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Message
re: Dividend stocks and DRIPs as a long term investment vehicle
Posted on 6/24/13 at 9:56 am to Volvagia
Posted on 6/24/13 at 9:56 am to Volvagia
quote:Was just looking at this. The only thing that worries me is people say the whole past performance doesn't indicate the future. that fund has done well over 1,5,10,life. I like the fact that it is a mid cap and i'm young with more room for loss.
Another big "growth" holding of mine is VSEQX
Also it has high turnover. won't that lead to gains tax? but will it even matter in a roth?
2
Posted on 6/24/13 at 10:00 am to jimbeam
quote:
Also it has high turnover. won't that lead to gains tax? but will it even matter in a roth?
As long as you follow the rules, you don't pay taxes on Roth growth or earnings. That's the deal.
Posted on 6/24/13 at 10:05 am to ThaBigFella
:facepalm:
So from one ad homimem to another. Before it was a professional attack, now it's one of age. With a tinge of arrogance that because of my youth my views are dismissable due to a lack of experience.
I don't presume to know it all. I have made a dedicated effort to learn more about finances in the past few years and have deferred to the wisdom of multiple posters here when they corrected me and backed it up.
But some of your statements aren't even supported by the basic statistical information that YOU brought up.
Yes, I'm aware of how math works.
A small percentage applied to a big number can also result in a big number.
I get your point.
You are missing mine:
What do you do over time as the fund's composition changes due to new up and comers? As some holdings are diminished and new ones emerge.
And how do you avoid paying even more in commissions during those rebalances?
One does need to pay close attention to fees and loads. It's why I like Vanguard with almost a zealot fervor.
But they are not inherently an anathema to a good portfolio.
There are some good low cost but still actively managed funds that more than offset the feed incurred.
So from one ad homimem to another. Before it was a professional attack, now it's one of age. With a tinge of arrogance that because of my youth my views are dismissable due to a lack of experience.
I don't presume to know it all. I have made a dedicated effort to learn more about finances in the past few years and have deferred to the wisdom of multiple posters here when they corrected me and backed it up.
But some of your statements aren't even supported by the basic statistical information that YOU brought up.
Yes, I'm aware of how math works.
A small percentage applied to a big number can also result in a big number.
I get your point.
You are missing mine:
What do you do over time as the fund's composition changes due to new up and comers? As some holdings are diminished and new ones emerge.
And how do you avoid paying even more in commissions during those rebalances?
One does need to pay close attention to fees and loads. It's why I like Vanguard with almost a zealot fervor.
But they are not inherently an anathema to a good portfolio.
There are some good low cost but still actively managed funds that more than offset the feed incurred.
Posted on 6/24/13 at 10:08 am to jimbeam
quote:
Also it has high turnover. won't that lead to gains tax? but will it even matter in a roth?
Once the money is in a Roth, and you don't take out more than contributions, you'll never pay another penny on taxes* on that money, no matter what you do with it within that Roth or how much the fund turnsover.
*Unless Congress ever pulls a Greece.
Posted on 6/24/13 at 10:10 am to Volvagia
Thanks. I just read about turnover but completely forgot about 'what if it's in a roth'. 
Posted on 6/24/13 at 10:11 am to Volvagia
new consumer staples don't emerge overnight man
When was the last time a serious competitor to coke or pepsi emerged?
When was the last time someone threatened to knock charmin off its toilet paper throne?
Marlboro has been king of the smoking world forever
that's the beauty of consumer staples, new ones don't emerge! That's why they've been such a fantastic, headache free investment over all these years. This isn't technology, in the 90's when I was a teen, it was a big deal when we had
MS-Dos then a few years later we had a $3,000 PC, then sony was king and their products were thousands of dollars, then apple came along, today computers are $400.... and the technology shift is all over the map.
