I cut and pasted this from a longer article I was reading. I think it shows younger investors ---- that you don't need to chase Bitcoin --- or Faceybook --- in order to retire "wealthy". You just need to INVEST.... and stick to it.







For younger investors with long-term investing horizons, the reason for this comes down to the reasonable certainty of return from a dividend stock with higher yield, versus the more uncertain return from capital growth that lower yielding dividend stocks are dependent on. This is a return that is highly reliant on "Mr Market's mood."

Companies like McDonald's (MCD), the Coca-Cola Company (KO), Pepsi Co (PEP) and Kimberly-Clark Corporation (KMB) all offer dividend yields of near 3% or more. For investors in these stocks, dividend return contributes a significant amount to the total return that an investor derives. Further, an investor is able to accelerate their investment growth and dividend income by reinvesting that dividend income over time.

In contrast, stocks like Visa, MasterCard, American Express (AXP) and Moody's (MCO), which have provided reasonable dividend growth over time are far more reliant on strong capital returns to generate total return for investors. These stocks all offer dividend returns of 1.5% or less.

The significance of such a strong contribution from dividend income to a investment return should not be understated. Dividend income makes a significant contribution to a stock's total return and can form the basis for close to 50% of a stock's total return on average, and even more so during periods of poor stock market performance.

Additionally, the impact that reinvestment of dividend income makes on a portfolio return should not be overlooked. Consider the example of an investor who had invested in McDonald's 10 years ago. An investment of $10,000 in McDonald's without dividend reinvestment would be worth close to $66,000, and provide you with an annual dividend income of almost $1800. An investor who had reinvested McDonald's dividends back into McDonald's stock would have an investment value of almost $73,400 and an annual dividend of almost $2500.

The power of dividend reinvestment on investor wealth creation can really be seen over a very long term time period. An investor in The Coca-Cola Company who invested $10,000 about 50 years ago would have had a stock value of almost $500,000. If you think that's impressive, consider the scenario where those dividends were reinvested. That same investor would have almost $1.75M in stock investment in The Coca-Cola company.

So younger investors who are able to stick with a long-term plan and reinvest their dividends over the long term will be significantly advantaged in terms of both capital growth and dividend income. Of course this assumes that they retain the conviction and discipline to stick with such a strategy over many years. It doesn't take much to knock this confidence away, such as devastating bear market or recession of the likes that we saw in 2008 - 2009.

The key with any investment strategy is that you can you stick with it long enough to make it work and see the returns. This is where higher yielding, but possibly slower dividend growth stocks should be preferred in a younger investor's portfolio. While companies such as a Verizon (VZ) or AT&T (T) may not have the high growth, high return profile of a Visa or MasterCard, a young investor in these types of businesses is getting the advantage of a stable, reliable dividend from a company, which can be reinvested and put to work.

Verizon and AT&T pay out hefty dividends in the range of 5% and also experience less volatility than the broader S&P 500. In other words, higher-yielding stocks give you an incentive to stick around and give the dividend growth strategy time to work. You get paid to wait, even if there isn't any immediate capital appreciation for some time. Additionally, investors in higher-yielding stocks such as Verizon have experienced handsome longer-term returns; for investors in Verizon close to 9% per annum over the last 10 years.

Not only do you get paid to wait, but more importantly, higher-yielding stocks help provide a buffer against considerable market fluctuations. They help make it less likely that downturns in the market will result in younger investors getting scared by volatility and selling out. This is because these higher-yielding stocks can still generate considerable total return purely from the contribution of a high dividend, in spite of the general turmoil that may be happening in the stock market.

Good article.. I believe i read that one on SA yesterday too. heheh.

It popped up on my feed due to me owning a bunch of the ones they mentioned in there. ;)

Bitcoin is not a stock like Facebook.. its an open source virtual currency. One that is safe from devaluation.

Really?? That's not the story I read! It's already been hacked
And the "currency" has swung wildly up and down.

While it's an interesting concept.... Usually the last guys in are
Left holding an empty bag. The concept has been tried many times
So there's history of this kind of stuff if you dig a little. This may be
Different this time.... But I'd say it's a gamble not investing. IMHO.

