[afazio.uk_887]

$ 10 Mil, age 60

[Unknown Member]

No debt

Own your home

Enough money from investments while maintaining principle to pay your expenses

[Dr_Cocciolillo]

We are having another go at this in 2016 ?

Too early in my career (well not too early but rather too poorly compensated for the past 6 yrs ) to be able to make any statements w confidence. For certain, I will not achieve anything close to the number by 55

[julie.young_645]

The “number” depends on your spending. Maintaining McMansion, 3 Mercedes, vacation house, multiple European ski vacations will require a larger nest egg than a small house in the ‘burbs, two Camrys and a week at the beach here and there. 
 
Your circus, your monkeys. You decide. 

[katiedavies05]

Dalai nails it again.  Your number is a function of your lifestyle and your needs.   A 10 million dollar nest egg will fund a retirement lifestyle more lavish than anything I have ever known, my number is probably somewhat less than half of that.  

[leboyd1]

kpack and DD have it right in my opinion. For me it’s about meeting a few goals, having no debt, and being healthy enough to enjoy it.
 
To expand as I have some serious free time this morning:
 
My Dad did very well in his own engineering business and paid for all schooling for myself and two siblings (3 college tuitions and 2 grad/med school) and even helped out with everyone’s first homes if needed. My parents have a great apartment in big East Coast city on the water and they do what makes them happy. They travel, including high end stuff (it’s so much cheaper when you can go without kids and during non-school vacation/summer), but not all the time. No extra homes. But they never are wanting for anything – they still have a Mercedes as that’s still the car Dad loves. They spend lots of time with their multiple grandkids.
 
Well not long ago, for the first time we had a real discussion about assets and saving and goals. I always thought they literally had high single digit millions (and I am not an inheritance guy – I believe its their money, blow it all!). In their early 70s I found out they have about 1.5 million in cash/investments, 1.5 million apartment and some other non-liquid assets maybe 500k (art, etc.). With SS income for both of them and the income from low risk investments, they either break even or make more than they spend every year. And they have been retired since age 60, about 15 years ago, definitely young enough to enjoy their savings. (That 1.5 million in cash has never really changed during that time period…) 
 
So what I am getting at is they have the type of retirement I would also enjoy. I felt so much better knowing that having about a million in retirement funds and 500k for 3 kids college by 43, we are definitely on track to our goals. (and to the known dismay of some who lurk on this board – my wife stays at home with kids, although she did while I was in med school. So if you have a working spouse, kudos to hopefully rget to your goals even sooner).
 
I would suggest (to give wisdom some hope) that any rad who controls their spending and invests wisely (I’m a Boglehead) should feel pretty darn confident by age 50 that they will live a nice life and be well into the 1% club in the US, never mind the world as a whole.
 
So 10 million mentioned about would be great. But I personally will be long gone from medicine and radiology before that…
 
So long answer to get to the fact that I have no definite age target and no real number – but goals are 1.) pay for kids college and, if they choose, grad school to get them on their feet (best thing my parents did for us) 2.) continue to sock away max retirement – which was 81k last year by having both regular job and 1099 job as well as IRAs. 3.) then hang it up or do something else when I get too tired of radiology. Could be 5 years. Could be 25 years.  4.) Stay healthy, which also includes not being a miser and spending money now on fun vacations and other activities without going into debt

[afazio.uk_887]

If you have $2.5 M in investments at age 40, you can reasonably expect to have around $10 M by age 60 if you never touch it (not additional investments).  I don’t think that’s too crazy. The challenge is getting to 2.5 M in investments by 40, but doable with recent rad incomes of the last decade (I’m close to both numbers and didn’t get my first rad paycheck until 31 yo).
 
The time value of money and compounding is key.  You could sock away 2.5M in a index portfolio at age 40, then blow all your income the rest of your working years and still end up with $10M retirement nest egg at age 60.
 
 
 
 

[nelson33.jn]

2.5 million in investments by early 40’s?? I’m not anywhere close to that. Doable if you make top money and have minimal expenses/ live in a really cheap area of country. No radiologist I know in that age range has investments close to that number

[jun52.park]

thats because you are in NYC….very different when you head 2.5 hours south on the turnpike…

[btomba_77]

I had to work hard to get to $1 million at age 40.
 
I was pretty pretty impressed with myself to get loan debt retired and to that number … and I live in Cleveland with no kids!    
 
I don’t see how the average rad starting a family, buying a home,  and paying off loan debt gets anywhere near $2.5 million at 40 unless his compensation is 90th percentile for rads.  
 
 
The doubling times cited are the same for me though.  I wanted that $1 million for 40, then from age 40 to 50 continue to save and compound interest to get to $3 million, then $6 million at 60.
 
That’s my [i]official[/i] target …. $6 million age 60.

[poymd25]

yes, but what is YOUR number?

[sraghuvanshi1]

Unless otherwise specified, should be assumed the number is in today’s dollars.

[nelson33.jn]

Need 8MM in liquid assets/ non real estate. needless to say, I am going to have to work to the day I die. Maybe I can go part time in 10 to 12 years.

[Unknown Member]

I am struggling with this number too. I am mid career and have house paid off but still have to pay for college and a wedding…the final number could be lower if i want to live “frugally”, but to maintain current lifestyle, i am looking at 5 milli not including about 2 k each per month in social security for wife and I (if ss still exists in 15 years). I have no portfolios like waduh dong and no rental properties or passive income.
 
Yes I have a 529. But college is more than just tuition…

[btomba_77]

Quote from Waduh Dong

$ 10 Mil, age 60

 

Quote from Waduh Dong

$50M for me

 
That’s a real target change over 7 years
 
 

[afazio.uk_887]

Actually, I don’t think $50M is realistic…. $20-25M probably is a more reasonable goal.  No need to keep working after that, unless just a 1 day a week for kicks. 
    

[afazio.uk_887]

 
As a passive investor primarily, I have to take what the market gives.  If we are in for a decade of low returns, I will have to adjust my goal. 
 
 

[Unknown Member]

Quote from Waduh Dong

Actually, I don’t think $50M is realistic…. $20-25M probably is a more reasonable goal.  No need to keep working after that, unless just a 1 day a week for kicks. 
  

Vanguard. Highlights: Nominal median U.S. equity market return of 4.7%-6.7% during the next decade; 7.2%-9.2% median expected returns for non-U.S. equities; 4.1%-5.1% median expected return for U.S. fixed income (Oct. 31, 2022).Jan 20, 2023

[leboyd1]

Yeah, serious kudos to 2.5 million at age 40! Is that just cash/retirement or housing value as well? Regardless, well done. And hope that your calculation of 7-8% average yearly return holds up. We could all use that…

[antoni.bielazik_633]

If you have a majority stock portfolio (assuming it’s a broad-based and low-cost), then a 4% withdrawal rate should last you a long time if not forever.  Take whatever you need to live on and divide it by 0.04 and you will get your total.  For me, that total is 2.5 million, hopefully achievable by age 50.

[Unknown Member]

[b]If you have a majority stock portfolio (assuming it’s a broad-based and low-cost), then a 4% withdrawal rate should last you a long time if not forever.[/b]
 
My philosphy— A portfolio with dividend yield of 4% or as close to 4% as i can get.  That way a 5 million dollar portfolio pays me 200K a year and I maintain principle and very likely even grow it.
 
So as long as I dont get to greedy and live with in my means………….the principle never dries up, I get a pretty good totally passive income my entire life and I divide it up to my kids at death

[antoni.bielazik_633]

How are you going to get a dividend yield of 4% when the market average is 2%?  If you aim specifically for high yielding stocks, then you’re looking at lower capital appreciation.  A company can only do so many things with its profits (reinvest for growth, pay dividend, buyback stock).  Also the high yielding stocks are also the ones at risk for cutting of dividend.
 
Dividends also add to your taxes (I assume you can’t hold all that 5 million in a 401k or roth IRA) even if you don’t sell.  While dividends are nice and offer instant gratification, the better way for a company to reward its shareholders is through reinvesting in growth or stock buyback.  This is why BRK (arguably the most successful stock of all time) has never paid a cent of dividend.

