- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Dividend stocks and DRIPs as a long term investment vehicle
Posted on 6/24/13 at 7:15 am to AUtigerNOLA
Posted on 6/24/13 at 7:15 am to AUtigerNOLA
I honestly don't know much about IRA's and Roth's bc when I first started investing I was 16, then I always worked in our family business after school and bought more stocks with the money i had and never really knew about those IRA's till I was older. I don't know the penalty or consequences of withdrawing early vs just paying taxes as you go but honestly the tax hit is very minimal annually for me anyways bc I don't really trade anything and the dividends are taxed at 20% so its not that big a deal after all my deductions are brought into play.
I never planned on retiring after 59.5 but rather much sooner so i never cared to look into it. Isn't the max contribution like $5K? I contributed much more than that anyways in the past. Also aren't there income limits too? I probably wouldn't pass that either today.
I probably should read more about that SEP the self employment one.
I never planned on retiring after 59.5 but rather much sooner so i never cared to look into it. Isn't the max contribution like $5K? I contributed much more than that anyways in the past. Also aren't there income limits too? I probably wouldn't pass that either today.
I probably should read more about that SEP the self employment one.
1
Posted on 6/24/13 at 7:46 am to AUtigerNOLA
$5500 this year 
Posted on 6/24/13 at 8:15 am to Chris Farley
quote:
The people in these threads blindly following your strategy are no different than the boglehead sheeple you mentioned earlier.
Hold on there, CF. I looked at his strategy and analyzed it on my own. I came to the money board looking for ideas, as I've had a recent windfall. I already buy an index with my 401K, so, in a sense I've already diversified.
I looked at what he was saying, then analyzed it objectively. I've been all over the world - yes, smoking in the U.S. may be down to 18%, but elsewhere, in Europe and Asia, they ALL smoke, the kids, judges, families, nuns, EVERYBODY smokes. PM is a great company to invest in - IF your goals are to have a recession-proof equity with both an organizational and industry history of paying good dividends. If the dividends beat inflation, you don't care if the stock grows.
Is that the right strategy for everyone? Of course not - it is part of a get-rich-slowly strategy. Other people might find it distasteful to invest in tobacco (or gambling, liquor, etc.), but to suggest I'm "blindly" following his strategy, or that anyone else has, for that matter is pretentious and insulting.
Posted on 6/24/13 at 8:23 am to Ace Midnight
Thanks for the kind words Ace Midnight.....the key word you said is KIDS....as horrible as that is, the booming US smoking market relied on tobacco companies using cartoons like Joe Camel in the old days, and characters like the Marlboro Man to make smoking "cool".
Well the government banned all those forms of ads aimed to target kids bc it worked so well and our smoking rates were soaring, it was a pandemic. Overseas, that same thing that caused the US boom is happening on a much larger scale, kids are being targeted all over the world and sadly its working. Is it morally wrong? sure, but so are many other things you invest in.
I own gas stations and some of these companies I buy oil from Exxon and Shell, do some pretty bad things to get their oil whether it be hurt the environment, kill innocent animals, cause oil spills in the past, deal with shady countries etc but that doesn't stop you from fueling your car at those places. Don't even get me started on Mcdonald's or Coca Cola and the unethical stuff they are involved with. You literally cannot name me one ethical mega-cap company. They all have their darkside.
Well the government banned all those forms of ads aimed to target kids bc it worked so well and our smoking rates were soaring, it was a pandemic. Overseas, that same thing that caused the US boom is happening on a much larger scale, kids are being targeted all over the world and sadly its working. Is it morally wrong? sure, but so are many other things you invest in.
I own gas stations and some of these companies I buy oil from Exxon and Shell, do some pretty bad things to get their oil whether it be hurt the environment, kill innocent animals, cause oil spills in the past, deal with shady countries etc but that doesn't stop you from fueling your car at those places. Don't even get me started on Mcdonald's or Coca Cola and the unethical stuff they are involved with. You literally cannot name me one ethical mega-cap company. They all have their darkside.
Posted on 6/24/13 at 8:24 am to ThaBigFella
quote:
Isn't the max contribution like $5K?
$5,500 per person for 2013.
quote:
Also aren't there income limits too?
Joint income of greater than $183k makes you ineligible. It starts to phase out at $173k.
This post was edited on 6/24/13 at 8:26 am
Posted on 6/24/13 at 8:26 am to Ace Midnight
Ace Midnight thanks, I made under $90k for the first 12 years I worked, what would happen if I had that plan and my income exceeded that threshold say this year?
Posted on 6/24/13 at 8:26 am to saintforlife1
quote:
Are you saying DRIPs should only be done in an IRA account and not a regular online trading account like Fidelity or E-Trade even if they offer free DRIP option? Is the reasoning behind this tax savings? Can you explain how that works?