This was a couple years ago. But if you search.. You find the system is still
Being hacked.... I found articles about that dating January 2013


This particular article just has better basic information.


http://www.dailytech.com/Inside+the+...ticle21942.htm

Here's a comprehensive list of the hacks and thefts if bitcoin.





https://bitcointalk.org/index.php?topic=83794.0

Like i mentioned.. too "high tech" for my tastes...

Open source is great, for a software for the greater good of the community. Such as a Security software. NO ONE wants to get hacked. especially the developers. Thus they donate their time to be as secure as possible. Multiply the contributers by 10 fold and you have a LOT of great minds to put something together and at VERY low overhead. Thats a GREAT reason for open source.

Now, dangle the fact they can have MONEY to do this. These same programmers when faced with the fact of "i can donate my time to make bitcoin more secure. OR, i can use my time to find loopholes in bitcoin and potentially make myself rich.".

Are you willing to gamble YOUR money on the fact that most/all programmers/hackers will be MORALLY SOUND? Not me.

Thus, a little too "high tech" for me.

The link comes up empty.. but I'll correct myself, the value of it depends on the user market.. so no, its not exempt from devaluation, but the good news is the users control the value instead of a central bank.

Peoples wallets have been hacked before, but it is correcting. Any bitcoins you have are stored in a wallet, and that is kept on your computer or a flash drive, offline. Like any wealth anywhere, you need to protect that. There are so many layers built into the system that makes it pretty secure. But its at a record level $90 each, someone out there should try to hack and steal right? With its growth, we are already seeing more levels of security built in.

This concept has never been done before as far as I know. It's completely user driven, peer to peer. I've always thought that competing currencies was a good idea, no one should be forced to use just one. And as for investing, many invest in other currencies for security.

I think the whole bitcoin thing is fascinating, it will be interesting to see how it plays out.

The link is about the dutch tulip bubble, where by dutch people went insane paying thousands of dollars for tulip bulbs, that is thousands of dollars in todays money.

It sounds ridiculous, why would someone pay 2k for a tulip bulb? And that's how it is AFTER something melts down, it sounds ridiculous, even to (sometimes formerly) rich so called smart people.

Have you seen the internet? Do you want the internet people controlling the value of anything you have?

Great question! I'm pretty sure that's why this thread was named "Investing 102" rather than "Hey! Let's gamble!"



:lol: :lol: :lol: :lol:

You'd think that with the fantastic run up in equities -- that this thread would be lit up like a neon sign.... yet it seems to have fallen off the radar.


What? <think of the scene in The Birdcage>

Hey Greg, yes this thread does quiet down from time to time, but i read it every day, i dont have much to contribute in terms of experience, so rather that just babble, i just read and learn. I bet three hundred to a thousand "read only",

But the readership on this topic fluxuates like the market haha.

But I can bet you dimes to donuts, when sh!t hits the fan again, the readership will see numbers to the moon. When everybodys fat, who needs a meal, know what i meen?

Mike

So true!



A market like this lulls people to sleep.... it's way too easy! Every day it just goes up. Good for the old psychology... makes everybody FEEL smart and right and wonderful <remember what you felt like when your house doubled in value every month!>. I will say though -- that if people have made GREAT choices --- they should still sleep easy when it's not so hot --- and that's the key to good investing. Being able to rest easy with what you own. It's like owning a good house in a good neighborhood --- it's fundamentally important that you love the house and the neighborhood FIRST.... the value is only important when you finally decide to sell.

And I like what you said about the "employee" part, you good employees working for you when your sleeping or away....my company's getting like that, finally, after seventeen freakin years!

Good for you!


I know many people that work their butts off long hours and for years --- and then after 20 years or so they look around and they're running a pretty nice little business.... it's just that at the time... they're caught up in the day to day and are too busy to stand back and see what they've built!


Like my old partner used to say... "we'd have a really nice business if it wasn't for all these damn PITA customers".

