Your Retirement Nest Egg

[oldag]

Then you may want to inform vanguard,

Buying a dividend and its effect on your taxes | Vanguard

Why shouldn't you buy a stock or fund right before it pays a dividend? You might increase your taxes.

investor.vanguard.com

and fidelity,

Why Dividends Matter - Fidelity

Learn why dividends matter and why you should consider them when making your investment decisions.

www.fidelity.com

and every company that has ever paid a dividend, that they are not deducted from the share price. The reality is that they are, but most people just don’t know any better. I’m not sure who is teaching that a companies share price is unaffected by a reduction in that companies assets, but I hope they aren’t charging much.

I wasn’t trying to go down the rabbit hole of how dividends work. The important thing that most investors should realize is that chasing dividends is a bad idea if they want to hit that $1.8 million number sooner than later. You can backtest the dividend fund of your choice in portfolio visualizer and see that dividend funds tend to underperform the broad market even ignoring the tax drag. This is because the market is driven mostly by companies that do not pay dividends.

And yes, I did factor inflation in in the last post.

If you think cash on hand is hard linked to stock price, I have farmland ten miles south of Galveston to sell you.

You keep going back to the youngster preparing for retirement decades in the future. You fail to grasp that is totally different than being at retirement age. The investing strategy is not the same.

Your last sentence shows you failed to read what I posted. Again.

 

[oldag]

It’s not a theory. It’s math. the money for the dividend is factored into the company’s assets. When it’s paid out, the company is less valuable and that is reflected in the share price change. Whether the company should reinvest the money into the company will depend on if they believe they can grow the money. The ability to buy and sell stock from a smart phone at no cost has somewhat made dividends outdated. Take a look at the new excise tax on share buybacks to see how the government is upset about missing out on the tax money from companies favoring share buybacks over dividends.

And that is where you are wrong in practice.

 

[Havok1]

If you think cash on hand is hard linked to stock price, I have farmland ten miles south of Galveston to sell you.

You keep going back to the youngster preparing for retirement decades in the future. You fail to grasp that is totally different than being at retirement age. The investing strategy is not the same.

Your last sentence shows you failed to read what I posted. Again.

I grasped exactly what you said. Its just not what the article/thread is about. You’re right that someone planning on retiring decades in the future is in a different situation than someone of retirement age. Nowhere in the article does it say that it’s specifically about retirement age people.

The article in the OP states “Americans on average believe they will need to save an average of $1.8 million for retirement ”, “Only 37% of workers think it’s very likely they’ll achieve this target”, “High inflation has been the biggest obstacle for savers”, “Sixty-two percent of workers see inflation as an obstacle to saving for a comfortable retirement”, etc. it’s clear the article is not talking about how much current retirees need. So when I explained the math of why I believe what “Americans on average” think they need, I used the average age of an American, used a typical retirement age of 65(which is also used in the article) and used a hypothetical inflation adjustment since nobody can say for sure what inflation will be like over that time period.

 

[Havok1]

And that is where you are wrong in practice.

Got it! So for the first time in history, Nasdaq, as well as two companies who have created and managed countless dividend paying funds, (and are also majority shareholder of many companies in the S&P 500), all understand share price movements less than some guy on a gun forum who recommended a strategy that leaves out many top performing stocks. Makes total sense.
The way you believe dividends work is a common misconception.

 

[ZX9RCAM]

I wonder what percentage of Americans retire with $1.8 million in savings?

 

[oldag]

I grasped exactly what you said. Its just not what the article/thread is about. You’re right that someone planning on retiring decades in the future is in a different situation than someone of retirement age. Nowhere in the article does it say that it’s specifically about retirement age people.

The article in the OP states “Americans on average believe they will need to save an average of $1.8 million for retirement ”, “Only 37% of workers think it’s very likely they’ll achieve this target”, “High inflation has been the biggest obstacle for savers”, “Sixty-two percent of workers see inflation as an obstacle to saving for a comfortable retirement”, etc. it’s clear the article is not talking about how much current retirees need. So when I explained the math of why I believe what “Americans on average” think they need, I used the average age of an American, used a typical retirement age of 65(which is also used in the article) and used a hypothetical inflation adjustment since nobody can say for sure what inflation will be like over that time period.

As was written earlier, my statements stand on their own and are not linked to the article.

 

[oldag]

Got it! So for the first time in history, Nasdaq, as well as two companies who have created and managed countless dividend paying funds, (and are also majority shareholder of many companies in the S&P 500), all understand share price movements less than some guy on a gun forum who recommended a strategy that leaves out many top performing stocks. Makes total sense.
The way you believe dividends work is a common misconception.

