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Post by kathiel on May 3, 2023 1:38:01 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income.
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Post by steelpony10 on May 3, 2023 11:06:17 GMT
kathiel , Hey what’s new? Not anxious but happy for me. Let our pros work for us. See how they do under stress. Of course I agree no lifestyle impact. This is another income investors blowout sale which seems may last awhile.
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Post by colorado on May 5, 2023 15:51:21 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income. I feel much the same way, for now. During this period of the market moving to higher rates, I prefer less drama of income investing. When the market finally adjusts to the reality of not being a zero interest rate market with government offering ongoing stimulus support, I suspect we will have more investment options that look attractive.
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Post by kathiel on May 6, 2023 19:04:30 GMT
steelpony10, not much is new. During this time in the market, I haven't ben buying or selling much, but I have been reading the economic commentary. I'm amazed by how many people have been insisiting that a recession (or stagflation) is just around the corner, despite the data that shows the exceptionally strong job numbers, historically low unemployment, etc. It makes me wonder who benefits from people believing that a recession is imminent. I did pick up just a little Microsoft back in September for $237. It was a time when I wished I had more cash in my Roth. Speaking of cash the only new thing I've done this year with my money was to put idle money into a high-interest savings account (currently paying 3.75%) and some into a CD at 4.15%
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Post by steelpony10 on May 7, 2023 10:50:41 GMT
kathiel , That’s good. I read economic commentary for the snicks. My view is similar to yours. When I was learning, my experienced mentor led (forced 😂) me into opening investments into MSFT and AAPL in the late 80’s. I never thought a ROTH would work for me after running various scenarios and assumptions on practice Fed tax forms. My kids all have Roth’s though. Well getting investors to churn their accounts used to benefit the industry. Bad news constantly makes one not spend as much so fear keeps management fees higher longer. It’s the one cent a gas fill up model. We just spend part of the extra cash each month plus we’re doing more extensive house maintenance this year. Hope all stays well with you. Keep in touch.
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Post by uncleharley on May 7, 2023 12:47:48 GMT
I heartily agree with both of you. My only reservation is that I have had success by investing both for income and for capital gains. I am delighted with the income returns I am getting from my CEFS, but it is also wonderful to see the price of my miners climbing on up the charts. Unfortunately most people never develop the skill that is necessary to deal with the volatility that comes with capital gains. I especially agree with Kathies statement of the dominant comments about how tough the economy is going to be. Mainstream Media has gone Tabloid a long time ago and is of very little use to a serious investor. As always, JMHO.
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Post by colorado on May 7, 2023 13:08:05 GMT
I heartily agree with both of you. My only reservation is that I have had success by investing both for income and for capital gains. I am delighted with the income returns I am getting from my CEFS, but it is also wonderful to see the price of my miners climbing on up the charts. Unfortunately most people never develop the skill that is necessary to deal with the volatility that comes with capital gains. I especially agree with Kathies statement of the dominant comments about how tough the economy is going to be. Mainstream Media has gone Tabloid a long time ago and is of very little use to a serious investor. As always, JMHO. "serious investor"? There are many kinds of investors, in many different life situations, with many different legitimate portfolio objectives. Some of the most dedicated and "serious investors" are dedicated "income" investors.
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Post by Mustang on May 7, 2023 13:31:23 GMT
I heartily agree with both of you. My only reservation is that I have had success by investing both for income and for capital gains. I am delighted with the income returns I am getting from my CEFS, but it is also wonderful to see the price of my miners climbing on up the charts. Unfortunately most people never develop the skill that is necessary to deal with the volatility that comes with capital gains. I especially agree with Kathies statement of the dominant comments about how tough the economy is going to be. Mainstream Media has gone Tabloid a long time ago and is of very little use to a serious investor. As always, JMHO. "serious investor"? There are many kinds of investors, in many different life situations, with many different legitimate portfolio objectives. Some of the most dedicated and "serious investors" are dedicated "income" investors. Most people who manage their own money are very serious about their retirement portfolios.
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Post by Chahta on May 7, 2023 13:35:16 GMT
My income is doing fine. But then again I don’t use it, I reinvest it. As ususal balances rise and fall.
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Post by FD1000 on May 7, 2023 20:58:03 GMT
The usual, income is only one part of total return. TR is the only number that matters. Investor X annual income = 7% and TR = 8%. Investor Y annual income = 2% and TR=10%. Investor Y is the winner regardless of anything. It doesn't matter if you need 2,4,6% from your portfolio. It's just simple math.