In that same time: coke,marlboro, and charmin are still kings of their industry
That's the point im trying to make, people over think their investments way too much. Investing is really not that hard, the population is growing, buy the stuff they need and collect dividends and re-invest
Im watching fox news and they're talking about alaska airlines right now as good investment. That may be, but they pay no dividend and I know damn well that 99% of the world won't ever use Alaska Air. Sure tons of great investments exist, but I like to be headache free and go with the big 800 lb gorilla in the room and own it for many many years.
When was the last time a serious competitor to coke or pepsi emerged?
When was the last time someone threatened to knock charmin off its toilet paper throne?
Marlboro has been king of the smoking world forever
that's the beauty of consumer staples, new ones don't emerge! That's why they've been such a fantastic, headache free investment over all these years. This isn't technology, in the 90's when I was a teen, it was a big deal when we had
MS-Dos then a few years later we had a $3,000 PC, then sony was king and their products were thousands of dollars, then apple came along, today computers are $400.... and the technology shift is all over the map.
In that same time: coke,marlboro, and charmin are still kings of their industry
That's the point im trying to make, people over think their investments way too much. Investing is really not that hard, the population is growing, buy the stuff they need and collect dividends and re-invest
Im watching fox news and they're talking about alaska airlines right now as good investment. That may be, but they pay no dividend and I know damn well that 99% of the world won't ever use Alaska Air. Sure tons of great investments exist, but I like to be headache free and go with the big 800 lb gorilla in the room and own it for many many years.
This post was edited on 6/24/13 at 10:13 am
Posted on 6/24/13 at 10:13 am to ThaBigFella
I know you're against ETFs and whatnot, but what about a consumer staples ETF, at least at first? Gives you broader exposure until you can put more funds into play. 
Posted on 6/24/13 at 10:19 am to jimbeam
jimbeam, you can do as you please man, personally there's alot of stuff in those ETF's that I feel is overpriced and honestly stuff I really don't believe in.
I like to pick individual stuff I believe in based on
1.product
2.strength of balance sheet
3.dividend growth history
That's why I say more people should do their homework, ETF's do give diversification but sometimes they have stuff you dont want. Certain stocks in a consumer staple ETF are undervalued and some are overvalued, Id rather buy the undervalued ones.
I like to pick individual stuff I believe in based on
1.product
2.strength of balance sheet
3.dividend growth history
That's why I say more people should do their homework, ETF's do give diversification but sometimes they have stuff you dont want. Certain stocks in a consumer staple ETF are undervalued and some are overvalued, Id rather buy the undervalued ones.
This post was edited on 6/24/13 at 10:21 am
Posted on 6/24/13 at 10:24 am to ThaBigFella
Posted on 6/24/13 at 10:26 am to ThaBigFella
We aren't talking over night.
We are talking over time.
And to be honest, we were actually talking about personal investment approaches.
You were the one that brought up the hypothetical of "so this relative dies and dumps a huge amount of money in your lap."
Of course, in that scenario it's easy to justify a very personal hands on approach.
I'm talking from a more practical aspect.
In the case of 96.584% of people, the cost of commissions in following your strategy far outweighs the cost of fees.
The fees scale commissions tend not to unless you have a respectable amount of holdings.
And let's use math....let's say someone has a holding of 500k, which sadly is far more generous than most.
You bring up spending 2.5 hours a week on it......
Even ignoring cost of commissions (which isn't ignorable), that works out to 7.70 a hour assuming a fee of .2% (which is double of most of my ETF holdings).
I value my time a lot more than that, thank you. If you want to take it is cold, calculating cost/benefit analysis, you would get a better ROI going out exercising for that half hour a day
We are talking over time.
And to be honest, we were actually talking about personal investment approaches.
You were the one that brought up the hypothetical of "so this relative dies and dumps a huge amount of money in your lap."
Of course, in that scenario it's easy to justify a very personal hands on approach.
I'm talking from a more practical aspect.
In the case of 96.584% of people, the cost of commissions in following your strategy far outweighs the cost of fees.
The fees scale commissions tend not to unless you have a respectable amount of holdings.