I don't post in this thread a lot but I read it. :popcorn2:

Happy Easter, people.

yeah, i hear ya... it has been a nice run. my newly re-situated 401k is doing fairly well thus far. But, sadly to say I've been quite busy. My dads health hasnt been good for quite a while, and he just underwent a major hurdle in his Congestive Heart Failure situation. i wrote a thread about it in the Off Topic forum. He's been in the hospital the past month, and mom's been living over there in an apartment. Which is about a 2-2.5 hour drive. So my friday afternoons/saturdays have been spent trying to stay over there. While during the week juggle work, the work at my house and keeping my parents place up and trying to re-organize the house (de-clutter it), in preparation for their return home. The past 3-4 weeks have been hectic.

On a good note, I finished my "Total Money Makeover" book today. Started our house budget for April and looking forward to saving some money up for my emergency fund again, and then back to saving for investing/future. :)

Sorry to hear about your Dad! I didn't see the thread. I'm sorry to hear this news. Brought back memories of when my Dad was in one hospital from a heart attack - and my Mom was across town in another hospital with Congestive Heart failure and COPD.... Both in intensive care! OMG ---- it's all I did was go back and forth like a ping pong ball.

Life is what happens to us while we're busy making other plans....

yeah.. ping pong ball. thats about what it feels like! lol. or a rag, being pulled every which direction by a pack of dogs. lol. You mom had CHF too? wow.

Oh yeah --- CHF and COPD.... and still smoked up a storm even while having to be hooked 24/7 to oxygen. Sorry smokers... you're just D U M B.


She lived 4 more years in a private nursing home (5 people lived there) - sitting in a chair - too weak to care for herself.... costing me a small fortune. Cost me an extra $5 per cigarette because someone had to take her outside and be with her while she puffed away. That's some addiction right there!

:lol: It's clear that there's a lot to learn about bitcoin, but I'm enjoying the reactions. :lol: "internet people" :lol:

Valuation bubbles happen all the time with fads. Bitcoin is emerging right now, but still very much under the radar. It's the antithesis to establishment central banking right now. For that reason alone, it holds great risk as the eye of Sauron looks on. Unless some major 'event' happens, I don't see a mass exodus or devaluation out of using Bitcoin. Either way, it'll be interesting.

Corrections just don't happen in tulip markets :lol: Everything's a gamble. In 2008 many investors lost huge. Now look at the dollar, look at the debt, look at the EU/euro. When the Fed stops pumping, then what?... tick... tick... tick...

Boy Greg, you said a mouthful there..

Health Issues will eat through money like termites through wood..

I have been too busy lately dealing with my own health care issues, and even with great Insurance, I still have to pay thousands for my share..

I should of, would of, could have taken better care of myself....Spilled Milk.:snapout:

So you younger Guys follow the Health thread and take good care of yourself...Otherwise the money you Save and Invest will get eaten up later by Hospitals and Doctors...

MIke

Oh wow. Thats too bad. :(

My Dad's CHF is a result of CHOP Chemo he had to undergo during his 2nd round of Non-Hodgkins Lymphoma Cancer that he had in the late 90's. the LVAD pump (think electronic water pump, but hookedup to the heart and pumps blood instead) will (hopefully) be a short term fix until he is healthy enough to undergo a full on Heart Transplant. Assuming he gets that far. he's having some trouble right now (not with the device, but seizures and some mental issues). Talk about a scary road. :brix:

Sorry to hear about your parents Greg.

Wise words Mike. Hope you're doing well.

Good to hear from you Mike!


Keep up the good fight buddy!



:grouphug: :headspin: :D

I don't know anything about bicoin, but from what others are saying here it looks like it may be a very risky stock. Sure the stock market has risks, but if you invest in solid companies and diversify, you greatly reduce your risk. You mention 2008 as an example in the stock market. I was invested in 2008 and did not lose, because I did not sell when everyone else was panicking. My portfolio is now worth much more than in 2008.

The difference is you are comparing one highly speculative stock that could go down signficantly and never come back up.

