Your Retirement Nest Egg

[msharley]

Evidently my dividends are losing me money.

 

[leVieux]

Evidently my dividends are losing me money.

<>

Very large “players” can exert some control on prices. While “insider trading” is usually illegal, trading on honestly obtained “inside” info is not.

Derivatives can be very dangerous to novices like me.

Over the years I learned that some people just are unable to understand anything which affects their finances negatively. No matter how clear & straightforward the reason & explanation.

<>

 

[Vaquero]

Make sure your financial advisor makes a commission off of your profits. Not your trades.

It's not rocket surgery.

 

[ZX9RCAM]

Did I say something that is wrong?

Evidently dividends cause my stock prices to go down, which in turn would cost me money.

Is that not what is being said?

 

[leVieux]

Health insurance don't cost that much.

<>

Where have you been ?

<>

 

[Vaquero]

<>

Where have you been ?

<>

Right here.
I'm 62 and paying for my own.
Sure as hell ain't six digits per year.

 

[Havok1]

<>

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 ?

&

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

<?>

They can. The graphs I posted were based on reinvesting dividends.

Make sure your financial advisor makes a commission off of your profits. Not your trades.

It's not rocket surgery.

Even then people should still look at how much they are charging to see if it’s appropriate. People paying 1%+ of AUM to an advisor is insane to me.

 

[toddnjoyce]

Did I say something that is wrong?

Evidently dividends cause my stock prices to go down, which in turn would cost me money.

Is that not what is being said?

It’s a secondary effect. Dividend paying stocks see a bump in price on various factors, many unique to that specific stock’s dividend history, other times the market will punish the stock.

Many investors choose to reinvest the dividend instead of taking the payout; this nets you more pieces of the pie at an effective discount which tends to be more beneficial over time.

 

[Havok1]

Did I say something that is wrong?

Evidently dividends cause my stock prices to go down, which in turn would cost me money.

Is that not what is being said?

The only time they really cost you money is if there is tax drag in a taxable account. Aside from that it’s not that they are problematic, they just aren’t the free lunch that a lot of people believe they are.

 

[Eastexasrick]

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.



This is the real world. Dividend focused investing vs not.
View attachment 401145

Or maybe this one.
View attachment 401146
Dividends just aren’t the free lunch you think they are. And yes, those graphs are with dividends reinvested.


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.

There is no free lunch. Great sales brochure material, and narrative. I bow to the you tube guru.

 

[TheDan]

The only time they really cost you money is if there is tax drag in a taxable account. Aside from that it’s not that they are problematic, they just aren’t the free lunch that a lot of people believe they are.

Because that's not how it's supposed to work. You're supposed to invest in a company, and then get a share of the profits, but of course that's not how the stock market actually works because of all the paper games that are played. Plus you have perverse tax incentives and loan structures that encourage companies to never make a profit. So companies become focused on share price only and don't even mind their business.

You're not wrong, I just don't like that game.

Does nobody invest privately, or run their own businesses?

I want to be like my aunt... She minded her business, and when it was time sold it for a boat load of money. She lives in a house near the beach and can afford to hire a caregiver to wipe her ass now that she's infirm.

That's the goal. Have just enough money to be well taken care of without burdening family or ending up packed into some old folks facility.

 

[oldag]

Because that's not how it's supposed to work. You're supposed to invest in a company, and then get a share of the profits, but of course that's not how the stock market actually works because of all the paper games that are played. Plus you have perverse tax incentives and loan structures that encourage companies to never make a profit. So companies become focused on share price only and don't even mind their business.

You're not wrong, I just don't like that game.

Does nobody invest privately, or run their own businesses?

I want to be like my aunt... She minded her business, and when it was time sold it for a boat load of money. She lives in a house near the beach and can afford to hire a caregiver to wipe her ass now that she's infirm.

That's the goal. Have just enough money to be well taken care of without burdening family or ending up packed into some old folks facility.

I recall the stat that 85% of small businesses fail within the first several years. It ain't easy.

 

[toddnjoyce]

…Does nobody invest privately…

Plenty do, the offerings is generally categorized as Private Equity or Placement; a subset of these are Reg D offerings. Most will have a fairly high minimum investment ($50K-$25M) depending on what type of placement. As a category, PE runs about a 10% annual ROI, but there’s way more losers than 10x or 20x winners.

You’ll find private placement primarily in private banking as the typical target investor is an HNWI. Some RIAs also dabble in private placement. Ours has a $500K investable asset minimum to even open the conversation about private placement offerings. That will get you into something like a regional carwash or self storage holding company type investment.

SEC.gov | Private Placements under Regulation D – Investor Bulletin

www.sec.gov

 

[oldag]

There is angel investing, but that is extremely high risk and few have the background and knowledge to be successful.

 

[perfor8]

Dividends are deducted from the share price. So if you have a stock that is $100/share and pays a $1 dividend, then when it pays the dividend, you will be left with a $99 share, and $1 cash. This makes the dividend irrelevant to the return. If you hold the stock in a taxable account, then you pay taxes on the dividend which makes your holding less valuable than before the dividend was paid out. While in retirement this isn’t an issue, but during accumulation the tax drag will have a negative effect on your portfolio.

If you want a better explanation of why this is the case, look up “the irrelevance of dividends” by Ben Felix on YouTube.

Since the article in the OP referenced “he average American”, according to google the average American is 38. If a 38 year old plans to retire at 65 with $72k/yr retirement income, based on 2.5% inflation that would be the equivalent of $36k annually now. That’s just not a lot.

Dividends aren't "deducted" from the share price. That's not even his argument in the video. His statement is an assumption (stock not rising in value with dividend of one dollar is equal to a stock rising in price one dollar) - assuming the stocks started at 100 dollars, so the percent changes are equal. A ten dollar stock rising one dollar is not equivalent to a one hundred dollar stock rising one dollar, but I digress. To state another way, he isn't saying dividends are deducted from the stock price. He's saying that, to compare apples to apples, we'll assume for this argument and comparison that dividends are deducted from the stock price.

 

[perfor8]

I don't notice the share price dropping when stocks I own pay dividends.

Because they don't.

 

[Eastexasrick]

Dividends aren't "deducted" from the share price. That's not even his argument in the video. His statement is an assumption (stock not rising in value with dividend of one dollar is equal to a stock rising in price one dollar) - assuming the stocks started at 100 dollars, so the percent changes are equal. A ten dollar stock rising one dollar is not equivalent to a one hundred dollar stock rising one dollar, but I digress. To state another way, he isn't saying dividends are deducted from the stock price. He's saying that, to compare apples to apples, we'll assume for this argument and comparison that dividends are deducted from the stock price.

Now you did it. You are going to get the charts and graphics now

 

[oldag]

One nice thing about reliable dividend stocks (e.g., have never cut the dividend in the past 20 years or more). The dividend doesn't drop when the market (stock prices) drops.

 

[perfor8]

All above will become irrelevant. Bottom line...

If you ain't buying gold/silver/bitcoin/hard assets, inflation is gonna destroy your wealth. Do not assume inflation will remain anywhere near current rates. Stop thinking in terms of "dollars" (fake money), start thinking in terms of ounces of real money.

 

[Eastexasrick]

All above will become irrelevant. Bottom line...

If you ain't buying gold/silver/bitcoin/hard assets, inflation is gonna destroy your wealth. Do not assume inflation will remain anywhere near current rates. Stop thinking in terms of "dollars" (fake money), start thinking in terms of ounces of real money.

Acres has worked well for me, so far.