[afazio.uk_887]

I only consider investment assets and am approaching 2.5M as I near 40.

I don’t include home equity cause I have no desire to move.

I certainly make a healthy income but I know several radiologists who make more than me.

I life a good lifestyle, similar to a pediatrician maybe, have two kids. Key for me has been:

– no divorce/affairs. Good wife who is fairly low maintenance.

– low cost index investing with multi year bull market during prime earning years.

– not into cars and other such useless toys / status symbols

– debt free (parents paid for education) and paid my house off early.

It hasn’t been that difficult, and like I said my income has been good but def not top 10% or rads I think.

[aryfa_995]

To those of you without student loan debt….hug your parents a little longer next time you seem ’em. Or hug yourself if it was your own academic acumen.

As a single family earner with three kids and an initial $500k in loan debt I won’t be approaching $2.5m for several more years.

[afazio.uk_887]

I certainly agree with you – my father made a point of wanting me and my sister to start our earning careers without debt.

I did my part as well however by choosing a lower cost good state school rather than an out of state more expensive one.

I think it has a lot to do with the fact that my parents were immigrants to the US and Asian culture influence / emphasis on education. My father was willing to fund my education fully, but I never took a penny from him after I got my first check as an intern ($1100 check biweekly I recall lol).

[antoni.bielazik_633]

For those of you interested in personal finance or retiring early, I recommend:
 
[link]https://www.bogleheads.org/[/link]

[afazio.uk_887]

I like bogleheads investment philosophy, however, you will run into some seriously frugal / miser folks on those boards. 
 
While I don’t believe in extravagant lifestyle, certainly living like a miser after all the years of training and effort to become a doctor seems like it would suck.

[antoni.bielazik_633]

Your wealth basically depends on 3 things:  earning, investing, and spending.  You don’t have to follow their advice for the first or third.

[Unknown Member]

[b]How are you going to get a dividend yield of 4% when the market average is 2%?  If you aim specifically for high yielding stocks, then you’re looking at lower capital appreciation.  A company can only do so many things with its profits (reinvest for growth, pay dividend, buyback stock).  Also the high yielding stocks are also the ones at risk for cutting of dividend. [/b]
  
[b]Dividends also add to your taxes (I assume you can’t hold all that 5 million in a 401k or roth IRA) even if you don’t sell[/b]
 
I’ve been doing a spinnoff of what jeremy Siegel for nearly 20 years
 
Best book  you will ever buy is right here
 
[link=http://www.amazon.com/Stocks-Long-Run-Definitive-Investment/dp/0071800514]http://www.amazon.com/Sto…vestment/dp/0071800514[/link]
 
First off qualified dividends are taxed at favorable rates.  The maximum rate is 20% for taxpayers in the top 39.6% regular tax bracket and 15% for most other taxpayers. For net gains that would otherwise be taxed in the two lowest regular brackets, the rate is 0% in other words, the gains are not taxable.
 
So yes while you pay taxes on dividends the rates are more favorable than ordinary income  under the cap …………… (thats one reason why I went Part time to avoid working harder
 
 
Secondly Yes It would be a little challenging at this moment to get a large basket stocks, 5 million dollars worth yielding over 4% to be satsifactorily diversified 
 
Thats why this long term strategy.  I rarely ever bought anything yielding under 4%.  Furthermore I sell very infrequently and Alot of stocks I own now yiled way under 4% but I bought when I bought them they were yielding 4-6%
 
Here is best part……………when you take that dividend and you reinvest every penney of it……….you buy more stock your yield on intial principle goes up every single quarter.
 
I will give you an esxample
 
Bought 200 shares of Federal Realty at 20 bucks a share at the time it was paying 1.50/share for yield of  7.5%.
 
Ok that was a 4000$ investment…………… 16-17yrs later following dividend reinvestment this is  nearly 900 shares paying a dividend of 3.76/share t
 
thats  3384$ per year from that original investment of 4000$………………basicallythis stock is paying me close to 100% return per year on the dividends alone
 
and the stock today is around 150$ a share 
 
So basically the stock today yields 2.4% but the yield on my original 4000$ investment is close to 100% yearly………………..and the total value of the 900 shares is 135,000$
 
Did nearly the same thing with with at least 5 others
 
It is not a short term strategy but it works.  You have to be disciplined and stay away from the stocks that everyone just has to own and the wall street Darlings.  You have do a little research and make sure the companies dividend is solid and I would strongly suggest has a long history of increasining the dividend yearly.

[Unknown Member]

Again absolute best 20 bucks you will ever ever spend is right here
 
[link=http://www.amazon.com/Stocks-Long-Run-Definitive-Investment/dp/0071800514]http://www.amazon.com/Sto…vestment/dp/0071800514[/link]

[Dr_Cocciolillo]

Thanks for the book suggestion
 
As far as dividends, i am not sure that div reinvestment is that great an idea.  it can really make accounting difficult when you are trying to determine your average price and such.  i suppose if you are going to hold something for 20 yrs and hold it, then you are ok.  but who buys a single stock with the intent of holding it for 20 yrs?  Even the index fund ETFs are far more easily traded without getting the complicated dividend reinvestment in there.  
 
or maybe i am missing something but that was my conclusion when i researched in a year ago and dumped the automatic div reinvestment.

[Count Contrastula]

Wisdom:

I was done with this thread but I so disagree with what you are saying I have to chime in.

What you said about dividends and holding stocks is the ABSOLUTE OPPOSITE on what is accurate

Buy quality dividend stock (not just looking at how high the dividend) reinvest (or don’t if you think valuations are high) , buy on dips and you will be the best off in the long run

Selling a stock, paying gains (short or long term) , sit money usually looking for an opportunity requires the next buy to be a home run in order to ultimately come out ahead. If it is exciting, do it a little and tell your friends the money you made. The reality is that it is sound investing.

[Count Contrastula]

Edit not working:

Is NOT sound investing.

Darn iphone

[Dr_Cocciolillo]

i was simply pointing out that determining your cost basis becomes very complicated when you do the dividend re-investment.  Not necessarily that it’s bad to reinvest in stocks you hold for long periods of time.   i prefer to take the dividend as is, and then just add positions of the stock on dips.
 
Now, another crux of the matter is — which stocks “kill it” over a 20 yr period, much more so than ETFs and without having to constantly do research to see if the stock is maintaining it’s dominant position?  which stocks will you not sell when there is a 30% correction or when it’s dead money for 2 yrs and there are qs about innovation and slower adoption, etc. 
 
All i have to is point out that while blackberry was hot and dominant 7 yrs ago, 3 years later, that was no longer the case.  Now, the shares are worth about 5% of what they used to be.  The rebound or reinvention of the company never came. 
GE — i own it, pay no attention to it.  but until last summer, it was markedly under perfoming the market.  
aapl, amzn and google — great runs for the past 10 years, but there have been years in there where they have been dead money.    who knows for sure where they will be?  only aapl pays a dividend out of those (i think ) 

[Dr_Cocciolillo]

slightly off topic
 
what are ppl paying their accountants for taxes? 
 
1) do you do billing per hour?  if so, what rates do you pay?   
 
2) if it’s a global sum, do you have any idea what it comes out to roughly?
 
3) has anyone dabbled in turbotax?   
 
my current accountant is billing @ 200+ an hour, which to me is highway robbery.  i can’t have him put in data entry at that price.  not that i can’t afford it but it’s highway robbery to me. 
 
thoughts? 
 
 

[Count Contrastula]

Omg now I agree. I have gains, w2, and a few 1099s but it’s like between 3 and 4K for my taxes!!!

[gabriella.ruffato.ext_635]

Tom Brady said it best:  I will retire when I suck.
My sentiments exactly.

[KRGenesis]

I do my own taxes on turbotax (W2’s, 1099’s, K1’s, itemized deductions). It takes about an hour or so, with all the carryover that turbaotax does from one year to the next (maybe twice or three times that for the first time).
 
I then pass the results and paperwork to my accountant who “blesses” the return for me with his signature. He charges me $200 to 400 to do the honors. We always are ready in April, but file in October.
 
I am conservative with deductions, and he is VERY conservative. I have yet to be questioned with any return (but it’s all just right there, nothing funny).
 
