$5500 if you're funding it yourself. Higher if you're over a certain age. In general though, they are great unless you find yourself in the tax brackets listed above. I do the majority of my investing within my Roth account.

Thanks guys....

Jointly the wife and I are under $160K, I sure hope my tax bracket now will be LOWER than my retirement tax bracket!! :thumbsup:

How much would you say is a minimum to start with? I'm a few months out before I can commit a decent chunk every month but I could swing a grand or so until then. Pick 1 stock and put a grand in it now?

Paying any debt that has a "high" (that's relative) interest rate is priority. Once it's paid off --- the catch is to not charge more than you can pay off each month... If you pay off a 10% loan -- it's the equivalent of making 10% (not quite but you get the idea). Paying interest is the opposite of compounding interest for yourself... it's compounding for someone else.




For those that qualify -- I'd always fund an ROTH IRA first --- while it's not tax advantaged NOW --- pulling that money out tax free when you retire is just HUGE. We don't know what tax rates will look like when we retire -- but the longer you have until you retire -- the more you can bet they'll be higher than what they are now. Allowing your money to compound for years - and withdrawing it completely tax free is huge!

Think this way --- if you retire and need $2000 a month from your ROTH IRA... you can just pull out $2000 each month... but if you need $2000 a month to pay your bills and you're withdrawing from a 401K and you're in the 25% tax bracket -- you now need to pull out enough to cover your $2000 need AND enough to cover taxes ($500 more?)... so you're draining your account $500 a month more than if you had it in a ROTH. That's $6,000 a year! Just for taxes.

Put the money in NOW -- let it grow... and withdraw tax free! It's the greatest gift Congress ever gave you!






Whatever you can afford -- there is no magic... I'd say if you have a grand --- either do ONE stock -- or do TWO.... and when you have $500 more add a third -- do this until you have TEN stocks... then start to add your $500 to one of the ten names... until you have a grand in each... and so on. The most you need is 20 names even if you have one million dollars (that's 5% per investment). If it was me -- I'd always add the additional funds to the name that had the poorest performance -- thus buying me more shares - and bringing my average cost down the quickest...

There's an explanation to averaging down somewhere in the thread.

I agree with Greg about doing what you can when you can at any point with the Roth. I say this even if you know you'll be over the salary limit to contribute eventually. I started my Roth in my 20s and some years could only manage a $1000 or so. I've only been able to max it out the last few years.

Also, I'm sure it's been mentioned but once you've got an account open, don't save up through the year and make lump sum deposits to it. Get the money into it ASAP even if it's $50 here or $100 there. If you're dealing with smaller amounts, especially if you're young and just starting out, you may find simply investing in a target retirement account is best. This way you can make the small deposits and not worry about having enough to buy a full share of a stock. You can't buy half a share of a stock but you can buy half a share of a mutual fund.

Here's a quick run down of the regular and Roth with minimums etc from Vanguard. I'd bet the other houses are similar

https://investor.vanguard.com/what-w...-and-roth-iras

Sorry -- I'd forgotten to respond to this...


I had written earlier that I was personally disappointed in a couple recent McDonalds visits... the food was cold and the places weren't especially clean.

When I'm an OWNER of a stock - that makes me an OWNER of the company -- small yeah -- but that IS what you are doing when you buy shares -- you're buying a piece of the company. I like to be proud of what I own..... and I also subscribe to the Jeffery Lynch version of investing. I buy share in companies that I can see and use personally.... keeps it simple.

SO --- I think I'm mister average Joe guy in the street --- and if I'm avoiding the food at McDonalds -- then maybe others are as well. What Gwen and I find is that if we get hungry for a burger -- we want to spend those calories on eating something really good!

So coupling that with the relatively low % of dividend.... and understanding that if my money has to work for me -- and I want to be paid a MARKET rate of return --- and we are in a rising rate environment -- then something has to be sold in order to buy something else with perhaps a better cash-flow and growth prospects. It's more just a rebalancing act which should be done by everyone at least annually. You look at every holding and if you're honest about your expectations and assessment of the business... and then you either continue to hold -- or you move on. I chose to move on.