Not at all.
I have dividend paying stocks in a taxable account.
However, my purposes and intentions for it are rather....custom? I wouldn't advise it to just anyone.
I am only surprised because he writes off ETFs because of a .1% fee (which would amount to 250 a month as opposed to 500 a month in his 3 million dollar example), but pays around 15% in taxes and diminishes its impact (around 1250 dollars a month in his example).
As far as recommending to others, I disagree heartily with his investment approach. One is far better off IMO in investing in other vehicles for retirement for the bulk of their lives.
Now when you start to approach retirement age, and start to transition to more conservative holdings, his approach is very very good.
But you suffer a big opportunity cost IMO if you have the 20-30 years to wait out market fluctuations.
This post was edited on 6/24/13 at 8:28 am
Posted on 6/24/13 at 8:32 am to ThaBigFella
quote:
Ace Midnight thanks, I made under $90k for the first 12 years I worked, what would happen if I had that plan and my income exceeded that threshold say this year?
Nothing. Income only affects your contribution limits.
Your money still can grow tax free regardless of how much money is made.
But that is mostly for an IRA FWIW.
You say you own 4 gas stations.
Are you self employed?
Then you can put aside a lot lot more (close to 40 k a year) through a SEP 401k.
LINK
This post was edited on 6/24/13 at 8:34 am
Posted on 6/24/13 at 8:35 am to ThaBigFella
quote:
Ace Midnight thanks, I made under $90k for the first 12 years I worked, what would happen if I had that plan and my income exceeded that threshold say this year?
Let's assume you maxed out contributions (Roth, so no tax benefit upon contribution) and worked 2001 to 2012 - limits were $2k in 2001, when to $3k for 2002 to 2004, $4k through 2007, $5k until this year, so you would have (presumabably bought an index or large cap fund with your strategies) about $48k (plus growth) of your own contributions in a fund that, if you follow the rules, will produce tax-free income from 59 1/2 on. My best guess is around $80k, depending on your allocation and if you did not get the benefit of an employer match.
You would not be eligible to contribute in years you exceed the income cap, but the money would still be there, growing, waiting for you at 59 1/2, or disability or death (then to your heirs).
Posted on 6/24/13 at 8:36 am to Volvagia
quote:
Then you can put aside a lot lot more (close to 40 k a year) through a SEP 401k.
But, but really WTF is a guy doing operating 4 gas stations as a self-employed sole proprieter (none of my business Big Fella, but if you aren't operating each one as a separate LLC, I don't know who the heck is giving you legal and tax advice. The fact that you can gain the benefits of being an employee and, essentially dictate your own income is all laignappe).
Posted on 6/24/13 at 8:37 am to Volvagia
The investment strategy is only bad if you can't see where the finish line is.
For me that finish line is when I can earn $100-$150K a year in dividends and stop working. I'll feel safe enough that coca cola,cigarettes, and other staples will be around and I can retire at that point
We each have our investing goals, I have mine, and the last 18 years I've been in these stocks have done nothing to sway me in another direction...
For me that finish line is when I can earn $100-$150K a year in dividends and stop working. I'll feel safe enough that coca cola,cigarettes, and other staples will be around and I can retire at that point
We each have our investing goals, I have mine, and the last 18 years I've been in these stocks have done nothing to sway me in another direction...
Posted on 6/24/13 at 8:38 am to ThaBigFella
quote:
We each have our investing goals, I have mine, and the last 18 years I've been in these stocks have done nothing to sway me in another direction...
"Past performance is no indication of future results"
Because people are just going to stop drinking Coca Cola and smoking cigarettes overnight.Posted on 6/24/13 at 8:39 am to ThaBigFella
No no ace midnight, there is an LLC, I inherited these from an uncle about 16 months ago. All I was saying was I've never been in an IRA,Roth,etc.
It's never been something on my radar, I grew up in a pretty well off family and I never had plans of retiring at 60. I always knew I was going to work in the family business one day in some capacity. My dad owns 9 stores and his brother owned 4. The brother had no children, so they were left to me.
It's never been something on my radar, I grew up in a pretty well off family and I never had plans of retiring at 60. I always knew I was going to work in the family business one day in some capacity. My dad owns 9 stores and his brother owned 4. The brother had no children, so they were left to me.
Posted on 6/24/13 at 8:46 am to ThaBigFella
quote:
For me that finish line is when I can earn $100-$150K a year in dividends and stop working. I'll feel safe enough that coca cola,cigarettes, and other staples will be around and I can retire at that point
And if you have as much money to throw around as you say, and have been investing as long as you say, you would probably already been there.