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Post by kathiel on May 7, 2023 23:30:50 GMT
FD1000, I want to have enough 'income only" cash to meet my needs to maintain my lifestyle. In order to access cap gains, you have to sell. With stock prices down lately, I wouldn't want to have to sell something in order to withdraw the money I need to pay my bills.
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Post by win1177 on May 8, 2023 1:39:12 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income. Agree 100% Kathie! My income is from my dividends, plus the income from my money markets/ bond funds. It is more than I made as a practicing MD, which is pretty hard to believe. Have always stuck with primarily investing in dividend growth stocks, especially stocks that had raised dividends for at least 10 years. Have a few non dividend payers (GOOG/ GOOGL, BRK.B, AMZN). I also wanted companies with strong wide moats, that had the competitive strength to endure future challenges. Many of them have also given us capital gains, but most of those are unrealized. It’s nice to see that growing income, and I try to avoid getting “bothered” when the account balances go down. I’ll research it, but 95% of the time it’s just market fluctuations. Very little “action” on my part, other than periodic reinvesting and adding to bond funds. Win
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Post by chang on May 8, 2023 11:06:48 GMT
The usual, income is only one part of total return. TR is the only number that matters. Investor X annual income = 7% and TR = 8%. Investor Y annual income = 2% and TR=10%. Investor Y is the winner regardless of anything. It doesn't matter if you need 2,4,6% from your portfolio. It's just simple math. Even if the results looked like this: Investor X annual income = 7% and TR = 7% Investor Y annual income = 0% and TR = 7% I would still rather have the TR. Why: because (LT)CGs may be taxed at a lower rate than income (of course, there are a number of variables here). Moreover, you can choose whether to sell and pay the CGs or not. That is, if your investment income exceeds your cash needs, then you've unnecessarily paid taxes on income you didn't need.
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Post by mnfish on May 8, 2023 12:19:06 GMT
Just so no-one here is fooling themselves, we all want our investments to have a total return. Price and dividends are both important. My highest dollar dividends come from AAPL and ORCL which are also my highest TR stocks. My highest % divs come from MLPs which are all my lowest TR stocks. I've owned ORCL since 1995. If we had all been invested in BRK.A since 1995 would we care if we had to sell a little to spend even though it has never paid a dividend?
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Post by FD1000 on May 8, 2023 12:28:29 GMT
The usual, income is only one part of total return. TR is the only number that matters. Investor X annual income = 7% and TR = 8%. Investor Y annual income = 2% and TR=10%. Investor Y is the winner regardless of anything. It doesn't matter if you need 2,4,6% from your portfolio. It's just simple math. Even if the results looked like this: Investor X annual income = 7% and TR = 7% Investor Y annual income = 0% and TR = 7% I would still rather have the TR. Why: because (LT)CGs may be taxed at a lower rate than income (of course, there are a number of variables here). Moreover, you can choose whether to sell and pay the CGs or not. That is, if your investment income exceeds your cash needs, then you've unnecessarily paid taxes on income you didn't need. I was intended to post it but the plane took off, I'm finally home. I wish my stocks had never paid one cent. Many times in the past when I invested in my taxable account, I used funds that paid lower distributions if the other criteria were about the same, even with bond funds. * Buffett: one of the best investors in the last 50 years looks at intrinsic value, moat company, economic value added (EVA) calculation, which estimates a company’s profits, after the shareholders’ stake is removed from the equation...and sure, he likes dividends, but only after the other criteria met. What is by far Buffet highest holdings? AAPL at 46% of its stocks( link). Buffett also teaches us another rule: don't diversify if you know what you are doing, otherwise use the SP500 * Investors who claim that their high div stocks did OK, I can say that I the lower-no div companies made a lot more money. The best successful companies as a group since the 80s were in the high tech category and their price have done better. In the top 10 companies in the SP500, 7 are high tech, I would rate BRKA also as a high tech. High tech as a group is already at 25-30%. Price matters, everything else is noise. * Value/higher div (not very high div) has its time. When growth makes so much more money for years and left value in the dust, and growth is overvalue, then value makes sense, that happened after 1999 for several years, and again in 2022. * Then it gets blurry using MLP, CEFs, Preferred, and other NOT mainstream investments. Many of these investors are traders. * Selling stocks to fund your retirement doesn't hurt your portfolio performance, its a myth that have been told for years. I have posted many times SPY vs PDI where someone needs 4-6%(or more) annually, and SPY was so much better, after selling shares. So, if someone wants the own stocks, the first question must be what are the best companies to own where I will make the most. If 2 companies are close but one pays 3% while the other pay only 1%, then you have a case, but why start looking only at companies who pays a min of 3-5%?