My positions in a name are kind of large on a relative scale to most reading this drivel on here.... My positions are usually a million or more per name. I live off the income generated rather than re-invest it, as I'm kinda done trying to save some money. LOL. When I look at where my portfolio is and the average income and growth --- making 3.3% and only seeing 7% growth puts a name like this at the bottom rather than in the middle. Middle gets held -- bottom gets sold. I have steady eddies already -- if I didn't -- then I would have looked at mickyD's with a different thought process... but I already have Coke (KO) and Altria (MO) and Con Ed (ED) and several other holdings that have those qualities.

Does this make sense?


BTW --- I NEVER want anyone to follow what I do just because I use it as an example around here. I'm in a completely different "place" -- I'm not a young man anymore (anyone under, say, 40 is young!) -- I've been retired for years -- and I'm (as stated above) not trying to diversify or save capital up to build a nest egg. So my moves are geared to making CASH FLOW so I can continue to race with Charley and put fuel in the rig. That's way different than INVESTING 102 -- similar -- but a different balancing act. If I have a long term gain (owning the shares one year PLUS a day) == and I can take that capital gain... and raise my % of dividend with some other name... then that's what I do. The difference of getting 3.3% on a million bucks or getting 5.2% is a good number... and if I can get 10% growth instead of 7%... that makes something look even better!

I DID NOT take the time to read this sites information --- I kinda already have a decent idea on what it takes to make some investment decisions... LOL

BUT ---- it might be worth a read for the new guys... and might be somewhat faster than trying to work your way thru all the posts here (maybe less confusing to get started with than here).


http://beginnersinvest.about.com/od/...esting-101.htm

So here's some info that came thru just now --- that KEEPS ME BEING A DIVIDEND INVESTOR...


http://www.marketwatch.com/story/bp-...k=MW_news_stmp

I own 11,000 shares of British Petroleum Prudhoe Bay Trust (BPT) -- the last dividend I got was $2.17 a share (for the quarter).... they just announced that shareholders of record (the EX date) will be paid $2.527 (call it $2.53).


Now ---- Since I get to waste my dividends buying much "needed" useless crap that Charley wants me to have... I just got an allowance increase of $4,000 every 3 months... for doing what? Nothing.

This particular dividend VARIES because it's based on how much oil they pump and some other stuff -- but it's always a nice check. I just like it when the check gets bigger rather than smaller!

I picked up Ford "at a discount" a couple of weeks ago while it was down. I am already in the green, cant wait for dividend day!

Glad to see a few more guys jumping on the train here. Awesome!!!

So I was just messing around SCHWAB and found that a guy can go to RESEARCH -- Choose ETF's -- and then choose ETF PORTFOLIOS...


So after that they ask what kind of investor you are... Conservative etc. In a drop down menu ---- then you can put in the amount you'd like to invest... I put in 10,000 for playing around.

It then built and entire portfolio of ETF's by how much to put in each one etc.

The minimum was 5K total.


My point here is --- for retirement accounts -- or those guys just struggling to CHOOSE particular names etc ---- ETF's would be a good investment. They're basically baskets of stocks that make up a particular group -- say TECH --- OR Bonds -- or Industrial -- or Big Caps... They're commission free some of them and they're very liquid... and pretty damn stable if you have a diversified portfolio of them. Which is exactly what this little "builder tool" does for you.

Pretty smart -- and pretty easy for those just starting out I think.

So I setup my work 401k and did it as follows.

Traditional IRA

• 60% Target Retirement 2045 Trust I
• 20% T. Rowe Price Personal Strategy Growth Fund (MUTF:TRSGX)
• 20% Vanguard Balanced Index Fund Institutional Shares(MUTF:VBAIX)

Our accountant advised that I leave my current Roth as it's own account and don't merge it with any others.

So on top of this IRA as soon as my school debt is paid off - I need to check my interest rates to see if I should even pay lump sums based on how high they are- I'll start investing a decent amount. Hopefully the money will work for me while we save to build another house and we won't have to just flat out save it all!

