|
Buy-n-Holder Considers Heresy
01-30-2008, 04:19 PM
|
#1
|
Full time employment: Posting here.
Join Date: Oct 2007
Posts: 642
|
Buy-n-Holder Considers Heresy
I am a devout buy-n-hold, asset allocation, rebalance, low cost, diversification investor.
Here a heresy I've been casually kicking around:
Some kind of dividend strategy that produces 4% of the starting portfolio and increases by 3% per year, while also (over long time periods) maintaining a constant real capital amount. This may become easier if the stock market continues to drop and/or dividends come back into vogue. One possibility here is Wellesley or a high-dividend fund. Another possibility is a fund that sell covered calls (although I'm worried about the capital worth). The idea here is to generate living income through the dividends while not having to sell capital assests during a market downturn.
Thoughts?
__________________
"Making deliberate choices about how to spend your money and your time is the essence of making the most of your life energy." -Bill Perkins, Die With Zero
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
01-30-2008, 04:23 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Works great for me.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
01-30-2008, 04:31 PM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,153
|
FWIW: Asset Allocation with rebalancing is NOT buy-and-hold investing. Rebalancing involves selling some assets high and buying other assets low.
Investing for dividends - that actually IS a buy-and-hold investing strategy as you don't sell any of the underlying assets. It's just that you aren't reinvesting dividends.
Audrey
|
|
|
01-30-2008, 04:47 PM
|
#4
|
Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,501
|
Quote:
Originally Posted by TickTock
I am a devout buy-n-hold, asset allocation, rebalance, low cost, diversification investor.
Here a heresy I've been casually kicking around:
Some kind of dividend strategy that produces 4% of the starting portfolio and increases by 3% per year, while also (over long time periods) maintaining a constant real capital amount. This may become easier if the stock market continues to drop and/or dividends come back into vogue. One possibility here is Wellesley or a high-dividend fund. Another possibility is a fund that sell covered calls (although I'm worried about the capital worth). The idea here is to generate living income through the dividends while not having to sell capital assests during a market downturn.
Thoughts?
|
Nothing wrong with Wellesley that I know of. My plan is somewhat similar. I'll have enough from Wellesley dividends and various fixed income to live, and I'll have index funds to let my nestegg grow (mainly VTSMX Total Stock Market Index, and VFWIX, FTSE All-World Ex-US Index).
I won't have to sell the index funds during a market downturn, and during market upturns they'll soar (and I can buy more Wellesley with the excess if I want to). Hope it works.
I will continue to monitor my asset allocation and rebalance as necessary. During market downturns I will try to buy new index funds in order to complete my rebalancing, and hang on to the Wellesley.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
|
|
|
01-30-2008, 05:00 PM
|
#5
|
Full time employment: Posting here.
Join Date: Oct 2007
Posts: 642
|
audreyh1,
Good point! I'll start referring to myself as an asset allocation investor and drop the B&H.
CFB,
Any strategy is going to do well for someone. Where's the theory, the research, the historical results? Details, man, I need details!!!
__________________
"Making deliberate choices about how to spend your money and your time is the essence of making the most of your life energy." -Bill Perkins, Die With Zero
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
|
|
|
01-30-2008, 05:18 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Plenty, but its all backwards looking and a lot of the factors may not work going forward.
But as UM says..."agile, mobile, hostile" usually works out fine when evenly applied.
Maybe you spread the peanut butter around a little bit. Chunk of Wellesley, chunk of target retirement income, chunk of lifestrategy income, chunk of managed payout 3%, little of this, little of that...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
01-30-2008, 06:08 PM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,708
|
This is what I did, using individual stocks - a combination of top quality REITs
and large-caps. When I retired in 2006, my starting overall dividend yield was
about 3.5%, with an expected growth rate around 7% or so. So far everything
is going smoothly - earnings and dividends have been increasing as expected.
__________________
learn, work, save, invest, fire
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|