I am now looking for wood to knock on.

[gsreddy454599_892]

What is a good retirement package from a job? is a 4.5% match reasonable?

[radgre305]

For background, I am a PP radiologist.
 
I second radi2012 recommendation of Bogleheads.org.  That forum and whitecoatinvestor.com have allowed me to educate myself on all financial, retirement, investment, insurance topics and probably most importantly how to tax strategize.  By having a decent understanding on tax code you can make decisions today that will effect you on tax day.  You don’t need to understand it all, but enough to help guide your big decisions.  Those websites above have taught me everything I need regarding investments, retirement, all types of insurance, and tax planning.
 
 Being a younger rad in my group I am amazed at how little the average doc knows how to minimize tax burden and maximize real return. Yet they certainly know that 1 workshift may pay a few hundred more than another shift.  This is where I think their priorities are misplaced.  
 
My goal as others above in this thread is to reach $1M by age 40 and retire in early to mid 50’s with 3-4M.  
 
 
 
 
 

[tselvidas_246]

Exactly, your chance of beating a pro is as good as your chance of beating Lebron at 1 on 1.

[Unknown Member]

[link=http://finance.yahoo.com/video/rising-dividend-stocks-beaten-other-133558735.html?soc_src=copy]http://finance.yahoo.com/…8735.html?soc_src=copy[/link]

I know it’s only 44 years of data but here is more proof

[antoni.bielazik_633]

Past performance does not guarantee future results.

[Unknown Member]

Maybe not but 44 years of Data kinda tells the truth
 
Stubborness=Poverty

[hans4231]

You are wasting time kpack. He is a boglehead. Past performance doesn’t guarentee future results…unless it is index investing, in which case that is the only way to invest. DUH!
 
/s
 
P.S. I don’t do either style but to me, any methodology that you’re happy with (returns and in mind) is worthed. No point in arguing which is better/worse 

[reuven]

Quote from radi2012

Past performance does not guarantee future results.

 
That also applies to every asset allocation strategy including the popular 60/40 stock bond allocation as well as over allocating to the US (home country bias).  

[Unknown Member]

What are you guys up YTD?

[Unknown Member]

Removed due to GDPR request

[Unknown Member]

My personal non retirement accounts are up 18% year to date

My IRA’s are up a combined 10.5%

[Unknown Member]

I had 2 companies get bought out So their share priced doubled that accounts for a couple extra percentage points in my non-IRA accounts

[Gdm4903]

So it is very worthwhile having a doctor spouse. 2 million at 40 is not a dream. 

[ljohnson_509]

Re3iRtH,

Bull market is not unprecedented 80s and 90s had a longer one.

Index funds have wonderful tax advantages- long term cap gains when you sell, stepped up basis when heirs inherit, can donate appreciated shares for tax reduction, etc.

Retirement accounts are a huge advantage to high earning professionals like us who will defer taxes at our current high bracket to a lower one in retirement. They are often protected from creditors as well.

If you want to access before retirement, you can use 72(T), Roth conversions, withdrawals at 55 from 401k.

Bear markets are expected when you invest in stocks, otherwise there would be no premium to riskless assets. Real estate has its own problems as you might know.

[Count Contrastula]

I own over 6k shares of GE;it’s my largest holding. While it was underperforming as you say, my dividends were buying the underperforming stock knowing it GE , and not blackberry, when the acceleration in price occurred, and you knew it would, I was way ahead

[antoni.bielazik_633]

Yes I know qualified dividends are taxed at about half the rate as ordinary income.  Everyone knows that.  But why pay taxes in the first place?  Wouldn’t you rather have your share price go up in value more?  That way you can just hold it and not sell and not pay any taxes until you need it.
 
This is Buffet’s take on dividends, which BRK has never paid.
 
With dividends, Buffett notes there are two disadvantages: 1) different investors may desire different levels of payouts, and 2) a dividend received is taxed as income, which long-term investors may not want.
Furthermore, introducing a dividend may turn off investors who don’t want dividends.  “Above all, dividend policy should always be clear, consistent and rational,” writes Buffett.  “A capricious policy will confuse owners and drive away would-be investors.”

[Dr_Cocciolillo]

just to make a point that is not always obvious
 
Whether you chose to re-invest the dividend or take it as a dividend, you are always paying tax on the dividend regardless of whether you chose to re-invest it.  
For example:  your vz dividend is $100 for the quarter and thats being taxed regardless if reinvested or taken as cash

[Unknown Member]

One point

If you buy a stock and dividend reinvest your brokerage will automatically calculate your cost basis of you choose to sell

Even if you buy directly without a brokerage its actually pretty simple to calculate the basis

Just add up the total dividend paid over the years to the original investment……. That’s your cost basis

If you keep records it’s easy

[afazio.uk_887]

Yes, a dividend is kinda an archaic concept from the past that is basically forcing you to pay taxes.  Since I am paying taxes on it anyways I usually don’t reinvest it automatically in case I decide to splurge on something.

[Unknown Member]

As for buffet

Pretty much everything Berkshire Hathaway owns pays a dividend

So the company pays the taxes which are essentially coming out of their holdings at some point

If you own Berkshire your paying the taxes on their holdings

You just aren’t seeing it

[Unknown Member]

Another point

If you are investing in securities that do not pay dividends to avoid taxes that’s all fine and dandy if the stock price religiously goes up

But what happens if it doesn’t go up

What I have had success with is quality stocks that pay increasing dividends…. Basically dividend aristocrats

Yes you are paying some tax yearly but you are also getting a return every year regardless if the stock price is up or down or neutral

If I could buy Apple at 8$ and watch it go to 800 then I’d do it

But in my experience that’s hard to do

It’s a lot easier picking a company with a 25 a 50 or a 100 yr track record

[antoni.bielazik_633]

My point is don’t pick and choose, just buy everything.

Total US stock market index
Total international stock market index
Total US bond market index

[Unknown Member]

Removed due to GDPR request

[hans4231]

Quote from kpack123

Again absolute best 20 bucks you will ever ever spend is right here

[link=http://www.amazon.com/Stocks-Long-Run-Definitive-Investment/dp/0071800514]http://www.amazon.com/Sto…vestment/dp/0071800514[/link]

kpack – does this talk about dividend investing? 

[Unknown Member]

Its not strictly a dividend book but there is a lot of info about div paying stocks
 
I would call it more of a value investing book.  Of course he makes the case that a lot of low P/E stocks with high dividend yields are what you should be searching for when buying a stock…which is what I’ve alluded to
 
 

[Unknown Member]

Unfortunately, in any ~5-10 year period (i.e. when talking about pre-40 net worth), the performance of the stock market will make a big difference on the outcome. 
 
So – 2012, 2013, 2014 were 16%, 33%, and 14% for the S&P500. In just those years, you could’ve gotten ~50-75% net gain if you had been lucky enough to start a job begin earning/saving in 2011. Similarly, between 1995 and 1999 there were 5 years between 20% and 38% annual gains – an investor could easily have tripled in those years. 
 
Guess what I’m saying is when we talk to others who may be only 3-4 years older/younger sometimes its hard to compute all these variables and realize just a couple years can make a very big difference if you are hitting different market conditions. 

[mariacardei7_785]

Paid up house
No debt
No divorce
To get from 2.5M to 10M, using the rule of 72, you need to get a consistent or better 7% return for each year for 20 years – I maybe wrong here.
Current advice is 3 to 4% withdrawal/year keep your investment base solid
Your money taken at retirement will be taxed, so figure what your post tax needs are

[antoni.bielazik_633]

Based on current dividend and bond yields, John Bogle expects stocks and bonds to grow 6% and 2% annually for the next 10 years.  That is before accounting for inflation.

[Unknown Member]

Removed due to GDPR request

[afazio.uk_887]

7% per year over the next 20 years is certainly achievable with a well diversified and low cost index portfolio.  CAPE generally is only good for predicting general returns for the next 10 years or so.  Subdued returns for US equities are expected, better for international tho.  Diversify my friend.

[antoni.bielazik_633]

I agree with diversifying into international stocks.  However even with that I think we should lower our expectations for returns given current historically low dividend yields.
 
