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Re: Pimp my ride!
Old 06-20-2005, 08:26 AM   #21
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Re: Pimp my ride!

Uh er - I'll leave the nitty gritty for the longer winded/better typing posters.

It depends - dividend stocks can be played a lot of ways - some of them risky and dangerous.

Dividends are back on the hype/media radar IMHO - because of recent lackluster markets/lower project returns AND the recent 15% break on taxation.

Wall Street has been rolling out products left and right in recent years to feed the ducks.

So a reasonible degree of scepticism is warrented.

Two old saws - in the accumulation/savings phase - look at long term(10 -30 + yrs) record of rising dividends. - after/in ER - look for a balance of current div/div growth to help with inflation.

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Re: Pimp my ride!
Old 06-20-2005, 11:06 AM   #22
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Re: Pimp my ride!

TH, take a look at DVY (iShares Dow Jones Select Dividend Index).
This fund pays about 3.0% currently, has a ER = .40% with 2%
turnover. It is classified as a mid-cap value fund with avg cap of 4.5B.
It's P/E is 14.1 and P/B is 1.79.

I am thinking that it might be a good holding for part of your taxable
account because of the low tax rate on dividends and the low turnover.

I have not bought this yet myself but have been thinking about it.
I believe Ben has some and maybe Nords if I remember correctly. It
looks to me as if DVY could give Windsor II a good run for the money.
The only thing I don't like is that it is pretty concentrated in financials
(39%) and utilities (21%) ....... but thats where the dividends are.
It's an ETF that unclemick should love.

I know you don't like I-bonds but they are tax free if used for
education. You need to hold them in your name, however.... not
Gabe's. This would give you the option of using them for his
education or not depending on how the future unfolds.

Cheers,

Charlie
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Re: Pimp my ride!
Old 06-20-2005, 11:17 AM   #23
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Re: Pimp my ride!

Quote:
Originally Posted by charlie
I believe Ben has some and maybe Nords if I remember correctly.*The only thing I don't like is that it is pretty concentrated in financials (39%) and utilities (21%) ....... but thats where the dividends are. It's an ETF that unclemick should love.
8% of our retirement portfolio. It recently hit a 52-week high.

The demise of the financials, utilities, value stocks, and small-caps has been predicted for about five years now. So I've been looking for a small-cap value fund that invests only in financials & utilities!
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Re: Pimp my ride!
Old 06-20-2005, 11:55 AM   #24
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Re: Pimp my ride!

Art - a huge chunk of past stock returns have been composed of dividends, believe it or not! In the future, if one feels stocks are ovevalued (as I do) then there is a good chance a lot of future returns will come from dividends. Its also a long running trend that value stocks (which usually pay a high dividend) outperform growth and blend funds during most market conditions.
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Re: Pimp my ride!
Old 06-20-2005, 12:16 PM   #25
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Re: Pimp my ride!

Ok, but what do you think of this:

"Plan Ahead" mode should be used in all retirement planning calculations. Why? Because, prior to 1990, the average dividend yield was about 4.5%. Nowadays its around 2%. If you use the "Look Back" mode you would be building-in unrealistic return rates for your retirement planning."

"There are a number of academic studies that use the historic dividends (total return) to come up with estimates of future sustainable withdrawal rates. As prudent advisors and/or investors, you should avoid such traps and ignore those findings. Dividends cannot go back to their historic levels unless markets lose more than half of their value or companies double or triple their dividends in a hurry. In the meantime, be conservative and use the prevailing dividend rates, not historic ones. Remember, you are ultimately responsible and not some academic researcher."

At: www.retirementoptimizer.com go to Program User Guide/Strageic Asset Allocation go to Look Back/Plan Ahead

I'm not trying to pick a fight- I just respect your opinion on this stuff.


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Re: Pimp my ride!
Old 06-20-2005, 12:18 PM   #26
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Re: Pimp my ride!

Quote:
Originally Posted by Art
"Plan Ahead" mode should be used in all retirement planning calculations. Why? Because, prior to 1990, the average dividend yield was about 4.5%. Nowadays its around 2%. If you use the "Look Back" mode you would be building-in unrealistic return rates for your retirement planning."

"There are a number of academic studies that use the historic dividends (total return) to come up with estimates of future sustainable withdrawal rates. As prudent advisors and/or investors, you should avoid such traps and ignore those findings.* Dividends cannot go back to their historic levels unless markets lose more than half of their value or companies double or triple their dividends in a hurry. In the meantime, be conservative and use the prevailing dividend rates, not historic ones. Remember, you are ultimately responsible and not some academic researcher."
Art, have you been inhaling from the House of *****?

