re: Investing Outside Of Retirement

quote:

---

If the income is in the form of a qualified dividend

---

What makes something a qualified dividend?

Equity for a US corportation or a foriegn company with a tax treaty with the US.

To give an idea of real world application, here is a list from Vanguard in 2011 for percentage of dividends that were qualified in mutual funds and ETFs

LINK

quote:

---

I don't want to lock all of it into retirement accounts

---

If I understand it correctly, that's one of the advantages of a Roth IRA. All of the money that you put into can be withdrawn without penalty. Only the appreciation of the account is locked.

quote:

---

Since you are working you want tax efficient investments in taxable to reduce ongoing tax drag. Total market funds, ie equity indexes, can be good in this regard. Holdings that throw off a lot of income will be taxed at your highest tax rate. My portfolio is half tax advantaged/half taxable + investment RE.

---

Any online reading suggestions to peek through that could help me work off of your basis for investing? I am a novice, although I do not want that excuse to single handedly prevent me from personal investing.

quote:

---

but recommended funds that didn't have them.

---

so the Vanguard High Dividend yield index fund does not have them?

quote:

---

Visa
Altria
Philip Morris
Exxon
Chevron
Conoco
Shell
Coke
Pepsi
General Mills

---

For the record, I do own most of those stocks. But to answer your question as to why somebody would buy a mutual fund instead of buying those 10 stocks individually, I'd say for the average investor it's simple economics:

Buying 1 share of each of those 10 stocks would cost approximately $850 give or take, 1 share of the SPDR S&P dividend ETF (Composed of 60 stocks) costs about $70.00.

That's pretty much the simple reason, but as I said, I do both.

Hey shaft

What is an estimate on the roi for doing the dividends of those stocks versus the mutual fund? I have been trying to look this up but couldn't find much.

Also, can you buy a stock that pays out dividends through something like E-trade etc?

Mine grew to that proportion as tax advantaged holdings would get maxed out annually and still have a lot of excess income/yr that I had to do something with, it just happened to work out to 50/50 over time and focusing on early retirement or working a lot less and having access to funds with minimal tax drag. The excess cash also resulted in finding some very good RE values over the years. The way this is structured I could live off taxable accounts for a couple of decades before going into tax advantaged, so it is a good place to be for early retirement, etc.

I do own some individual stocks, but less than 10% of my entire portfolio. If you want something dividend oriented that is one thing, it is not as tax efficient as a total market fund although it could be less volatile, but the dividend growth in the holdings of VIG were up almost 22% last year, lots easier than having to analyze and manage 50+ stocks. Dividend oriented holdings are destined to trail the market at some point due to all the interest in the category bidding up prices due to low fixed income rates. I am more of a contrarian and value investor, high dividends are one form of value, other value metrics have had higher long term returns in what would comprise the value segment.

RE investing can be tough regarding capital lockup, buy/sell costs, financing, holding period, etc, investing in public markets is much easier and less time consuming to build up account. I am evaluating an investment into an existing business in order to acquire the building that is currently being leased. Believe me, it won't be a short holding period if I decide to do it. Being able to sell an investment with a click of the mouse can never be underestimated value and time-wise, it removes a lot of risk vs hoping to be able to sell an illiquid asset.

Cool, I have 0 knowledge on drips and what little I had read made it seem like you had to buy the stock from the company in general. I'll look into that mutual fund though, I am looking for something long term.