[link=http://www.businessinsider.com/bogle-stocks-to-gain-about-6-over-the-next-decade-2015-11]http://www.businessinside…he-next-decade-2015-11[/link]

[reuven]

Dividend yields are lower because stock buybacks are higher

[antoni.bielazik_633]

A lot of the stock buybacks have been horribly timed and a disservice to investors.  There should be more reinvestment for growth.

[Dr_Cocciolillo]

International diversification sounds good until you realize that investing in the brick economies you’d be looking at 30 percent loss last 3 years.
On
Top of that , should there be a market correction of 10 or 20 percent , those stock exchanges will be hit much harder

[afazio.uk_887]

30% in the last 3 years sounds like a great entry point for someone investing for the next two decades.

[Dr_Cocciolillo]

except Brazil is a total mess politically and due to oil.  I won’t go into Russia or any other smaller asian markets where you simply do not want to be over invested in because of liquidity and it being a big boy’s game.  
Many acknowledge that China’s growth #s are exaggerated by 2-3 %
 
There is an earning’s recession in place (companies reporting 3 or more consecutive quarters of lower sales) and so forth…
Now, if you are in the dollar cost averaging club, then all is well.  Put it on auto pilot and just don’t look at it  you start with 2-3 percent share allocations on a weekly basis and see where things go.   or you intensify your additions with every additional 3 percent drop.  
The issue is that this has not at all worked the last 2-3 years.  
 
Ofcourse, SP could blow earnings out of the water and reverse the earning’s recession but that seems unlikely (never say never with equities) 

[Count Contrastula]

Typical responses will be enough money to make you feel that your situation is hopeless. Everyone else makes a ton and saves a ton, right ;)?

Most common advise will be to live like a frugal cheap bastard and have almost no material or experience pleasure in your life. Bet that you will have no health issues. Save half your take home pay. I know two guys that did it and hit nearly 10mil by 60. I would not trade with them for a minute.

That being said three mil at any age is plenty. Just work a week or so a month somewhere

[antoni.bielazik_633]

Quote from wisdom

slightly off topic

what are ppl paying their accountants for taxes? 

1) do you do billing per hour?  if so, what rates do you pay?   

2) if it’s a global sum, do you have any idea what it comes out to roughly?

3) has anyone dabbled in turbotax?   

my current accountant is billing @ 200+ an hour, which to me is highway robbery.  i can’t have him put in data entry at that price.  not that i can’t afford it but it’s highway robbery to me. 

thoughts? 

 
I do it myself and I look at it as a free course to help me understand my personal finances and lower taxes in the future.

[Unknown Member]

Also

The company pays you a dividend of 1$

That dollar is your pocket

A company that doesn’t pay a dividend but has extra earnings, how can you be sure they are reinvesting that dollar into the company?

You don’t

Not saying that these companies are bad but I’d rather have the dollar in my pocket than trust they are going to do the right thing with it year after year

Research WGL holdings…… Go back to 1858 and see what it has done for its investors

I will take that kind of performance any day

[cohenadam_919]

Agree with radi2012. Brokerage houses have teams of trained analysts working 80 hour weeks to research stocks, map trends, build models, and they still often don’t get it right. And they get their information much closer to real time than you do on the various e-trading software. (And that’s the people getting their information legally– you are also competing with inside information, who know things they shouldn’t). So your odds of picking a handful of stocks that will go up in your spare time as a busy radiologist are really no better than throwing darts at a dartboard. You’ll probably get a false sense of confidence/talent in bull markets, but you are playing the part of the fool when the market slides. So you really should use index funds and invest in the market as a whole. Equities have grown steadily over time as a group, while individual companies have been much more volatile. The individual stock picking is really meant for people who spend every waking hour doing this, not those that spend a few minutes each day. For every person you know who makes money day trading there are others who would be better off at the track.

[Unknown Member]

Individual stock picking is not day trading
 
I own approximately 30 stocks. In my personal (non-retirement) I no longer buy stocks that do not pay a dividend and among those I only buy stocks which have increased their dividend for at least 10 years. I try to go for at least a 4% yield but I will make an exception in various sectors Particularly drugs and technology. I probably sell one stock every 1-3 years………… and at least 2/3rds of my holdings Ive owned for at least 12 years. I sell if they cut a dividend or more recently when they get bought out for which I made a nice premium.
 
The bottom line is you do what makes you feel good and comfortable.  If you do not want to put time into it then you either pay an advvisor or buy a global fund and hope it goes up eventually
 
As for me I will stick with my plan to reinvest my increasing dividends so when I completely quit working I have a monthly revenue stream to pay me for sitting on my arse and preserving principle for my kids.  Me personally I am shooting for 25 grand a month
 
My goal is to completely replace my income with Dividend paying stocks, Real estate and Retirement accounts by the time IM 60 
 
TO each is own though.  You have to do what makes you sleep better
 
 

[antoni.bielazik_633]

Which stocks are at highest risk for dividend cuts?  The stocks with the highest dividend yields.  So your aim for > 4% dividend yield is self defeating.

[Dr_Cocciolillo]

Kpack
Are you outperforming the indexes and if not , do you feel you at least have less downside risk ?
My re ole room from 2007-2009 is that all of my stocks took at least 50 percent haircuts. Including Vz (4-5 percent dividend ) ge etc. heck Vz dividend was 8 plus percent during the carnage.

[btomba_77]

If people are interested in a happy medium between the Bogleheads approach and stock picking on dividend funds, you could consider NOBL.
 
 
It’s an ETF that mimics the S&P 500 Dividend Aristocrat Index.  It doesn’t have a long history (nor does the index itself… so hard to judge long term comparison), but thus far has outperformed the S&P 500 broadly.
 
 
ER is only 0.35% so not too expensive.  
 
 
[link=http://www.morningstar.com/etfs/ARCX/NOBL/quote.html]http://www.morningstar.co..fs/ARCX/NOBL/quote.html[/link]
 
 
 

[Unknown Member]

[b]Are you outperforming the indexes and if not , do you feel you at least have less downside risk ? [/b]
 
Without a doubt.  Particularly if look at my return on original investment
 
I don’t buy anything that everyone says you have to own.  I don’t expect to buy the next apple or google.  
 
My stock screen is simple
 
-I buy solid dividend paying stocks that have a yield of close to or above 4%
-They must have a track record of [b]increasing[/b] dividend (very important because your dividend grows too) of at least 10 years though usually I look for 15-25 years.
-They must have a reasonable payout ratio to make sure the dividend is in no immediate risk of being cut.  This varies with the sector
 
 
THis is strictly for my personal accounts.  I do Play around a little with my retirement accounts and speculate some because I don’t have to worry about short capital gains.  I have to say Ive gotten burned a few times in my retirement accounts by doing this and trying to speculate by performance overall has been above board
 
 
Downside risk is A global panic or  a major global event.  
 
I guess too If Bernie Sanders gets elected and tries to increase the dividend rate Id be paying more in taxes but even then I look at it THe companies are paying me over a hundred grand a year to reinvest in their comapny………..and Im just giving the government their cut.
 
ITs all relative……….  I know people hate paying taxes, but honestly the More you make the more you pay
 
Not paying taxes really isn’t always putting more money in your pocket.  Sometimes it s better to make more money even if you pay a few extra bucks in taxes
 
At least thats my opinion.
 
I know some people take taxes more personal than I do

[Unknown Member]

[b]Which stocks are at highest risk for dividend cuts?The stocks with the highest dividend yields.  So your aim for > 4% dividend yield is self defeating[/b]
 
I will disagree with that ……..most of the stocks at risk for dividend cuts are higher than 4-5%.   They are usually 7-8% or above.  Conoco Phillips is a real good recent example.
 
However A lot of the time A stock with a higher dividend is beaten down for no good reason. IF you follow Warren Buffet you should know this.  He preaches it all the time.  Thats why he bought Coke and US bank and pretty much everything else he buys.
 