And let's use math....let's say someone has a holding of 500k, which sadly is far more generous than most.
You bring up spending 2.5 hours a week on it......
Even ignoring cost of commissions (which isn't ignorable), that works out to 7.70 a hour assuming a fee of .2% (which is double of most of my ETF holdings).
I value my time a lot more than that, thank you. If you want to take it is cold, calculating cost/benefit analysis, you would get a better ROI going out exercising for that half hour a day
This post was edited on 6/24/13 at 10:27 am
Posted on 6/24/13 at 10:31 am to Volvagia
Volvagia you make good points but I will say I started buying stocks at 16,worked in banking from 21-33 and have always invested alot in stocks from that time. Along the way I got a big cash gift after college graduation. I paid cheap rent and I never made $90k along the way and had a portfolio of over $500k when I left my job a year ago.
you may not think its the norm, but I think anyone who makes $75K+ and saves and invests wisely will have a pretty high portfolio after 10-20 years of investing
there are so many different investments out there, and everyone should do what they're comfortable with.
you may not think its the norm, but I think anyone who makes $75K+ and saves and invests wisely will have a pretty high portfolio after 10-20 years of investing
there are so many different investments out there, and everyone should do what they're comfortable with. This post was edited on 6/24/13 at 10:33 am
Posted on 6/24/13 at 10:40 am to ThaBigFella
Reading this thread kinda makes me regret majoring in History in college.
Posted on 6/24/13 at 10:41 am to windshieldman
Que?
Posted on 6/24/13 at 10:56 am to jimbeam
quote:
Que?
I never learned this kinda stuff in college. Wish I had taken some finance classes or something. I read books about investing but you all are talking way over my head.
Posted on 6/24/13 at 10:57 am to ThaBigFella
quote:
ETF's were created to make money off the ignorance of the many, sorry, that's just the truth. The take your regular joe who knows nothing about the markets, can't read a balance sheet, and understands nothing about dividend history,payout ratios and growth and wow them with all kinds of statistics and returns, etc all while collecting that tiny fee over and over on billions of dollars
I am not a financial advisor. The ETF statement is just a broad, overreaching statement of nonsense. ETFs provide a tax efficient way for people with large amounts of assets in taxable holdings to reduce current taxation by limiting capital gains as the ETFs greatly reduce or eliminates CGs due to the structure of the ETF and creation units. This is not hard to understand, and to that point they are extremely similar to individual stocks tax impact. You speak to reading balance sheets, etc and I strongly question that someone with zero financial experience is capable of understanding the financial statements of a multi-national conglomerate or having any knowledge of non-US financial reporting. You also have never indicated that the income statement and quality of earnings can be the most important part of due diligence. I am not throwing you under the bus, but you are greatly exaggerating/underreporting the processes and risks some may not pick up. So if someone wanted to invest in international small caps they should buy individual stocks and eschew the diversification and reduction of idiosyncratic risk through the use of an ETF like VSS, etc which offers a wide range of developed/emerging small caps at a very low cost? That would not begin to make sense given the high level of risk involved in the sector.
Most will never inherit life changing amounts of assets and need to learn how to manage their money early and with caution, and progress into other investing endeavors after gaining experience and taking some lumps. DRIPs into large cap companies may not be the worst thing they could do, but it's not necessarily the best. There are people on here that struggle with the concept of tax advantaged accounts and how best to utilize them which has little to do with "picking" stocks, do you think they really are capable of analyzing individual securities?
I am not opposed 100% to what you do, but trying to illustrate your take on some posters on here is offbase with regards to experience and capabilities. Still very surprised you have done this for years without researching more tax efficient investing methodology as your life seems to have changed rather dramatically and what had little drag on your taxes 2-yrs ago could be vastly changed to your detriment over the next 5-20 years.
This post was edited on 6/24/13 at 10:58 am
Posted on 6/24/13 at 10:58 am to windshieldman
trust me. I haven't taken any finance classes either. have just read a lot over the last couple of months. I probably will take some finance classes though, especially if I stay for grad school
Posted on 6/24/13 at 10:59 am to tirebiter
zero financial experience?