The difference in theory and the real world.

And I have had financial gurus swear that "the markets are always rational."

 

[msharley]

I wonder what percentage of Americans retire with $1.8 million in savings?

0.5%....

And they are working plotting, even now.......

To make dang sure...YOU don't! (me neither....)

 

[Eastexasrick]

The difference in theory and the real world.

And I have had financial gurus swear that "the markets are always rational."

But Ben Felix of PWL Capitol of Canada, on his you tube channel says your wrong, so you must be wrong.

Every generation has its investment advice guru. Time and reality always, well so far, proves them as fallible as the all the other gurus. The investment world is littered with their victims.

 

[msharley]

Fifty percent?

0.5% of the population are "millionaires"....they will make certain that you (and I) NEVER join them (in the millionaire club)

You better believe, the way this Country is set up?...If poop was worth money?

The poor man would be born without a bunghole...

 

[msharley]

But Ben Felix of PWL Capitol of Canada, on his you tube channel says your wrong, so you must be wrong.

Every generation has its investment advice guru. Time and reality always, well so far, proves them as fallible as the all the other gurus. The investment world is littered with their victims.

Wall Street is a "venue" for the idle Rich to do one another a "mischief"...

NEVER forget! Every DIME on Wall Street? Came off of your BACK!

 

[ZX9RCAM]

0.5% of the population are "millionaires"....they will make certain that you (and I) NEVER join them (in the millionaire club)

You better believe, the way this Country is set up?...If poop was worth money?

The poor man would be born without a bunghole...

Dang you were quick.
I deleted that as soon as I reread it...

 

[msharley]

Dang you were quick.
I deleted that as soon as I reread it...

Relax...

I'm headed dahn to the ice cream parlor.....

Feel the need of a MILK SHAKE....

 

[Fishkiller]

The difference in theory and the real world.

And I have had financial gurus swear that "the markets are always rational."

You two should get a room

 

[IXLR8]

Your medical expenses will outpace any gains that you make on investments. I thought I was doing pretty good until I heard that I will likely experience $385k in out of pocket medical expenses in retirement. Of course that is now, the amount grows every year. Anyone retiring at 59 should review what your medical expenses will be until retirement age.
Hopefully you are eligible for VA benefits or similar.

 

[Vaquero]

Health insurance don't cost that much.

 

[Havok1]

I wonder what percentage of Americans retire with $1.8 million in savings?

The number will increase as time goes on and the dollar is inflated. It hasn’t been that long since $1m was a huge number to strive for.

The difference in theory and the real world.

This is the real world. Dividend focused investing vs not.

Or maybe this one.

Dividends just aren’t the free lunch you think they are. And yes, those graphs are with dividends reinvested.

But Ben Felix of PWL Capitol of Canada, on his you tube channel says your wrong, so you must be wrong.

Every generation has its investment advice guru. Time and reality always, well so far, proves them as fallible as the all the other gurus. The investment world is littered with their victims.

Ben Felix is just a guy who explains it in a way that’s easy to understand on video. One of the largest stock exchanges in the world as well as multiple brokerages that have their own funds also say he is wrong. I think they probably have a good idea how their own funds work. Go start a thread about using dividends to get to your retirement goal on an investing forum and see how replies compares to what you read here.

 

[thescoutranch]

Depends, there’s some qualifiers on that.

Charles Schwab

www.schwab.com

It has to be from your current/most recent employer sponsored 401k (and some other 40***); your rollover, IRA’s, and 401(k)s from previous employers, are not eligible for withdraw out of under this rule.

There is also a SEPP substantially equal payment plan that lets you access ira monies before age 55. (There are some conditions here, also).

 

[leVieux]

It’s not a theory. It’s math. the money for the dividend is factored into the company’s assets. When it’s paid out, the company is less valuable and that is reflected in the share price change. Whether the company should reinvest the money into the company will depend on if they believe they can grow the money. The ability to buy and sell stock from a smart phone at no cost has somewhat made dividends outdated. Take a look at the new excise tax on share buybacks to see how the government is upset about missing out on the tax money from companies favoring share buybacks over dividends.

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I get what you are saying, and don’t totally disagree; but, aren’t common stock dividends paid from profits after contingency reserves are set-aside ?

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Can’t dividends routinely be re-invested in the same or similar shares ?

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[ZX9RCAM]

Evidently my dividends are losing me money.