened that you didn't beat the market the entire time you were invested? Hardly a realistic expectation. If anyone could do that, it would be a first. Buffet & Lynch certainly couldn't do it and neither could Graham or Fisher.

I think you need to measure over a much longer period -- 5 years minimum. It's a combination of dividends and generally lower draw downs which contribute to overperformance over the long-term.

Not sure how you save taxes by using ETFs over using individual stocks. Perhaps you can expound on that.

Good luck in your new adventures.

[Rasec]

Hi DW!

To clarify, I wasn't disheartened that I didn't beat the market, I was disheartened because I was feeling emotionally attached to my portfolio and collecting Dividends at the end of each month! It was painful to sell! But I trust it was the best decision.

Re Taxes on individual stocks vs **some** ETFs/Funds, is that for non residents/non citizens you have to pay taxes twice, to the US government and to the country where you have fiscal residence (in this case Portugal).

Example, imagine you were to collect $100 in dividends from JnJ, as a citizen/resident alien living in the US you'd take the $100 and pay 15% in taxes, taking home $85 to reinvest or take your spouse/partner out for dinner.

Living in Europe, you'd still have to pay 15% taxes to the US (because my country as a treaty to avoid double taxation it's "only" 15%, otherwise it would be 30% to the US) but on top, you have to pay 28% to Portugal. So instead of having $85 to reinvest, you are left with $61.2. It's quite a difference...

Some Funds/ETFs instead of paying out dividends, reinvest in the fund before releasing, hence saving you from the taxes on dividends. You only pay taxes on the sale; capital gains, which are also higher but in this case, the US wouldn't touch it (it's 28% in capital gains to Portugal).

You'd have to substantially beat the tracker in order to be worthy continuing to invest in individual stocks the way I was.

[rayray]

Good luck with everything Rasec!!

My sisters BF just renewed his passport for a Portugal visit.

Going to miss your DGI investing posts!

Enjoy life man

[Roadmap2Retire]

Its hard to expect to beat the market year in, year out. Its why things like ETFs make sense for majority of the investors. The only way to do that would be to bet in a non-consensual manner and get it right each time -- probability of which diminishes.

Howard Marks talks a lot about this. Here's a quick except from Farnam Street Blog:

Quote:“The problem is that extraordinary performance comes only from correct nonconsensual forecasts, but nonconsensual forecasts are hard to make, hard to make correctly and hard to act on,” writes Marks.
You can’t do the same things that other people are doing and expect to outperform. When you do what everyone else does you're going to get the same results everyone else gets.
It's not enough to be different — you also need to be correct. The goal is not blind divergence but rather a way of thinking that sets you apart from others. A way of thinking that gives you an advantage.

Good luck with the new chapter in your life Rasec.

[cannew]

He's already sold everything, but I don't know why he just didn't let his holdings ride.  DG is, IMO, a long term investment strategy and by being away should not trigger a sell.  If they were good stocks than just let them grow on their own and likely he would not be disappointed when he returns.