**Just checked, student loans are at 6.8%**

After looking further into the funds in each, it seems that the Targeted fund has a lot of Vanguard Index funds in it. I might be doubling up to much :twak:

Target 2045 Fund:
Percentage Fund Percentage
1 Vanguard Total Stock Market Index Fund 63.1%
2 Vanguard Total International Stock Index Fund 26.9%
3 Vanguard Total Bond Market II Index Fund** 8.0%
4 Vanguard Total International Bond Index Fund Institutional Shares 2.0%
Total — 100.0%

See --- you're LEARNING.... and that's what I love to see!! I don't care what you guys end up doing --- as long as you're engaged and THINKING and LOOKING...

It doesn't take a whole lot of work -- and as you understand it a little more -- actually becomes kind of fun.

Oh it's fun, I know this. I almost did it for a living, or wanted to in school. But then I realized what most people end up doing. I wanted to help people, not push papers for accounting.

Ugh, Problem is there are not a ton of options on this Vanguard site for my choices for the IRA. Guessing it has a lot to do with my 'independence' through work. But I feel that fund is going to end up doing some double dipping of stocks which isn't ideal.

That's not really high rate debt --- so what you have to gauge -- is if you INVEST -- what is your TOTAL RETURN going to look like -- vs -- just paying down the debt and maybe adding some to the principal from time to time as you can.


At 6.8% --- I'd lean toward trying to get total return on my investments. Now if it was above 10% then I'd pay it off asap.

Pick me pick me!!! :y0!:

So would a mutual fund like this pay dividends? Seeing as how the stocks IN the fund pay dividends, would you get them seeing as how it's inside a 'mutual fund'?

Vanguard Dividend Growth Fund (VDIGX)

Yes -- that's it's primary function... "current dividend income".


So to me - that would be a better investment choice for someone already retired.
If you have TIME on your side -- then you'd be better off with something that will give you growth. In looking at it -- it's growth isn't BAD... given
that it's stated objective is dividend growth not capital growth... So IF YOU CAN CHOOSE TO RE-INVEST THE DIVIDEND having that dividend buy
you more shares.


Here's what THEY say is the funds objective.




The investment seeks to provide, primarily, a growing stream of income over time and, secondarily, long-term capital appreciation and current income. The fund invests primarily in stocks that tend to offer current dividends. It focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time. These stocks typically-but not always-will be large-cap, will be undervalued relative to the market, and will show potential for increasing dividends. The fund seeks to be diversified across industry sectors.


The funds top ten holdings:



McDonald's Corporation (MCD) 3.01%
Microsoft Corporation (MSFT) 2.83%
United Parcel Service Inc (UPS) Class B (UPS) 2.78%
Wal-Mart Stores Inc (WMT) 2.71%
International Business Machines Corp (IBM) 2.71%
Merck & Co Inc (MRK) 2.51%
Target Corp (TGT) 2.51%
Praxair, Inc. (PX) 2.50%
Roche Holding AG (RHHVF) 2.46%
Johnson & Johnson (JNJ) 2.44%

You can also do regular mutual funds too if you select "all in one solutions" I punched in 250K - It picked 4 ETF funds and then did the same amount with regular mutual funds (mostly schwab funds, low or no fees) and it picked 9 funds ..... I agree with you pretty interesting and maybe not a bad way to go.

Someone with 100K plus to invest -- or invested already -- should be picking their own stocks. With that kind of money you don't need the mediocrity that generally comes with Mutual Fund ownership. I was trying to find a way for guys just starting out -- with less than 50K to invest... which would allow them to get some diversification and have some immediate benefit (just being invested!)

Exactly. I just went through this talk with my wife. She has these law school loans she just wants to pay off ASAP because of the psychological burden she feels they are, but I explained we are certainly paying off the 8 and 10% loans but no way in HE!! we are paying off the 3% and 4% loans which make up a large bulk of it. It's not hard to beat that total return PLUS you have liquidity should you ever need some money.

Not to mention the interest from student loans can be tax deductible up to $2,500 or something like that...

Try doing THAT with credit card interest!

Dividend ETF
 

I put some money in this ETF to see how it will compare to the performance of my individual stock picks: VYM

I am curious to see how it will compare over time.

