I am 47 and will retire in the next 0-2 years. I have a dividend-oriented
portfolio, and expect my total return will probably be about the same
as an index portfolio. However, the advantage of a dividend-oriented
portfolio is that I do not really care what the total return is - I will be
living on the dividends. As long as the companies perform well, keep
earning more money and raising dividends, I do not care what happens
to the stock price. Actually, I care a little bit - if valuations on the stocks
I like become out of balance, I will reallocate to take advantage.
In mid 1998 I switched to a 100% REIT portfolio (about 1.5 years too
early) because of the extreme undervaluation of them compared to
regular stocks (IMO). 2 months ago I rebalanced to a 30% REIT/70%
dividend-paying blue chip allocation as REITs finally became overvalued
(IMO). So far I am 2 months too early with the shift back, but I sleep
better at night.