As far as what happens when the Fed stops pumping money into the sytem, who knows. They will likely stop pumping money into the system when they feel the ecomomy is strong enough, so maybe nothing happens.

If you watch CNBC at all there are so many people who claim to know what is going to happen, but no one really knows. For those that have been around long enough, do you remember Harry Dent. Many years ago he wrote a book projecting the Dow would go to 15,000 within a few years. He had all kinds of great reasons why it would hit that level. I believe that was in the early 2000's some time. Now he is claiming the Dow is going to go back to 6000. I would be willing to bet he will be wrong on that prediction as well. Unfortunately people listen to these guys.

Woody --- Bitcoin is NOT a stock -- it's a "currency" that is traded on it's own exchanges. So not only is it speculative - the entire concept is "electronic" - and is only worth what the next guy will pay. It can be used to buy stuff - but only from others that are willing to accept it as a payment.


I couldn't agree with you more when you say the talking heads on TV all have the answer for what's ahead. That's what makes a market - one guy selling - the other guy buying - both betting they're right and everyone else is wrong.

It's why I HARP on the INVESTING aspect of the market rather than all the hype and speculation. You've heard it before - buy good stuff - that pays a dividend - companies you know and understand etc.

Bitcoin is for "fun" and for speculators. Maybe it becomes something and maybe it doesn't. I won't care one way or the other because I'm busy making real money off my investments... I have an open enough mind to look - read - discuss... but that's as far as my interest goes. It's a bit ironic since I made my money off speculative deals --- but a man has to know his limitations and say when is enough, enough. Personally - that's where I'm at.

Hi Woody. I never meant this to be Bitcoin vs Stocks or anything. Like Greg said, Bitcoin is a digital currency. Just like the dollar, its backed by nothing more the the people who use its. The main difference is that Bitcoin can not be artificially distorted by central banking manipulation. It's a peer to peer, open source user driven system. I knew about them and was very skeptical when they were $1 each. When I brought them up here, they were $70. Today they are busting out at $104. This is a direct result of the outright theft that has occurred to the people of Cyprus having their money outright stolen from the Banks they kept their money in. All of EU is debt to the same bankers. Bitcoin at $103 today is still a GREAT deal, I believe, as this mess is only going to get worse in the EU, and people are looking for other options.

As far as Bitcoin being something for "fun" I would agree! But its very real. It valued at more that alot of sovereign currencies are! It's total value topped $1 billion and soon could rival the dollar and euro. And you can always exchange back into dollars at any time just like any other currency. Of course to dive in you need to be tech savy and that right there turns a lot away, or scares them. But we all know the role technology is playing in this future.

As for stocks, the people I listened to seen it coming. I sold my home right before the bust. Because I listened to all the people the "stock" shows were calling "Crazy"... I listen to the guys who proved themselves right by calling out where these bubbles are. They are saying the same thing about the stock market.. it's very much an illusion that's being propped up. We are simply on bought time at this point.

Greg you should just go for some Bitcoin... Get in and out, now is the time... then kick yourself later for now staying in!

Tony --- I've been IN the stock market and other investments for some 30 odd years now. I've been up and I've been down... but mostly I've been retired since I was 41 (I'll be 60 this summer) and I live a pretty nice lifestyle. I think I'll just keep doing what I'm doing. :thumbsup:

Tony,

I am showing my ignorance about bitcoin because I never did any research before posting. You were discussing in an earlier post how bitcoin moved up from a few cents to $70+ so I was just assuming it was a stock. Just for my knowledge how is bitcoin traded? I know it is not a currency future. Does it trade on an exchange?

I have nothing against speculation as I have done my fair share of speculating in the futures and options markets, but when you were discussing the stock market being risky, it appeared to me that you were comparing bitcoin to be on the same risk scale as the stocks we have been discussing in this thread.

I don't disagree that the stock market is a little scary to invest in after it has run up so much. However, I do not believe in the doom and gloom predictions some are making now. I have seen too many of these guys make claims that they called the top before. In reality, they called the top 2000 points ago and have been wrong for a long time. When the market finally does correct, and it will, they will say that they were right and called the top, but they won't tell you that they have been calling for a top for the last year all the while the market kept going higher. It like the saying "a broken clock is right twice a day".