(EDIT: That row of asterisks decodes to h-o-c-u-s.)
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Re: Pimp my ride!
Old 06-20-2005, 12:29 PM   #27
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Re: Pimp my ride!

No, Nords- wasn't in that thread nor do I want to be- reading it was bad enough.

My question has to do with your opinion of the point made that pre-1990 dividends were 4.5% and post 1990 dividends are 2%.

If you don't know/don't have an opinion- that be cool with me.
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Re: Pimp my ride!
Old 06-20-2005, 12:34 PM   #28
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Re: Pimp my ride!

Art - I can get a 3% yield from several funds that load up on stocks I dont mind owning at all, very low risk. Not up to the 4.5% yields of yesteryear, but good. Since these stocks have also been appreciating at a nice pace along with that 3% yield, that makes them good. In down markets, I still get the 3%. In up markets, 3%+. Sideways markets, 3%.

In the few times growth outdoes value/dividend stocks (like the late 90's) its usually something unhealthy going on and it abruptly ends at a time thats not easy to predict.

In the meanwhile, 3%...3%....3%...
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Re: Pimp my ride!
Old 06-20-2005, 12:44 PM   #29
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Re: Pimp my ride!

I like it- which funds are these?
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Re: Pimp my ride!
Old 06-20-2005, 12:46 PM   #30
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Re: Pimp my ride!

H#*!s smokus!

After Firecalc and ORP - run ennumerable times - time to get off the pot.

Ding, ding, ding - and the winner is:

DA NORWEGIAN WIDOW!

Yep after record date this quarter - gonna get Vanguard to autodeposit divd/interest to checking. At least until 70 1/2 and they make me an 'offer I can't refuse.'

Big surprise - huh?
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Re: Pimp my ride!
Old 06-20-2005, 12:50 PM   #31
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Re: Pimp my ride!

So for the forseeable future, UncleMick, cash is king?
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Re: Pimp my ride!
Old 06-20-2005, 12:58 PM   #32
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Re: Pimp my ride!

Er ah - 3.056% - approximately -* although I could figure a little closer - but I'm trying to leave my left handed, INTJ, engineer, Leo past behind.

I sometimes have a tendency to over calculate.

I have to remember - in the real world - handgrenades are nicely effective in the right circumstances.

And I will try to lighten up - and spend the money.

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Re: Pimp my ride!
Old 06-20-2005, 01:15 PM   #33
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Re: Pimp my ride!

Quote:
Originally Posted by charlie
TH, take a look at DVY (iShares Dow Jones Select Dividend Index).
This fund pays about 3.0% currently, has a ER = .40% with 2%
turnover. It is classified as a mid-cap value fund with avg cap of 4.5B.
It's P/E is 14.1 and P/B is 1.79.

I am thinking that it might be a good holding for part of your taxable
account because of the low tax rate on dividends and the low turnover.

I have not bought this yet myself but have been thinking about it.
I believe Ben has some and maybe Nords if I remember correctly. It
looks to me as if DVY could give Windsor II a good run for the money.
The only thing I don't like is that it is pretty concentrated in financials
(39%) and utilities (21%) ....... but thats where the dividends are.
It's an ETF that unclemick should love.

I know you don't like I-bonds but they are tax free if used for
education. You need to hold them in your name, however.... not
Gabe's. This would give you the option of using them for his
education or not depending on how the future unfolds.

Cheers,

Charlie
Charlie - not familiar with that particular etf but it smells an awful lot like the equity income fund I mentioned above...3% yield, low PE, large cap value.

I considered ibonds for myself and for my neighbors kids college fund. Problem is they just dont make enough. At 1% plus fake inflation, college costs will easily outpace them. My IRA is loaded with reits, small cap value, healthcare and the like...I'll be 59+ when gabes college age comes around. Hopefully those equity rockets will keep up with college care. Thats the way I think i'm going to go with that part. I recommended the TIAA-CREF 529 plan to my neighbor, the 'aggressive equity' option. He's put nothing aside yet and his two boys are under 5. With several other kids in the same age range in the immediate family, he'll use it.