Perfect example
 
Look at Spectra Energy…………..it was down to its 52  and even 2 year low several months ago and it boosted its dividend another 10%…one that it has increased since its inception.  The only reason it got beaten down was because it got guilt by associatation with the latest energy  issues…………..but its a solid stoc and its up  33% since then because it took time for the market to realize it shouldn’t be lumped into the rest of the sector.
 
I own nearly 30 stocks
 
Ive had to sel 2 in the last 6 years because they cut their dividend……………..and I was up over 70% in one and 45% in the other
 
 
……….so your point is?

[ljohnson_509]

Kpack is confusing strategy and outcome. A successful outcome for him does not necessarily mean a good strategy. It has been shown in multiple academic studies that you take uncompensated risk with individual stocks. The only way to get rid of that uncompensated risk is by owning the entire market. Additionally, focus of portfolio should be on total return not on dividends.

And if you do decide to use the dividend strategy, better do it passively in the form of a fund. Who is on the other side of a trade? Probably a big institutional player (90% of volume these days is institutional) who knows much more than you. Your academic skills in medicine in no way extend into investments.

[Unknown Member]

Anyone heard about the famous bet between Warren Buffett and a hedge fund manager? Buffet is winning by taking a total Stock market index fund.

[Unknown Member]

[b]Anyone heard about the famous bet between Warren Buffett and a hedge fund manager? Buffet is winning by taking a total Stock market index fund.[/b]
 
THen Why doesn’t Buffet just put all Berkshires holding into an index fund?
 
He doesn’t………he buys good companies that are undervalued and have strong balance sheets…………………and if you look at most of his holdings they are dividend payors and when he bought them they were paying close to 4%
 
ITs a great strategy…..thats why he is who he is

[ljohnson_509]

A risk that can be diversified away is not compensated. Single company risk can be diversified away by owning the entire market and is bad or uncompensated risk.

There is no way to get rid of market risk. There is a way to optimize risk adjusted return by owning the entire market (Sharp ratio). It works, as the last 40 years have shown since Bogle started the first index fund.

[afazio.uk_887]

The point I think people are making is you can apply a dividend growth strategy via funds and ETFs like VYM, VIG etc.  Using such funds gives you additional diversification benefit as well and most are low cost.
 
I tend to be a total return investor rather than focus on dividends.  To me it is just a pile of money, and when I need to withdraw it to live off of it doesn’t matter if I am taking the money out as a long-term cap gain or from a dividend.  In fact, a dividend is [i]forcing[/i] you to take out that money and pay tax on it, even if you might not need it.

[Unknown Member]

You can look at it that way

Of the 30 stocks I own now about 1/3 of them are paying me my original investment back yearly

If I have to pay a little tax on that so be it

I’m not crapping on non dividend paying companies

I’m just saying if they pay a dividend they are usually solid companies and the money and the return is real

And if you re-invest it…. And if the dividend increases yearly then you are doubling your money quickly

It’s worked for me and I’m sticking to it. I’m on the path to bring totally financially independent by sitting on my arse

It took nearly 20 yrs and a house and 4 college funds to do it but it’s real

And that was the plan all along

[afazio.uk_887]

I def agree dividend growers tend to be solid companies. It is a good strategy overall, albeit a touch riskier compared to index investing.

[antoni.bielazik_633]

To all you active investors, past performance does not predict future results.  Bill Ackman knows that best.

[Unknown Member]

The thing about Dividend ETF’s I dislike is there is very little growth component
 
Sure you get the dividend which is OK but you get really little or no growth from an ETF for dividend.  Today ITs more like a bond with a little higher rate and a little more risk if there is a large downturn.
 
Individual companies with solid balance sheets that are a little beaten down are the best of both worlds.  You get growth plus a dividend
 
Ive seen a lot of Buffet references in this thread…………………Isnt that pretty much what he does?

[reuven]

There is bit of misinformation in the above thread so let me clarify a few points.
1) you can diversify away most of the idiosyncratic risk of owning stocks by holding 30-50 in multiple sectors and industries
2) you can gain alpha (out performance) by either allocation (% in stocks, bonds, etc…) or the ability to pick the right stocks, bonds, … (evaluating the fundamentals)
 
I have been a successful active investor since 2008 and it is a part time job.  Many physicians have a halo effect thinking that if they are good at medicine then they are good at other things.  This is not true, without hard consistent work, and even then only sometimes.

[antoni.bielazik_633]

You can make beta 1 by owning the whole market through a diversified index fund.  You can gain alpha by gambling away your money.

[Unknown Member]

Most of the market is Junk
 
Why would I would own all that Junk
 
Low P/E stocks with a long track record of not only paying but increasing their dividends, minimal debt and solid balance
 
Not glamourous and often quite boring but wins the race

[antoni.bielazik_633]

If there was something magical about low P/E/value stocks that pay high dividend, then everyone would be buying it and the magic would be over (efficient market hypothesis).  You’re basically trading in growth for quarterly income that you have to pay taxes on even if you don’t sell.

[Unknown Member]

And you are saying that companies that do not pay dividend automatically re invest that money back into themselves and make huge profits and continue to climb in price.  That’s not nearly the case.
 
Those companies can make bad decisions… bad investments…. Buy their own stock back at bad prices………..give more stock options to their administrators etc.
 
If you have a dividend yes you pay a little tax on it but it is real and you can spend it or reinvest it………….your choice………..but it is real return that can’t hide behind accounting tricks.
 
When the market is down and the stock is down my payors are still paying me a dividend…………yours are taking on water
 
And Low P/E stocks with good dividends are not magical…………….. But, If they have strong balance sheets and a long history of increasing their dividend they are very good investment in my experience most of the time.
 
Personally I think you are fixated on taxes to a fault. Yes taxes aren’t great …….but when you make money you pay taxes…that life…………….. and the gains far outweigh the losses. 
 
You seem like the type that would rather pay no Tax and make 50,000 a year versus some tax and 5 million a year.  I think it is a mistake to solely base your investment strategy on not paying taxes on your gains…………..you just gain less than
 
You can deek around in index funds if you want but Its
 
 

[antoni.bielazik_633]

I don’t chase alpha, dividends, or growth.  I take what the market gives me, with very low fees (0.05% ER, no loads, no commission) and low taxes (0 trades, rarely any fund capital gains distributions).

[reuven]

I don’t chase alpha either.  I earn it.

[reuven]

I can assure you that I do not gamble away my money.   As I mentioned above it is a part time job for me since 2008 and I am successful at it.  My purpose for interjecting in this thread was to educate some of you that believe that it is impossible to generate alpha as an independent investor.  It is possible but challenging.   If the market was truly efficient then I would not be able to do this nor would the others that are like me.  Keep up the good work kpack!

[Unknown Member]

[b]The only way to get rid of that uncompensated risk is by owning the entire market.[/b]
 
There is no way to get rid of risk
 
China goes into a panic tommorow and Your entire market is down 3-5%
 
WGL has been paying a dividend since 1858.  THe lights in the DC area are still going to need to be turned on even if China panics.  But if a terror attack blows up its infrastructure then they lose too
 
You can bury your money in the gorund and watch its value deteriorate over time in value
 
Risk is everywhere

[Unknown Member]

Anther few points that jeremy Siegel points out in his book
 
-THink of dividend reinvesting as essentially dollar cost averaging which can really lower your overall cost basis of a stock over time
 
– When you dividend reinvest the company essentially invest money for you.  It really never comes out of your pocket.  Its like saving with someone else footing the bill.
 
I don’t have to throw 10,000 bucks out of my salary every month to invest……………my stocks are doing that for me.

[antoni.bielazik_633]

I recommend the following books for those of you interested in financial freedom:
 
Capitalism and Freedom by Milton Friedman
The Little Book of Common Sense Investing by John Bogle
White Coat Investor by James Dahle
The Bogleheads’ Guide to Investing by Taylor Larimore et al.
A Random Walk Down Wall Street by Burton Malkiel
The Millionaire Next Door by Thomas Stanley
All About Asset Allocation by Richard Ferri
If you Can by William Bernstein (free online)
How a Second Grader Beats Wall Street by Allan Roth

[afazio.uk_887]

Everyone has been making money since 2008, it has been one of the great bull markets in history.  Bull markets have a way of giving people false confidence in their own ability to pick stocks. 
 