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Post by colorado on May 8, 2023 13:58:22 GMT
FD1000 , I want to have enough 'income only" cash to meet my needs to maintain my lifestyle. In order to access cap gains, you have to sell. With stock prices down lately, I wouldn't want to have to sell something in order to withdraw the money I need to pay my bills. Kathie, your investing decisions, and stated explanations, make sense to me. You are doing what works for you, and your personal priorities. It may not be the preferred investing approach by others on this thread, but they are walking in different shoes than you.
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Post by Deleted on May 8, 2023 14:17:24 GMT
Sequence of Returns Risk is a very real thing. It may be irrelevant for those who will never run out of money regardless of market direction but many of us are not in that position. That said, I think a lot of investors take on unnecessary risks in super high distribution portfolios. Like most things in life, there is need for balance.
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Post by Chahta on May 8, 2023 14:20:17 GMT
Just so no-one here is fooling themselves, we all want our investments to have a total return. Price and dividends are both important. My highest dollar dividends come from AAPL and ORCL which are also my highest TR stocks. My highest % divs come from MLPs which are all my lowest TR stocks. I've owned ORCL since 1995. If we had all been invested in BRK.A since 1995 would we care if we had to sell a little to spend even though it has never paid a dividend? That is not the case at all. Many here have stated that the income is primary and they don't care what the value is. If one is heavily invested in and not trtading leveraged CEFs, that must be the case.
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Post by chang on May 8, 2023 15:00:50 GMT
Just so no-one here is fooling themselves, we all want our investments to have a total return. Price and dividends are both important. My highest dollar dividends come from AAPL and ORCL which are also my highest TR stocks. My highest % divs come from MLPs which are all my lowest TR stocks. I've owned ORCL since 1995. If we had all been invested in BRK.A since 1995 would we care if we had to sell a little to spend even though it has never paid a dividend? That is not the case at all. Many here have stated that the income is primary and they don't care what the value is. If one is heavily invested in and not trtading leveraged CEFs, that must be the case. I have to confirm what Chahta said. Well, okay, if you put the question "all other things being equal, would you prefer your assets' NAVs go up or down?" then anyone will say "up". However, some (many) income investors have proudly asseverated that they do not care whether NAVs go up or down; only the income stream matters. Personally, I cannot subscribe to this viewpoint, even though I am a LT / B&H investor and I am willing to put up with paper losses and stay the course. But I choose assets with quality and TR potential in mind (income + CG). I think one can get into trouble if income is the only criterion (think ADVDX, DCS, etc.). Having said this, I actually do like dividend paying stocks. At the risk of making a gross over-generalization, a dividend (especially one that has grown over decades) demonstrates financial strength and stability. Second, it is easier to hold a good but volatile stock if it throws off a nice dividend (case in point for me - RIO). In fact, my portfolio (stocks and funds) are geared toward dividend income, with growth and tech tucked away in my Roth.
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Post by rhythmmethod on May 8, 2023 15:41:36 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income. I feel 'ya. Though for me, it isn't either/or. I just trimmed a bunch of MSFT and AAPL that I was way overweight and will turn it into income, likely via CEFs on a soon-to-be wall of worry. Turning growth into income is the closest I know of turning water into wine. I'm not out to beat a hypothetical benchmark. I want to increase my standard of living and insulate myself from Mr market's day-to-day drama while still participating in the tidal waves. To each their own. Good luck - RM
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Post by kathiel on May 8, 2023 17:42:36 GMT
My investments are almost all in IRAs, so the tax issues are irrelevant, as I pay the same rate on all withdrawals from my IRAs.
We all are in different circumstances, and so have different needs, different investment goals.
I do sell stocks from time to time when a stock is overweight in my portfolio. I'm 100% in individual stocks, and my rule is that no one stock should constitute more than 5% of my portfolio.
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Post by FD1000 on May 8, 2023 18:30:52 GMT
I was never either or. It's not about being different, it's about making money. That's similar to someone who owns only MM for 50 years and claim they are different.
Let's do a little test, you all know I don't like ATT. 1) Why anyone owned it for years?
2) Suppose you have 2 choices ATT vs MSFT,AAPL for the next 10 years, why would you own T? The only reason would be is high div, but it's still not a good company. Owning both is still not a justification.
3) If you buy single stocks and you never owned MSFT,AAPL you don't have an excuse. So again, the div isn't the problem, owning inferior companies just for the div is the problem.
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Post by johnsmith on May 8, 2023 19:16:54 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income.
At the end of the day, investing is a tool.
Do what works best for you.