So having an MBA and working as a banking analyst for years leaves me with no experience?
I just never had any interest in tax deferred accounts I couldn't touch till I was 60, I knew my goal was to save,invest, retire much earlier than the norm.
If someone wants to buy small caps, go ahead do the ETF, I personally don't even bother with small caps, my goal is simple, I have a big portfolio, I want that portfolio to give me a high yield and thus more shares which give me more and more income. Then my goal is to allow that theory to play out quarter after quarter while I add new fresh cash deposits. It's not rocket science. It's compounding.
You're right, Im just a shmuck convenience store owner. I fell into the business I'm in now, but I spent my formidable years in finance.
I don't sell any of my shares, so the only "tax" im hit with is the 20% on the dividend, which is income, and when its combined with my other income minus all the deductions I have these days it's really not too big a deal. I wish my entire income was taxed at 20%.
So having an MBA and working as a banking analyst for years leaves me with no experience?
I just never had any interest in tax deferred accounts I couldn't touch till I was 60, I knew my goal was to save,invest, retire much earlier than the norm.
If someone wants to buy small caps, go ahead do the ETF, I personally don't even bother with small caps, my goal is simple, I have a big portfolio, I want that portfolio to give me a high yield and thus more shares which give me more and more income. Then my goal is to allow that theory to play out quarter after quarter while I add new fresh cash deposits. It's not rocket science. It's compounding.
You're right, Im just a shmuck convenience store owner. I fell into the business I'm in now, but I spent my formidable years in finance.
I don't sell any of my shares, so the only "tax" im hit with is the 20% on the dividend, which is income, and when its combined with my other income minus all the deductions I have these days it's really not too big a deal. I wish my entire income was taxed at 20%.
This post was edited on 6/24/13 at 11:08 am
Posted on 6/24/13 at 11:01 am to jimbeam
I've read Random Walk Down Wallstreet, guess that's why I stick with index funds mostly.
Posted on 6/24/13 at 11:06 am to ThaBigFella
quote:
I just never had any interest in tax deferred accounts I couldn't touch till I was 60, I knew my goal was to save,invest, retire much earlier than the norm.
FWIW I've heard this before and I never understood it.
It only makes sense if you plan on dying before 60 too.
You don't have to sign an exclusivity agreement with an IRA.
You can reap the tax savings, using money in a taxable account to fund retirement before 59.5.
It can sit there growing tax shielded until the money in your taxable accounts runs out, then you can switch.
That's the main thing I don't understand about your approach TBH.
You go on and on about the impact of a fraction of a percent fee, but you are fully tax exposed which is costing you 15% on dividends.
This post was edited on 6/24/13 at 11:09 am
Posted on 6/24/13 at 11:10 am to Volvagia
Volvagia I'll be honest, I really never knew much about those things, I was always the type that just worried about myself and knew that one day when I was 60 no matter what I was going to have money from my parents. I'm one of 3 children but our parents have significant assets so in my mind, my future was pretty safe and my dad had always discussed with my brother and I how when he was ready to retire we both had a good job waiting. Like I said he has 9 stores and his brother had 4. Unfortunately his brother is gone today and I was left the 4 stores.
So basically I always knew I would be making a significant salary at some point and thus I knew working till 59.5 wasn't in my future so I just ignored that notion altogether.Secondly I contributed well over $5K/year so that wouldn't have worked either.
but you're right I should have probably looked into it, but that's hindsight now bc I exceed the threshold mentioned now.
So basically I always knew I would be making a significant salary at some point and thus I knew working till 59.5 wasn't in my future so I just ignored that notion altogether.Secondly I contributed well over $5K/year so that wouldn't have worked either.
but you're right I should have probably looked into it, but that's hindsight now bc I exceed the threshold mentioned now.
This post was edited on 6/24/13 at 11:16 am
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