Here’s another Buffett-ism —  “Bull markets are like sex, it feels the best just before the end.”
 
I am not fully an index investor, I use some active funds as well for certain less efficient areas (international, ALT, small cap etc), but long-term picking stocks as a physician probably will under-perform benchmarks.

[Unknown Member]

I hear that all the time but it’s actually easier to get alpha in a bear market.
 
I’ve outperformed my benchmarks by 8% YTD.  If I weren’t a resident, I’d have more dry powder and would have had an alpha closer to 15%.

[reuven]

Alpha= A measure of [link=http://www.investopedia.com/terms/f/financialperformance.asp]performance[/link] on a risk-adjusted basis.
Some of you should refrain from offering your investment advice when it is clear based on your comments that you do not understand basic investment terminology.  If one can sustain out of sample alpha over a prolonged period of time ([b]Years not days or months[/b]) then it is statistically improbable that it is due to luck or the “bull market”.  This emphasizes what I brought up earlier regarding the halo effect.  Some physicians believe that because they are good at medicine that they should be good at other things, when they are not.  Check out Renaissance Technologies (a hedge fund) to truly understand what true master investors can do.

[afazio.uk_887]

LOL – Renaissance Technology avoided paying $6 billion in taxes that guys like me and you have to.  Soros has done the same tax avoidance schemes. It is not a level playing field and I am not terrible impressed by quant funds that front-run and pursue other shady tactics.  Forget about SEC capital hedge fund that blatantly engages in insider trading.
 
It’s easy to beat the average investor when you are not playing by the same rules.
 
If you really think you have some great insight into investing that has seemingly gone unnoticed by the millions of professional investors and traders who will use any means necessary to get returns – kudos to you and please do share. LOL

[reuven]

I get paid for my investment services.  I wish you luck because with a closed unlearned mind you are going to need it.  And by the way I am nothing like you.

[g.giancaspro_108]

This followed the usual pattern of financial threads on AM.
A few answers, then some braggadocio, then some head butting.
Anybody want to talk about how many studies they read in one day?

[antoni.bielazik_633]

Quote from JTG

I get paid for my investment services.  I wish you luck because with a closed unlearned mind you are going to need it.  And by the way I am nothing like you.

 
Wow he just got personal.  You mad bro?

[afazio.uk_887]

LOL. He is nothing like me — mush smaller portfolio and manhood no doubt.
 
The hubris is amusing tho, except to the fools who actually pay him to lose their money of course.

[Unknown Member]

Some interesting posts, I’m impressed.
 
I’m guessing I’ll retire around age 60, and hope to have some regret when doing so because I’ll be leaving work that is still meaningful and stimulating. Will probably go down to 80% time within 5 years from now. Those decisions have no relationship to any dollar amount of investments/savings, as expenditures will be determined by whatever I have at the time, which – as it is now – is likely to be way more than enough.

[Unknown Member]

a lot of interesting posts
 
i do think for most people trying to assemble a portfolio to beat the market (which is nearly impossible based on history anyways) is futile, and takes too much time. Find a good, honest investment advisor. Pay them well to help you assemble a great portfolio. Or just invest in the general market + bonds + cash based on age. 

[Unknown Member]

I don’t my investment philosophy is unique

Basically what I do is pretty much what Jeremy Seigle preaches and really it’s what Warren buffet does
I’ve been doing it since 1994 and it works

If you read something that tells you that everyone is stupid and no one beats index funds over the long haul …. Then I’m sorry you are just lazy afraid or stupid

Or so frickin tax adverse that you’d rather make less money

The people that write the books that tell you index funds are the way to go are the same people selling you the funds

[Unknown Member]

In fact

I’m pretty positive I got laughed at for buying boring old utility stocks when this Board first came out

Uhhhhh those boring stocks after dividend reinvestment are up over 400% for me

It’s just funny

[antoni.bielazik_633]

Bogleheads investment philosophy
 
Live below your means
Invest early and often
Never bear too much or too little risk
Diversify
Never try to time the market
Use index funds when possible
Keep costs low
Minimize taxes
Invest with simplicity
Stay the course

[Unknown Member]

I agree with everything except

Invest in index funds…… Personally I think they are crap

Minimize taxes is great but that doesn’t mean you should avoid large gains or avoid taking some profits because you have to pay some tax

That’s where we disagree…… Paying some tax is not always a terrible things

Sometimes it means you are making money and that the price of doing business

That’s all

[antoni.bielazik_633]

kpack is feeling the BERN
 
[link=http://www.vox.com/policy-and-politics/2016/3/25/11293258/tax-plan-calculator-2016]http://www.vox.com/policy…x-plan-calculator-2016[/link]

[afazio.uk_887]

It’s not [i]people [/i]telling you that index funds and passive investing is the way to go for the average investor – it’s decades of academic research.
 
There people who are small active investors who get above average/index returns – there have to be mathematically, maybe you are one of them and if so kudos. There is also strong tendency for reversion to the mean over the long-term as well, however.
 
The issue is that people seem to think that accepting index returns means somehow you are just an “average” person.  They can’t possibly be satisfied just making “average” returns!  It’s just like if you ask every radiologist out there they will say they think they are in the top 25% of all rads… human nature.
 
[image]http://static4.businessinsider.com/image/53ea7b5ceab8ea603b24ab35-1200-600/c-75.jpg[/image]
 
 

[antoni.bielazik_633]

lol great graphic

[antoni.bielazik_633]

Not sure what reasonable means in this situation.  You should get what you can leverage.  I’m a resident so I don’t get anything.  My fiance works in finance and she gets 4%.  In that industry, she has seen 4% to 12%.

[Unknown Member]

I think the most common match is 50% up to 6%.
 
Given that, 100% of 4.5% seems reasonable.

[dipaktc_99]

Warren Buffet does not invest in the same stocks and the general public. I believe Berkshire generally gets preferred shares that are negotiated in advance behind the scenes. These typically pay significantly higher dividend payout then market shares.

When the S&P is used as the benchmark are they using simple gain in equity price or is the dividend taken into account.

If an individual invests in a S&P low cost index fund they automatically will beat the S&P annually by 2% due to dividend return if the dividend is not taken into account as the benchmark. If th divident is taken into account then the index will fall short of the benchmark ever year by the fee percentage (.05% for the VFIAX vanguards fund).

I believe warren buffets bet against the active hedge fund managers will show he wins over 10 years. This is against “professionals”. That being said home investors who are diligent need not pay 2 and 20 for the privilege of professional guidance annually. Bill Ackman has had a tough two years but still gets paid with investor money.

[Unknown Member]

That’s not true

First off anyone can buy preferred shares

Second Most of the time Buffet buys common shares

You may be referring toThe times he did get special preferred shares and more favorable yields were basically bail out deals like like Bank of America a few years bank

That was a little different

Go google Berkshire Hathaways holdings and you can see what it owns

20 largest holdings he owns common shares in

American Express
Charter communications
Coke
Davita
Deere
Direct TV
GM
Goldman Sachs
IBM
Moody’s
Phillips 66
Precision cast parts
Proctor and gamble
Restaurant brands international
US bank
Walmart
Wells Fargo

He owns preferred in

Bank of America

Dow chemical

And both common and preferred in Kraft/Heinz

[antoni.bielazik_633]

Keep it simple and own the broad market through a low-cost and diversified index fund.

[Unknown Member]

Also in the previous edition of Jeremy Seigles book I referenced ( I haven’t read the most recent edition yet) he specifically references the “decades of research on index funds”

He points out that the academic research omits dividends when calculating yearly and total return and states that’s why they come out on top

Basically that’s a farce or at least a deceptive tactic

He further points out that if you add in the dividends and reinvest them on the fly these stocks blow away the index funds

…. Basically he is making the case of dollar cost averaging through dividend reinvestment

As says….. There are lies damn lies and statistics

[antoni.bielazik_633]

You can also reinvest dividends paid through your index funds too… it’s no different than common stock.

[Unknown Member]

You don’t get at as much growth though

…… Because you watering down your good companies with crappy companies

[antoni.bielazik_633]

I cannot identify which are “good” and which are “crappy” and how their values will grow.  More power to you if you can.

