Investing 102

[68Cuda]

Originally Posted by GregWeld

Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.