Bum - the only way gabes getting a brother is if some sort of severe brain damage strikes me. The first time I was left in charge of him for 72 hours straight my brain told my body to stop producing testosterone, and I believe my sperm count went negative. Not to mention at our age, the odds of getting pregnant ONCE is about 1 in 10 over a year long period. DW's lady doctor said it was very very unlikely to happen at all the first time. A repeat? (shiver) I had a nightmare that we had a second baby right now (a neat trick, that 4 month pregnancy). Woke up with the sweats

Yes, I want to gear to low taxation. If its a matter of making 10% and paying 33% taxes or making 7% and paying 5 or 10%, I'll take the latter. I'll even take a small downside hit to avoid paying a tax dollar if possible. I'm not at all impressed with what the government does with my money, so I'd rather not give them any of it, even if I come out on the downside a little.

Anyone with an opinion on using vanguards high yield as my nearly sole bond holding in the 25-30% range? I dont see a lot of risk in the next 5 years from defaults. Its been a risk free ~7% for the last 3-5 years.
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Re: Pimp my ride!
Old 06-20-2005, 01:17 PM   #34
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Re: Pimp my ride!

Quote:
Originally Posted by Art
I like it- which funds are these?
Vanguards equity income fund paying 2.77% (admiral shares) is my current target...charlies recommended etf is another good one.
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Re: Pimp my ride!
Old 06-20-2005, 01:27 PM   #35
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Re: Pimp my ride!

Here's a divi payer that's on my radar screen: NFJ

http://www.etfconnect.com/select/fun...sp?MFID=141336
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Re: Pimp my ride!
Old 06-20-2005, 02:14 PM   #36
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Re: Pimp my ride!

Bought the SO some Vg High Yield several years back - now maybe 2% of combined portfolio's. Bumped up her cash flow a tad and still kept her is the low tax bracket. Plan to hold forever.

With the duration and swings in high yield with interest changes - you have to prepare your brain for it's anticipated behavior under various conditions. Never to be tapped in an emergency and willing to take a lot of variation in NAV are keys here. Right guessing on interest rate direction would also be nice but not manditory.

30 - 35% is too rich for my blood - but if you can stay the course - Vanguard is probably one of the best - I'd be more worried about default risk with somebody else.

Oh yeah - I believe I owned some Equiry Income way back when they first came out - in my er ah multi asset days - when I also owned - psst Wellesley.
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Re: Pimp my ride!
Old 06-20-2005, 07:05 PM   #37
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Re: Pimp my ride!

I think Vanguard's Windsor II is a better large cap value fund than
either Equity Income or Dividend Growth. It has a better 1, 3, 5 or
10 year total return. I even like it better than DVY for my IRA.

IMHO, not TH, you may be chasing yield a little too much by committing
all your bond allocation to High Yield. I think GNMA is a safer long
term play. You also might consider Vanguard's Intermediate Term
Bond Index, which has a better return than any other of Vanguard's
intermediate term bond funds. In any case, diversify your bond
holdings just as you do your stock funds.

My $.02 for what it's worth.

Cheers,

Charlie
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Re: Pimp my ride!
Old 06-20-2005, 07:07 PM   #38
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Re: Pimp my ride!

Good advice Charlie...I'm pushing buttons here and seeing who calls bullpuckey. I sort of planned to keep some of my muni and gnma funds through the change, but if nobody thought a 30% high yield bucket was a bad idea, I'd have considered it.

I'll look at windsor II. Doesnt hurt that most of the vanguard brass hold windsor and windsor ii in large amounts...
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Re: Pimp my ride!
Old 06-21-2005, 01:05 PM   #39
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Re: Pimp my ride!

I think 30% high yeild is a bad idea. I'm about the same age as you and am in a similiar tax situation. I'm sitting at about 55% stocks right now. Most of the remainder is in ST corp fund, and intermediate munis (then some CDs, REIT, and cash). THe purpose of the bonds is to reduce risk and volatility in my stock holdings. Around 2000 my allocation was even more conservative. Saved my ER in 00-02. My understanding is that the High Yeild fund is more correlated with stocks performance. That's not what I want. I'd go with the intermediate index and Cali Muni (just enough to keep you under 25%). Adding High Yeild may be similiar to increasing your stock allocation. It would be interesting to look at the difference (growth, volatility) in adding more stock vs. HY.

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Re: Pimp my ride!
Old 06-22-2005, 11:34 AM   #40
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Re: Pimp my ride!

Hey TH(not),

Here is a good link on the Diehard Forum that shows the optimum
combination of Total Bond Market plus High Yield.

http://socialize.morningstar.com/New...mrr=1119452160

Cheers,

Charlie

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