[Unknown Member]

My typical screen

Company must have at least a 10 year history of increasing their dividend ( I like at least 15-25yrs)

Payout ratio must be at or below sector mean

Acceptable debt levels

Near 52 week lows

Focus on sectors that people need drugs utilities or when sectors are beaten down a lot real estate, energy banks and even some tech. I stay away from clothing and restaurants

I really like to buy on pullbacks too you can get discounts and I like bargains

[Unknown Member]

And if they cut their dividend or some unforeseen trouble sneaks up on them…… Sell and either cut your losses if you have them or take the profits that you have before the fundamentals change

Do not fall in love with the stock and ride it to the bottom

I learned my lesson the hard way on Lucent and MCI WorldCom a while back

Losses are best when you take them quickly instead of praying while they tumble to the bottom

[antoni.bielazik_633]

Great to hear that you can time the market.  You should write a book.

[Unknown Member]

sounds like from your sarcasm you just want to be stubborn and win an argument but you are out of ammo

That being said I don’t consider what I do as market timing….. Maybe I try that with my initial investment but dividend reinvestment is actually dollar cost averaging which essentially is the opposite of market timing…. But hello you know that and pretty much everything else

I’ve certainly lost on a few stocks in my investment career but I like to think I learn from my mistakes and try not to make the same one twice

I’ve done very well because I know and I admit I’m not the sharpest tool in the shed and even if I was I could still get burned

Hopefully your pay no tax do no research and pray philosophy works out for you

[afazio.uk_887]

I think if you buy and hold through downturns and don’t panic sell you will end up with a nice nest egg.  I guess each individual has their own preference as to what they buy and hold.

[antoni.bielazik_633]

If the market wants to give me the current historical low of 2% dividend, I’ll take it.  If it wants to give me the historical average of 4%, I’ll take it as well.
 
The goal is to minimize taxes, not to avoid them altogether. No trading = no realized capital gains.  Low turnover index funds also generative minimal capital gains.  Keep high turnover and highly taxed assets in IRA and 401k.
 
I don’t do any research on any stock.  My research focuses on asset allocation and fees, the two most important factors in long term return.
 
It’s not too late to join us Bogleheads

[hans4231]

What’s the return using boglehead strategy vs dividend reinvestment strategy ? Why argue when you can plot it head to head?

[antoni.bielazik_633]

Bogleheads strategy is not a specific portfolio.  It’s an investment strategy made up of these 10 pillars.
 
Live below your means
Invest early and often
Never bear too much or too little risk
Diversify
Never try to time the market
Use index funds when possible
Keep costs low
Minimize taxes
Invest with simplicity
Stay the course
 
The cumulative return will depend on your fees and asset allocation.  Some own 1 fund and others own 10 funds.  I own 2 funds in a 60/40 split.  Cumulative expense ratio is 0.078% or $7.80 for every $10,000 invested annually.

[hans4231]

Sure but charts would be nice let’s say random broad index fund vs value investing

I should probably google harder than port here I hire

[antoni.bielazik_633]

Past performance does not predict future returns (that should be the 11th pillar).  Vanguard Value Index has trailed Vanguard Total Stock Market Index 6.46% vs. 7.51% over the past 10 years.  You cannot expect higher reward without taking on additional risk.

[jeevonbenning_648]

I am just one year post residency (early 30s). My real estate rental income already covers my living expenses.
Index funds are a painfully slow way to wealth, with terrible tax advantages. Investing in any retirement account is a scam. What if you want to retire at 45, 55? You are screwed. Just hope there isn’t another 2009 when you turn 60 and decide to retire. Of course everyone feels good in this unprecedented bull market.

[antoni.bielazik_633]

I absolutely agree.  Doing your own taxes helps you understand the convoluted tax code.  You can only minimize your taxes prospectively, not retrospectively.
 
Invest in low-cost broad-based index funds, never try to time the market, and stay the course!  It allows you to get your fair share of the market return over time.
 
It’s never too late to be a Boglehead!

[hans4231]

Radi you just compared two index funds. Other one says value investing but still is broad based fund so would have same market weighting philosophy.

I have never read boglehead but thanks for posting will check it out. Will do some research to arrive at my own conclusions.

Personally 6.4% returns going onwards doesn’t seem that exciting. This brand of investing is save save save and wait for money to compound and grow is probably best suited for busy professionals like us. I doubt businessmen or big time investors do this – they probably go after higher yield.

[afazio.uk_887]

The wall street guys making huge returns are gaming the system — blatant insider info, front-running, tax avoidance schemes etc…

[antoni.bielazik_633]

Investing is supposed to be boring. If it’s exciting then you’re doing it wrong.

[brunotriaire00]

“I doubt businessmen or big time investors do this – they probably go after higher yield.”
 
Actually, big time investors do exactly this. They have some additional tools at their disposal which includes hyper fast computer trading and the ability to diversify into all kinds of nooks and crannies because of the size of their portfolios. But for most the basic process is the same. Diversify across multiple markets and asset classes. Set asset allocation based upon time horizon of the need for income or other goals. Don’t try to time the market or stock pick. 
 
They have some problems that the individual doesn’t have in that moving large sums of money can influence markets and drive down yields due to their own trades. Finding places to park hundreds of millions causes its own problems. 
 
My father retired from managing a retirement fund for a Fortune 500 corporation in 1990. At the time he was investing $2 billion. He transitioned from old fashioned stock picking to modern investment theory and practice during his career. He drilled into me the importance of proper diversification and asset allocation, and then leaving it alone. Let time and compounding do their thing. 
 
And that only a fool thinks that as an individual investor you can reliably beat the market or the big time pros.

[Unknown Member]

I think some individual investor can realiably beat the markets. It takes a solid strategy and a strict discipline to your sell signals especially.

I’m sure there are many that do not however

I do agree it’s pretty unlikely you can beat the big time pros….. They are taking profits or getting when or before news breaks while the individual investor can’t do a thing till the market is open. You see that daily

They are in or out before the average joe can turn their computer on

[antoni.bielazik_633]

Over a 10-year period a low cost broad market index fund will beat 80% of all investors with 0 effort required.

[Unknown Member]

You will love those index funds in a bear market

Hahahaha

[ljohnson_509]

We need kpack and other stock pickers otherwise indexing wouldn’t work. Thanks.

[Unknown Member]

I’m near 50 and semi retired have been for a few years

If you are an average private practice rad…… I probably make half of what you make yearly in dividends alone

I think I will just keep doing what I’m doing

Anyone who does not need an accountant to do their taxes…….. Has no real wealth

[hans4231]

With you kpack

I’m not denying the benefits of index funds here. But boring investing is SLOW investing. What I’m saying is there are ways to generate wealth faster be it starting a business, real estate whatever and in some instances some rich guy value investing in few companies (like warren buffet)

Index is fine for average people. I also take issue with the word “investing” I mean if you are putting money in an index fund how is that “investing”? A monkey can do that

Like kpack I have seen my share of smart business men and other styles of investors that easily retire by 40. Infact I am very close to starting a blog and running an 8 year experiment to see for it myself

[Unknown Member]

Whether one likes index fund investing or not, it’s definitely investing.
 
If you own 100 shares of an S&P 500 index fund, you own fractional shares of 500 companies.
 
And if you own shares in a company, you’re an investor! (i.e., one who has taken a risk and is personally “invested” in the success of a company).
 

Quote from radioman_10

With you kpack

I’m not denying the benefits of index funds here. But boring investing is SLOW investing. What I’m saying is there are ways to generate wealth faster be it starting a business, real estate whatever and in some instances some rich guy value investing in few companies (like warren buffet)

Index is fine for average people. I also take issue with the word “investing” I mean if you are putting money in an index fund how is that “investing”? A monkey can do that

Like kpack I have seen my share of smart business men and other styles of investors that easily retire by 40. Infact I am very close to starting a blog and running an 8 year experiment to see for it myself

[antoni.bielazik_633]

We need traders like kpack for efficient market hypothesis to work.