There are 3 things to remember - diversify (index funds are good)
- reduce costs (vanguard has low costs) - be able to sleep with the risks you are taking. (Cash, Bonds, Stocks; Use Bucket system; whatever gets you to your sleep point)
Wether one trades a lot. Trades a little. Buy and Hold. Income investor.
When all 3 of the above are covered, you'll find that on the whole things should turn out alright.
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Post by mozart522 on May 10, 2023 22:16:02 GMT
Money is fungible. It has no clue if it came from a dividend or the sale of shares. The stock, fund, portfolio, and so on with the highest total return over some period can produce the most "income". This is particularly true in tax-advantaged accounts when everything is taxed as ordinary income anyway. There is nothing wrong with investing with dividend income as a goal. But recognize that you are still getting a total return, which is the only real measure of an investment. If a dividend investor continuously receives a lower TR than the income he/she produces and spends, the portfolio value will decline. The same is true if you spend more than your TR.
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Post by FD1000 on May 10, 2023 22:33:07 GMT
Money is fungible. It has no clue if it came from a dividend or the sale of shares. The stock, fund, portfolio, and so on with the highest total return over some period can produce the most "income". This is particularly true in tax-advantaged accounts when everything is taxed as ordinary income anyway. There is nothing wrong with investing with dividend income as a goal. But recognize that you are still getting a total return, which is the only real measure of an investment. If a dividend investor continuously receives a lower TR than the income he/she produces and spends, the portfolio value will decline. The same is true if you spend more than your TR. Bingo. One of the tennis players in my club sold his company for over 10 million in the early 90s. He invested over 90% in Munis. He is doing great, but he could definitely do better with 30-40% in stocks with a bit more risk/SD while his portfolio risk-adjusted return would be better.
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Post by Deleted on May 10, 2023 22:46:54 GMT
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Post by steadyeddy on May 10, 2023 23:07:15 GMT
Watching the market (and my portfolio balances) fall, I'm so glad to be an income investor as I don't feel anxious about the decline in balances, as it has no impact on my income. I feel 'ya. Though for me, it isn't either/or. I just trimmed a bunch of MSFT and AAPL that I was way overweight and will turn it into income, likely via CEFs on a soon-to-be wall of worry. Turning growth into income is the closest I know of turning water into wine. I'm not out to beat a hypothetical benchmark. I want to increase my standard of living and insulate myself from Mr market's day-to-day drama while still participating in the tidal waves. To each their own. Good luck - RM rhythmmethod, the concept you presented here in this post is definitely worth thinking through for me. Love the analogy of water to wine. 🍷
Most financial advisers talk about cash flow & income generation before/during retirement.
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Post by FD1000 on May 11, 2023 3:48:14 GMT
The above doesn't discuss income, it talks about TR because the only thing that matters is TR which includes the income. The word "income" relates to the withdrawals. The following is a simple example I posted dozens times. PDI vs SPY for 5 years during 2018-2022. Let's assume our retiree have one million Dollar and needs $4K per months. We already know that PDI dist easily supply the income, while you have to sell shares in 3 bear markets of 2018+2020+2022. The numbers ( link)show that our retiree would be much better investing in SPY....BECAUSE HIGHER TR ALWAYS EQUAL BETTER RESULTS. After 5 years taking out $4K monthly PDI shrank to $841K while SPY finished with $1.276 million. BTW, PDI paid 5 times more income.
From the article "Protecting against sequence risk means anticipating a worst-case scenario" it has nothing to do about income and everything to do about total loss or gain which are TR.
So, the above example proves that we had 3 bear markets in 5 years, PDI paid 5 times more than SPY, but SPY was the better choice by a huge margin because it's performance=total returns was better.
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Post by mozart522 on May 11, 2023 12:41:07 GMT
Taking income in a down market for expenses is no different than selling shares in a down market for expenses. Both reduce the portfolio value and can possibly impact longer term sustainability. Taking income is "selling" an investment.
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Post by steelpony10 on May 11, 2023 17:24:04 GMT
Taking income in a down market for expenses is no different than selling shares in a down market for expenses. Both reduce the portfolio value and can possibly impact longer term sustainability. Taking income is "selling" an investment. mozart522 , Can you clarify why living on bond, CD or dividend interest only to suppliment SS and/or other income could reduce a portfolio’s value long term? I can see in these types of markets when a cash reserve is depleted, one is forced to eat into lower capital gains or cost basis holding equities (only?) could hurt long term. High inflation just quickens the process without cutting spending. I know kathiel is talking about dividend income and I receive income from another investment (bond) type. There’s nothing to sell for either of us.
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