Don

Don ---


As you know -- this isn't the stock pickers thread... but having said that -- I'd be real curious (not that you have to defend yourself) why you choose this particular ETF.

Is it inside an IRA? Or is it in a taxable account?

So -- the reason I ask this -- is that we use these names that people throw in as learning tools... discuss them - dissect them - and see what makes them tick and what the thought process is. That way others can glean some things to think about.

I know what I think of this pick -- but I'm interested in why you chose it.

:thumbsup:

Was googling something and ran across this. Made me think of this thread.

http://www.amazon.com/The-Dividend-G.../dp/B004JU1S6W

"How to Keep Your Retirement Income Doubling Every Five Years" Bold statement.

From one of the reviews:

Hi Greg. Well I picked it for a number or reasons. My stock picks to date have been pretty good but I also picked a couple of turkeys. I got to thinking maybe there was an ETF that focused on stocks that pay decent dividends. I noticed that this one had a lot of the names that I had considered as good picks. So I bought some in the interest of science and hopefully finding a way to pick up a reasonably decent dividend while reducing risk through the diversification of this fund.

Greg, I put this out there knowing that you would likely dissect it. I am interested to hear what you say and respect your opinion. I am pretty sure you will not particularly like it but I am curious to hear why. Is it because the dividend is too low, the growth too low or because there is some percentage of turkeys in there too? Or all of the above?

I do not have a significant position in this. I have a little in my Schwab account and a little in my 401k. I bought it to serve as a benchmark of sorts so that I could gauge my stock picking performance against it.

OK, I am ready, let's hear what you have to say... :thankyou:

Don

Wow -- I hope I'm not getting a reputation as the "stock ogre"!!


I love it when people use what they know and step up and put their hard earned money to work. That's the whole point of this thread IMHO!


Okay --- so a the price per share of this ETF -- above $60 a share -- it's only paying about 2.5%. It's growth last year (total return) mirrored the S&P 500 with 30%.

My old saying is "a rising tide floats all boats". Because pretty much everything does well (relatively) in a rising market.

I just wouldn't invest my money in much of anything that is only paying me 2.5% to own it. Coke pays more than that - McDonalds pays more than that BUT --- ALWAYS A BUT --- you got the growth (had you owned it) of the market (30% in 2013) so the 2.5% turned out to be a good return!

My problem with 2.5% is not a GOOD YEAR --- it's when we have poo years... and we're waiting for the market to come back -- THAT IS WHEN WE NEED TO GET PAID TO WAIT... because like the rising tide -- and down market takes everything down and that's when I need to be paid. With the 10 year Treasury bill hitting 3%... the 2.5% pales.

So that would be my only beef with this ETF particularly as it bills itself as a "high dividend ETF".

Not a stock ogre, a stock guru... Close, but different...:)

Marketwatch.com shows the dividend yield as 3.4% which is why I thought it was OK. If it is 2.5% then I agree, I picked another turkey, no argument. Any idea why the difference between the two yields?

I'm also curious what is considered a respectable yield. 4%?

Thanks again,
Don

Well --- the dividend VARIES because it depends on what is making up the ETF during any particular quarter etc. but I see it as under 3% --- and that's primarily because the NAV (NET ASSET VALUE) has been rising --- when the share price - or in this case the NAV rises the % paid goes down.

By the way ---- if you have two different accounts -- NEVER buy the same names in each account. Remember that DIVERSITY means to diversify. Regardless of what account money is in -- it's still ALL you're money and you want to be diversified. So it doesn't make sense to double up like that. If you want to buy ETF's then buy one different one in each account.

Ok let's just make sure I'm reading these correctly.

Coke(KO)

https://www.google.com/finance?q=NYS...vsQeV8gE&ed=us

This dividend is 2.77% which at the last payout was 26cents per share (coming from the Div/yield 0.28/2.77 field).

Did I get that correct? Or is this the projected % at the next payout? If it's not, how do you determine if it'll stay the same, up or down. From what I gather if a stock is doing great then the dividend % will go down - supply and demand.

Most stocks that I have been watching, most from this thread, are in the 2.x% range. I've been trying to find higher ones that I still know the company, searching is hard! :bang:

You read it right --- so that's good!