The other thing I have learned is that sometimes, some of these so-called gurus actually make a pretty good prediction and hit the timing right. Then everyone thinks that this guru knows everything and follows every word they say. The problem is, they are usually never right again.

Just my opinions, not trying to start an argument. I have been pretty silent for a while and thought I might like to be a bit more involved in the discussions for the time being.

I was fooling around in my Schwab account this morning - just kind of reviewing the quarter that just finished (January / February / March) and compared some of the names I own in this account vs the Benchmark S&P 500

We always are talking about "investing" vs trading vs gambling etc -- so I find real actual numbers to do the talking vs the "I think" kind of statements...


Large Company - Benchmark S&P 500 46.21%



AT&T (T) has a 3 year cumulative return of 71.75%


Altria (MO) " " " " 98.93%


American International Group (AIG) " 84.76%


Consolidated Edison (ED) " " 57.79%


Kinder Morgan Partners (KMP) " 62.77%



Small Company uses the Russell 2000 Benchmark -- 50.94%



National Retail Partners (NNN) " 92.61%


StoneMor Partners LP (STON) " 69.36%


There's a few more in my personal account - but you get the drift.... it's too much typing to do them all... and by the way NONE of these are recommendations for anyone to own - they're just examples from my own account. If you have a Schwab account you can find this info for your own stocks and might find it interesting to see how you're doing versus a benchmark.

This is THREE STINKING YEARS.... and while none have actually doubled a couple are close. So beating a dead horse.... do you really need to gamble to make a few bucks? Will these numbers "hold" going forward? Who knows....
Have we had an extraordinary run since 2008.... Yeah... but we also went down "too much" so we have to average back up. Over the longer terms - we want good steady averages - and we shouldn't get caught up in the bumps and lumps along the way.

Brawk, brawk. :lol: :poke:

$108 today! :rules: (we will see $110 here soon)

It trades between individuals. There are miners (using software to "create" bitcoins, and there are buyers and traders. So someone like you or me are better off just buying them. Later you can sell them off, cash them out, or just keep them. They are literally a virtual currency. It's value comes from miners and people buying them (available). The interesting thing is, they can not be inflated. There is only a fix amount 21 million. So once they're gone, that would be it. Scarcity is built in, unlike the dollar/euro, where that is created by central banking and diluted.

I didn't really want to compare one between the other.. they are different, both hold pros and cons, both hold risks.

I've been listening to guys like Tom Woods, Peter Schiff, Ron Paul. These guys arent "stock" market guys really. Peter Schiff owns Euro Pacific Capital, but they are more Austrian economists who study monetary policy, and how markets react to that. All of them predicted the housing bubble and are giving us warnings about the dollar/euro. Their view is that you can't have this artifiical growth, create this massive bubble and have that correct the economy. Sort of like spending money to get out of debt, it doesn't work. So they think the dollar is being diluted, the market is being pumped up once again, the growth is an unsustainable, unnatural bubble that will pop once again. I happen to agree with that. There are a lot of countries getting out of the dollar. Because of all that, I think its wise to diversify in other things like Bitcoin, holding precious metals, property, etc. Just my .0002 bitcoins.

Here's an article today from Peter Schiff about the market situation

Flying High on Borrowed Wings
http://lewrockwell.com/schiff/schiff214.html

And for anyone who's never heard of him, here's a classic video mash up of him telling the future, not many were listening.

Words beyond wisdom. Money won't buy you health. Steve Jobs can attest to that.

Part of financial planning should be the "what if's" of future health costs. My father's passing was a real eye-opener for me in that his sudden departure was in many ways a blessing. He left life on his own terms and it did not have to destroy his estate to pay for in-home or nursing care (I didn't care if he died broke, but HE did.)

There are no easy or inexpensive options here. In the long run, if one wants to protect their assests and pass them on to their children the the best thing to do is talk to a tax and financial professional/lawyer and start planning now. There are timeline rules for what can, and cannot, be done for asset protection.

