Investing 102

[68454RS]

if they don't pay a dividend - I'm not a buyer

I read that and then wonder about a stock like Tesla which shows no dividend payout but i'm hearing it's a good stock to buy in if you can catch it in a dip.. am I not understanding things?

[dhutton]

Originally Posted by 68454RS

I read that and then wonder about a stock like Tesla which shows no dividend payout but i'm hearing it's a good stock to buy in if you can catch it in a dip.. am I not understanding things?

Basically the thinking is there is a difference between being an investor and a stock trader. Investors pick steady rising stocks that pay a decent dividend and hold them while reinvesting the dividends versus stock traders chasing the next hot stock.

Don

[srode1]

Originally Posted by 68454RS

I read that and then wonder about a stock like Tesla which shows no dividend payout but i'm hearing it's a good stock to buy in if you can catch it in a dip.. am I not understanding things?

avoiding non dividend or low dividend paying stocks will ensure a person misses cycles where there is a huge opportunity for investment growth. I think the key to stocks like this is making sure they are an appropriate portion of your portfolio considering your time horizon and rebalancing your portfolio periodically to make sure they don't become overly weighted when/if they take off.

The FANG stocks over the last few years have been a great opportunity as an example and none of them pay much of a dividend. I'm retired and I own some of those as individual stocks and inside funds. I've rebalanced a couple times in the last 2 years because they became too large a portion of my investments and I think their growth will slow.

Tesla is an interesting stock that I haven't invested in unfortunately, I still think it's overvalued though and won't go after it especially with the rising competition. While I could be making a mistake on that one, I'm sticking to my guns on that choice.

[SSLance]

I also have this thread and GW to thank tremendously for our portfolio's growth over the past 7 years or so.

I had dabbled in the market quite a bit before and had my arse handed to me several times as well as made a bunch of money and was fed up with the market and sitting 100% in cash when I stumbled upon this thread.

Here I learned how to do Dividend Growth investing the proper way and have been making that happen ever since. The past few years have been outstanding for us and I don't see it stopping any time soon. I still sleep soundly every night and even Covid didn't sway me from our strategy...it's that sound.

I will say that I've ventured out and invested some of the other cash we had laying around in different investment avenues recently, but this was purely a way to diversify a bit more and I didn't take any Dividend Growth money out to play these other fields.

[dhutton]

Originally Posted by srode1

avoiding non dividend or low dividend paying stocks will ensure a person misses cycles where there is a huge opportunity for investment growth. I think the key to stocks like this is making sure they are an appropriate portion of your portfolio considering your time horizon and rebalancing your portfolio periodically to make sure they don't become overly weighted when/if they take off.

The FANG stocks over the last few years have been a great opportunity as an example and none of them pay much of a dividend. I'm retired and I own some of those as individual stocks and inside funds. I've rebalanced a couple times in the last 2 years because they became too large a portion of my investments and I think their growth will slow.

Tesla is an interesting stock that I haven't invested in unfortunately, I still think it's overvalued though and won't go after it especially with the rising competition. While I could be making a mistake on that one, I'm sticking to my guns on that choice.

Sounds like you didn’t read what Greg wrote. Keep in mind is that his advice and this thread is for relative newbies as opposed to well heeled seasoned folks who can tolerate a higher level of risk.

Maybe you guys who want to go more advanced should start your own Investing 103 thread….

Don

[srode1]

Originally Posted by dhutton

Sounds like you didn’t read what Greg wrote. Keep in mind is that his advice and this thread is for relative newbies as opposed to well healed seasoned folks who can tolerate a higher level of risk.

Maybe you guys who want to go more advanced should start your own Investing 103 thread….

Don

Good point, I spoke without understanding the context of this thread well, my bad. I did read it, and it's quite good. Just offering my opinion in response to the Tesla question, a stock with Zero dividends. I do think Tesla is not a great choice for a fairly new investor to - it certainly doesn't match the advice Greg has given earlier in the thread which is great.

[ricer]

I have a slightly different question. My in-laws sold a rental property they had for a long time and decided to give the money to our two kids. They are only 13/11 yrs old and already have a college savings account for them. My wife and I were thinking of putting into a trust account with all the typical stipulations about using it for additional schooling if needed, house purchase, etc before 25yrs old and can do whatever after that. Ideally it would be nice to have the account grow even larger for them but don’t want to risk the money since it’s a substantial amount and it gives them a huge head start in life.

Does anyone have any other options that may be more beneficial on the growth side with low risk?

[Vegas69]

If it was me, I'd probably dollar average into a good index fund and let it ride for 12-15 years. I'd also consider having a chunk of the money unavailable until the kids are 30+. It could really set them up.

Perhaps you split the money up. A conservative account for college and an index fund for the rest.

The older I get, the more I realize its a simple game of time in the market and inflation in regards to stocks and real estate.

[AMSOILGUY]

I may be crazy but it sounds like they already have a great head start. They can afford to take risk. I would shoot for the moon with a custodial brokerage account.

[ricer]

Yeah they are extremely fortunate, and I don’t think they will ever realize just how much of a boost this will be to their lives when they are older and know about the accounts. I get the whole can afford to take the risk but our reservations over all of it is we don’t want to be greedy yet at the same time would like it to grow more than a “savings” account could offer. I feel like the market is due for a correction so that’s why I was steering away from market based options.