[afazio.uk_887]

[image]https://static.vgcontent.info/ret/hnw/web/frsh_images/WSUA_cost_5.png[/image]

[Unknown Member]

What amazes me is the anger here when you point some things out or question what is accepted norms

I’m sorry but index funds suck. See how Those wonderful index funds do in a bear market

Every time we have a bull market you hear this lazy argument for indexing…… Simply put when the markets go up everyone is usually a winner…….. Unless you were dumb enough to bet heavy on gold a few years back like one infamous poster on this board

We have had a great market since 2011. You probably do ok indexing and if you are fine with that more power to you

But wait til we get a bear market for a few years……and watch those 7-8% yearly gains turn to 10-20 % losses

I have a sneaking suspicion that most of you indexers are newbie investors that never saw the Bear

Funny how you never hear about index funds during the bear markets

[Unknown Member]

I’m sure most of you too were the ones pumping Apple at 130$ thinking it was never going down

How’s that working out for ya

[ljohnson_509]

Stock pickers usually fall from a cliff eventually. You can read Swedroe’s work on this topic. Plus, active returns are often not as good when you compare their performance against an appropriate benchmark and subtract fees, transaction costs, extra taxes, higher turnover, etc.

[ljohnson_509]

Kpack, if you gotta a way to dodge bears and outpace the market, than you better start a hedge fund and go make some real money. You would be in a tiny minority because even the “pros” can’t do it with their fancy degrees and teams of PhDs. Look up The fall of Long Term Capital Management with their noble Economists and their failure.

[Unknown Member]

Ok

Just keep telling yourself that you are doing the right and the smart thing

[antoni.bielazik_633]

And active management doesn’t lose money during bear markets?  I have a bridge in Brooklyn to sell you.

[afazio.uk_887]

Unless you are buying a hedged product, like a long-short equity fund, I am not sure how you can expect to not lose money in a bear or down market with an active fund.  Typical active stock funds are not taking short positions or using derivatives.

[Unknown Member]

Well first off you obviously can’t afford a bridge to even bluff sale on

You do your your own taxes because you barely have a pot to pee in so you can’t afford no bridge

Secondly no one said you don’t lose money in a bear market

But I will take treading water or dropping a couple percentage points over those index funds losses in in 2008 of 30-35%

[antoni.bielazik_633]

The S&P lost more than 30-35% during the 2007 to 2009 bear market.  It lost 56%.  The S&P 500 index fund would have lost 56%.  But most Bogleheads dollar cost average, buying more shares as the market goes down and getting a better price.  You see a crash, I see a sale.
 
Market timers tend to buy high and sell low while the buy-and-hold strategy does not.
 
Find me an equity fund that “tread water” during 2007 to 2009.  The best way to endure bear markets is to dollar cost average and stay the course.  Bear markets eventually end and stock markets have always recovered.  Over a 40-year investment period, there will be 10 bear markets and even more corrections.  This is just noise.

[Unknown Member]

Who is market timing and who is advocating that

If you consider market timing adding or initatiating to positions on pull backs or avoiding throwing new money in when everyone is euphoric ….well so fng what that’s just common sense

You are throwing all these things out trying to make some argument stick

During 2008, You saw nothing and you probably never saw a bear market

You don’t have anything except parroted fund manager advice

And After listening to you parrot this fund sponsored babble I strongly believe you don’t have the balls to double down and buy when the blood is in the street

Your just parroting some fund managers schtick

If you saw a sustained correction you’d be peeing down your leg

[antoni.bielazik_633]

I buy every month, doesn’t matter if it’s up or down.  I saw a sustained correction or worst start in stock market history in January/early February and bought with every paycheck.  I did the same last September.
 
Stay the course!

[Unknown Member]

Hahaha. That wasn’t a a sustained correction

That was a speed bump

Look if your happy with what you are doing then more power to you

Most of what you listed earlier is actually a good plan to follow living within your means and investing early an often minimize taxes

Personally I think index funds suck you think they are the bomb

Despite that there are more ways to skin the cat and I think you can see that by realizing that most really wealthy people aren’t indexers

But any way Good luck to you

[Unknown Member]

“If you consider market timing adding or initatiating to positions on pull backs or avoiding throwing new money in when everyone is euphoric ….well so fng what that’s just common sense.”

This is the definition of market timing and if it is truly common sense then you must be a billionaire. Why are you meddling with us peasants?

[btomba_77]

Quote from 2BRads

“If you consider market timing adding or initatiating to positions on pull backs or avoiding throwing new money in when everyone is euphoric ….well so fng what that’s just common sense.”

This is the definition of market timing and if it is truly common sense then you must be a billionaire. Why are you meddling with us peasants?

 
Yep. That’s market timing.
  
  
It presumes that you have a sizable portion of your portfolio in cash at any time in order to buy on those lows.  To have that cash that means that you must have sold at a presumed “high” at some earlier point in time in order to generate that cash. 
  
  
That is market timing. 
  
The problem is that vast majority of people (perhaps not kpack, but the vast majority of investors) will time incorrectly.  They will sell at a “high” that turns out not to be a high and/or buy at a pullback “low” that isn’t a low. 
  
This means that most investors ( again …perhaps not kpack, but the vast majority of investors) will underperform the market in an attempt to execute this strategy. 
  
  
That is is why dollar cost averaging has taken hold and has been shown to outperform attempted market timing over the long run. 
  
  
What kpack is doing involves both market timing but it is different.   He’s not just timing the market as a whole, he is attempting to time individual stocks, particularly dividend aristocrat companies,  based on a proprietary formula in his head that tells him when it is the right time to buy.  His strategy I would term  “Dividend Growth Value” investing. 
  
  
There is a known problem with any type of value investing.  That is — determining a company’s intrinsic value is hard.  Very hard. Very very hard. 
  
Also, when you are selling at “highs” you are making a tax burden for yourself, generating capital gains in order to get the cash ready to buy something at a “low”.     (I would add that kpack’s strategy adds in an additionaly layer of tax-inefficiency by focusing on dividend-generating equities).
  
  

There are some people who will over the long term be able to outperform market indices using whatever formula and/or gut instinct they develop.  They see true value.  They avoid cognitive biases and emotion that damns the performance of other less disciplined investors.   They are able to outperform despite that trading costs and additional tax burden. 
  

  
But the vast majority of retail investors are better served by dollar cost averaging into low-cost index funds, getting market returns over the long run. 
  

[Unknown Member]

THis discussion has veered in several directions to the point that some of things I have said certainly dont make sense for all situations.  My sentiments of buying on dips and selling when you think the price is too high Is for non taxable (retirement) or new money buys in taxable accounts 

But yes it is market timing  actually its more of an educated market timing 

TO dergons point- .  In my non retirement account I usually only do this with new money or adding to position.  I don’t sell much so I rarely have huge sums to lump some invest.  I use a very disciplined approach for my taxable accounts
 
However In my retirement accounts I do this quite frequently. I always have a good bit of free cash in my retirement account with either new money or more frequent sales. Because of the tax implications I dont follow the same rules that I follow in my non retirement accounts
 
If you know a stock well and you know it’s fundamentals then it’s smart

Example you love apple and think it’s the best ever

Why when Apple Is sitting at 130 and you are screaming buy buy buy buy buy???

But not buying it at 95 when it pulls back???  THen sorry but if it doesn’t fit your schedule then something is wrong with you

In my non retirement portfolio I take no chances. I’m very disciplined and I take a long term approach Really I think Ive sold 5-6 stocks in the last 6 years and most of those were because they got boughout and I didnt want to own the new company

In my retirement portfolio I’ll take a few chances on stocks in the short term because of no capital gains taxes like recently…. I knew oil was going down….everyone new oil was going down so I waited and got ConocoPhillips on 3 Septerate buys for an average price of 32$……… Sold it at 42 and picked up a quick 15 grand in a month

For honesty sake though also Bought BP at average buy of 33 right now I’m down about 3500$
 
 
Many ways to skin the cat and again most of the points brought up in this discussion are overall quite sound
 
I guess I get defensive to a degree when I hear the Don’t think just buy Index funds mantra………….I guess thats good for the average joe who doesnt have the interest or want to learn more about other ways of doing things better
 
And of course I really dont like mutual funds in general