Carl...

I was 50 years old 3 years ago when suddenly I was on my Death bed and NO Will or Trust.:sieg: :lostmarbles:

My Wife called a Trust attorney and his Notary and he drove through heavy traffic at 400.00 an Hour plus the Notary wages, to rush to my Deathbed to notarize a Will and Trust at the last moment..

I did pull through and I am fighting hard, But I almost left my family at the hands of our thieving Government...:disgusted:

PLEASE, EVERYONE...No matter what your age, prepare and set up a Trust and Will and Advanced Health Directive for you and your Loved ones...

When something goes wrong, it happens fast and unexpectedly...

Investing does no good if the Government is just going to take it and leave your Family without your hard earned money..:G-Dub:

Here's an alternative I've started to do lately in addition to my retirement stocks.

Peer to peer lending via Prosper.com or LendingClub.com. Essentially you are buying notes for unsecured loans, in tiny slices.

I used prosper in the past and was less than pleased but with lending club it's been great minus one thing, how long it takes from the point where I put up money, until the note is issued. It is decidedly not an invest and forget endeavor.

Anyways, the idea is that people want to borrow money, to do things like consolidate other loans like high interest credit card debt, home improvement, small business loans etc. These are the types of loans you could get at a bank, but eliminating the bank means that people can borrow at a lower interest rate.

Other people, have money and want to earn a return. You can invest as little as 25$ per loan and the company in between services the loan and you collect the interest (minus fees).

In the case of lending club, the interest rates are between 6 and 25% based of course on the risk that the person who receives the loan will default. They have plenty of information to convey the risk, including their own scoring system, the persons FICO, various credit history details (how many late payments etc), their debt to income ratio, and so forth. They also have an area where the person can describe what they are using it for, but it's generally not ideal to let emotion control who gets your money.

The key thing here is that you need to diversify here just the same as anything else, by both investing in enough notes and spreading out your risk profile. The more notes you have, the less impact an individual note defaulting has on the overall portfolio.

The other big thing is that it is a loan, so the payments you receive each month, are principal + interest. Similar to dividend re-investing, but more importantly you have to re-invest these, since you get principal back.

The pros here are:

High interest rates - my blended rate is 10%, but you can go riskier and get 12-15%
Easy to use and manage
Lending club seems on top of rejecting shady applications, they say they accept only 10% of applications, and then they do more checking once a loan is funded.

The cons are:

Long delays to fund loans - Two weeks for me to fund 80% of the loans I have tried.

Lots of maintenance. If you had the suggested 20k+ invested, you'd have to re-invest in 20+ new notes every month, which generally involves checking every few days to see what has funded or not.

The tax issues are more complicated than most although they have streamlined the reporting they give you in terms of the interest you received, defaults etc.

Not very liquid. You can sell your notes, but it takes time to do so.

If I had more money, I'd do this I think. I believe in helping people and if one of the ways I could do that was to lend someone money, I'd consider it. However, I'd only be willing to put up money I could lose and not see again without hurting myself. While I'm not really a fan of big banks, they have their lending criteria for a reason.

Remember that INTEREST is taxed as INCOME.... and you're adding to your income -- so let's say that you make a $1500 a week... at your regular job...and have withholding at the appropriate tax rate. Now a year goes by and you've added 20 grand in INTEREST INCOME. So be careful of 'bracket jumping' your income!

That's why dividends are so popular - they're not added to your income... and are taxed at a fixed rate of 20%...


72,500 is the top at 15%... make 72,501 and you're now paying 25% on that last dollar earned.

In most states there is also a STATE income tax.... so you've got to factor that in as well.

I'm not arguing against doing this kind of diversification etc... What I'm pointing out to ALL that read - is that don't forget that income taxes play a HUGE roll in your overall investing strategy! Don't overlook them! They will and do, affect your net return.

Indeed, the tax side of things is complex but they do have IRA accounts which avoid that.

They also say you shouldn't have more than 10% of your money in this sort of thing because I imagine if there was another recession the defaults probably go up.