The names used here are always just examples.... what to look for --- what to think about --- things such as total return etc. So if you have low dividend then you need some growth in capital (thus the total return).

Coke (KO) is a "steady eddie" stock... with a proven RISING dividend.

What's happened this last year is when you have stocks prices rising 30% --- then the percentage gets messed up. So that same .28 a share when the stock price was $37 was just a hair over 3%.

But that's the thing about the dividend paying shares --- the good ones tend to raise their dividend payouts. 5 years ago Coke paid out .21 a quarter now they're paying .28 cents and so on.

I'm not saying anyone should buy COKE -- It's just a good example. So the total return on it over the last 5 years is 104% -- which means in 5 years you've doubled your money. Not bad. And it's pretty safe too...

So that's why I always say it's more about TOTAL RETURN -- that's where the homework comes in. And all of this "depends" --- depends on what you're trying to do -- what kind of an investor you are -- and you totally risk adverse -- can you take on some risk -- or are you all in topedos be damned!

That's why nobody can say -- do this and don't do that.... because everyone is different.

Greg, I don't want you to have a day off. I haven't been doing this long but today was interesting.

The DJIA declined .41%.
The Nasdaq increased .3%.

My account went UP .23% today.

What's interesting is 3 out of 4 of best performers increased along with my WORST performer.

Is this just due to my account characteristics or did everybody see this today? Normally the DIJA and Nasdaq seem to follow suit. Why was today different?

I know this is over analytical but I'm trying to learn a little more about the stock market..

Good question Todd -- with no explanation except that the DJIA -- is the DOW JONES INDUSTRIAL AVERAGE.... so if you're not invested in much that's actually in the Dow --- then you're not tracking with them.

People don't really understand these indexes.... and without writing a book about it I'll give a brief explanation:


"The Dow" is made up of 30 stocks that they pick --- It's PRICE WEIGHTED - so they add up all 30 stocks and then divide that number by 30 to get the "Average". Since there's ONLY 30 STOCKS that actually make up "The Dow" -- you can see how if you don't own any/many of them - your day can be different than their day.


The NASDAQ --- is made up of every stock traded on it's platform -- so think like 3000 stocks and they are MARKET CAP WEIGHTED --- so the bigger market cap companies pull more than the smaller caps (Cap is the value of the company - which is computed by multiplying all the outstanding shares times the closing market price per share...

Makes sense to me, thanks for the explanation.

You're welcome!


Years ago I had to actually look all this up for myself - when one of the tv talking heads said that "IBM was taking the Dow down".... I'm like "really" -- IBM all by itself?? Sure enough --- most of the rest of the 30 were doing just fine - but old IBM was struggling and was killing the average.

Personally -- I've given up paying too much attention to the Dow and the NASDAQ averages... they're general trends -- but I've had up years when they've had down... and more importantly I've MADE MONEY every year - regardless of what those two indexes are doing. So do they really matter? Like selling real estate -- yeah the "market" can suck - but that doesn't mean you can't still make money. It'll suck you down if you let it - but it's not the only numbers that matter.

Greg you are a gentleman and a scholar!

We've obviously never met....

Just got another raise. Ford (F) just raised dividend 25% to $0.125 per share.
I bought some in May of 2012 and kept adding to it thru July 2012. The dividend was $0.05 when I first got some. You just got to love getting these increases, not to mention the growth on share price.

I own a few shares of Mother Ford (F).... (20,000)... My average cost is $16.12 so I'm not too underwater.... Raising the dividend is the same reason I bought Wells Fargo (WFC) bank (10,000 at an average cost of $39.90)... they just started back with their dividends -- they're profitable -- well run -- and have a history of rewarding the shareholders. I'm hoping over time that WFC doubles and triples the div...

I sold half the WFC I was holding only because I had a very nice gain in the shares - well ahead of what I expected - so took half that gain and held the rest. As it is I have a $62,000 unrealized gain still on the books! That's a keeper.

Ford also has a history of splitting... Not that anyone should buy anything on a lick and a promise. You have to be happy owing it as is -- and anything that comes in the future is just icing.