Now in your particular circumstance, maybe not.
I don't know how old you are.
But most people have the ability to transition asset classes without incurring capital gains taxes.
Even investing in US stock (mid/large cap) alone would give you ~20%+ returns compared to a dividend portfolio in a long run.
Dividend stocks make for a really nice end game. But not a good path to get there.
Posted on 6/24/13 at 8:49 am to Volvagia
As much money as I say? I said I had a pretty normal job until last year......I've been following this approach for nearly 18 years from the time i was given my first stock. Every month I'm pouring more and more cash in now bc Im making way more than I ever made before when I had my normal job. I originally planned on $75K+ of dividend income by 45 at my old job.
My goals have gotten significantly higher and will arrive much sooner now. Thanks for letting me know when I'd arrive at the finish line
I just laid out a 33 year DRIP return of 10 major US companies and not 1 returned less than 24x your money in a DRIP. I don't find that to be a bad strategy by going after the #1 returning industry that returned close to 50,000%
My goals have gotten significantly higher and will arrive much sooner now. Thanks for letting me know when I'd arrive at the finish line
I just laid out a 33 year DRIP return of 10 major US companies and not 1 returned less than 24x your money in a DRIP. I don't find that to be a bad strategy by going after the #1 returning industry that returned close to 50,000%
This post was edited on 6/24/13 at 8:51 am
Posted on 6/24/13 at 8:51 am to ThaBigFella
You are throwing down 3 million dollar values as a assumption in retirement, AND are talking about retiring early.
That doesn't combine with "normal money"
Although it might just be making 90k really early in life and holding steady....
Nonetheless, the point remains.
That doesn't combine with "normal money"
Although it might just be making 90k really early in life and holding steady....
Nonetheless, the point remains.
Posted on 6/24/13 at 8:54 am to Volvagia
Umm the average person who retired at 65 with a 44 year career of saving and growing would easily have $3M dollars
If you bought $1000 of coke in 1969 at 21 years old and added $200/month for the next 44 years you would be worth over $5.1M today
use a backtest calculator and see for yourself
LINK
Seems to me like a pretty normal person could have achieved that? Coke's been around for over 100 years
$5M @ .18% management fee is $9000/year...thats all i said, try to avoid that fee, do your own research
If you bought $1000 of coke in 1969 at 21 years old and added $200/month for the next 44 years you would be worth over $5.1M today
use a backtest calculator and see for yourself
LINK
Seems to me like a pretty normal person could have achieved that? Coke's been around for over 100 years
$5M @ .18% management fee is $9000/year...thats all i said, try to avoid that fee, do your own research
This post was edited on 6/24/13 at 8:56 am
Posted on 6/24/13 at 8:58 am to ThaBigFella
Coke makes up a big chunk of my stock portfolio as I've dumped money into it the last few years. Found this article this morning talking about the stability and "low risk" of Coke:
you would have to look back to late 90s when it was trading at 60x earnings for it to be a bad investment.
quote:
If you paid 19.7x earnings in 2005, you would have generated 10.6% annually.
If you paid 18.5x earnings in 2006, you would have posted 12.0% annually.
If you paid 21x earnings in 2007, you would have returned 10.2% annually.
If you paid 17.8x earnings in 2008, you would have gotten 10.1% since then.
If you paid 16.6x earnings in 2009, you would have generated returns of 16.1% annually.
If you paid 16.2x earnings in 2010 for your shares, you would have made 18.9% annually.
If you paid 17.4x earnings in 2011, you would have gotten 12.2% annual returns.
And if you paid 18.8x earnings last year, you would have gotten 9.5% returns since then.
you would have to look back to late 90s when it was trading at 60x earnings for it to be a bad investment.
Posted on 6/24/13 at 9:03 am to ThaBigFella
quote:
If you bought $1000 of coke in 1969 at 21 years old and added $200/month for the next 44 years you would be worth over $5.1M today
That's a little bit of a problem with your youth, though, Big Fella - $200 was a $hit ton of money in the 70s.
Minimum wage was under $2 an hour in the 70s and didn't top $3 until 1980 - heck, I'm only 45 and I worked for $3.35 an hour. I kick myself for not socking away $25 a paycheck, subsidized by the company, for WM when I was an employee, but I barely cleared $400 a month in 1985.
Posted on 6/24/13 at 9:05 am to Ace Midnight
quote:Yea I was gonna point this out. But you could probably afford much more than $200/month nowdays so it might work out?
That's a little bit of a problem with your youth, though, Big Fella - $200 was a $hit ton of money in the 70s.
Page 4 of 11
Popular
Back to top
Follow TigerDroppings for LSU Football News