Investing 102

[GregWeld]

Originally Posted by Stuart Adams

Greg, have you ever had any dealings with Thomas Partners?

I have not.

Here's why I don't use a big brokerage for dividend investing.... their percentage takes too big of a bite (percentage wise) out of the equation. When you're trying to be somewhat conservative and make a careful 5% average --- 1% is 20% of that. So the dividend earning money is held at Schwab and Fidelity. I break up my portfolio in the event something happens --- you know --- like "to big to fail"?

Just an Investing 102 statement here about a brokerage failing. YOU own your stocks -- they do not. So even if the brokerage went bust -- the stock is in your name.... BUT -- CASH is only FDIC insured (if your brokerage is actually FDIC insured!) for $250,000 per account. I have way more than that in cash any given day... so split my accounts up.

Lots of folks like their money "professionally managed"... nothing wrong with that if that works for them. Just NEVER use a private individual and never ever ever let them have access to your account. EVER.

[GregWeld]

Stuart ---

Taken straight off Thomas Partners website....


"We are distinguished by our disciplined commitment to the value-driving characteristics of dividends; a commitment to the goal of delivering rising portfolio income streams, without sacrifice of capital gain potential."



Here's my issue.... not with them in particular... just with "needing" someone that does what they do.


The above statement has been repeated by me a million times. In other words TOTAL RETURN -- that is Growth WITH a Dividend stream. Dividends protect on the downside -- create income and compounding - and "the market" will provide - over time - capital appreciation. I just don't need help finding 20 names that will do that for me. It just isn't rocket science... and these kinds of "pros" typically put people in lower dividend investments -- known as Little old blue haired lady" stocks.... Kimberly Clarke -- Johnson and Johnson - 3M - IBM. Now if I'm collecting 3% and they're taking .75% off the top... that REALLY REALLY affects your compounding -- and does someone really need to pay a third of what they're making (on the dividend) to pick these names?? I don't think so.

[Stuart Adams]

Thanks. Just browsing the schwab site. I'm happy managing my own dividend stocks, it's fun also. It looks like Thomas Partners specialize in that arena only and do pretty well.

[GregWeld]

Originally Posted by Stuart Adams

Thanks. Just browsing the schwab site. I'm happy managing my own dividend stocks, it's fun also. It looks like Thomas Partners specialize in that arena only and do pretty well.

They'd have to beat the averages by at least the percentage they charge for running the show... in order for you to just be "average". Average is the best anyone can expect... But the way I figure it --- and what I've been preaching here is -- as long as you just stay best of breed - don't go searching for abnormal stuff.... just stick with the tried and true... You're going to do just about as good as anyone else.

When people get into trouble is when they let greed and fear creep in. Many times it's the fear that the phone call to "the broker" will help with - 'cause they'll talk you back off the ledge. And many times they'll keep you from reaching - and becoming greedy. So if a guy lacks some basic common sense -- has no understanding of the market - has no desire to learn even rudimentary terms and functions. Then a broker is probably a good thing for that person and there's lots of people like that.

If, however, a person has good common sense -- takes just a little bit of time to understand "the market" (nobody will really ever figure it out!) -- and knows himself and can control the greed and fear... Then I say -- do it yourself. It's not hard. People make it hard... and they loose themselves money because they freak out and sell the first time the market takes a dip... Or they only put money to work when everything is at record highs ---- rather than just wade in and put money to work on a regular basis... reinvest the dividends and have some patience.

[GregWeld]

Stuart ---


I've read everything they posted to their website... here's the gist. Invest in select dividend paying stocks that pay above average dividends and have shown to increase their dividends over time.


I'll "select" one... or two.


AT&T..... In 1988 they paid .15 per quarter - 10 years ago they paid .31 per quarter - Now they pay .46 per quarter. So 10 years ago they paid $1.24 per year... and the share price was $24.... Today they pay $1.84 per year. Using the $24 starting price -- and collecting just a $1.24 per year... you've gotten half your money back already. Imagine if that dividend was buying extra shares each year for 10 years...


LO....Lorillard -- using this instead of MO because MO split off some companies along the way and makes it a tougher example..... LO was $8 - 10 years ago and didn't pay a dividend... today it closed at $49.78 and pays a .55 per quarter dividend... and had a 3 for 1 split along the way --- meaning that those $8 shares you bought 100 of --- you now have 300 of. (split adjusted cost basis would have been $24 initial per share) But here's the deal --- the 300 shares -- are paying .55 per share per quarter --- $2.20 per year on a cost basis of $8.00 (split adjusted).



JNJ... 10 years ago the share price was $50 and they paid .24 per quarter... today they closed at $90.10 and they pay .66 per quarter. Let's do some simple interest calculations. $2.93 (annual dividend) divided by $50 (what you paid) equals 5.86% dividend on your cost basis. So you've doubled your money in 10 years and you're getting 5.86% spending money.



How complicated is all that?? LOL

There's not a single name there that you'd lose sleep owning...

[GregWeld]

If today's action makes you nervous --- or has you questioning why you're invested. Go to a chart of STARBUCKS (SBUX) and look at it's 5 year chart... UP 700% --- when I just checked it's price it was Down .69%....


Really? Down half or 1% or even 10% is going to bother you on it's way to a 700% return? If that's the case --- put your money under a mattress and go join a bowling league. You're heart can't take the stress of watching football.


HAHAHAHAHAAHAHAHAHAHA

[Solid LT1]

Me....I'm into paid off real estate...income producing...and...heavy metals....AU, AG, Lead/Brass the sure stuff

[Stuart Adams]

Originally Posted by GregWeld

Stuart ---


I've read everything they posted to their website... here's the gist. Invest in select dividend paying stocks that pay above average dividends and have shown to increase their dividends over time.


I'll "select" one... or two.


AT&T..... In 1988 they paid .15 per quarter - 10 years ago they paid .31 per quarter - Now they pay .46 per quarter. So 10 years ago they paid $1.24 per year... and the share price was $24.... Today they pay $1.84 per year. Using the $24 starting price -- and collecting just a $1.24 per year... you've gotten half your money back already. Imagine if that dividend was buying extra shares each year for 10 years...


LO....Lorillard -- using this instead of MO because MO split off some companies along the way and makes it a tougher example..... LO was $8 - 10 years ago and didn't pay a dividend... today it closed at $49.78 and pays a .55 per quarter dividend... and had a 3 for 1 split along the way --- meaning that those $8 shares you bought 100 of --- you now have 300 of. (split adjusted cost basis would have been $24 initial per share) But here's the deal --- the 300 shares -- are paying .55 per share per quarter --- $2.20 per year on a cost basis of $8.00 (split adjusted).



JNJ... 10 years ago the share price was $50 and they paid .24 per quarter... today they closed at $90.10 and they pay .66 per quarter. Let's do some simple interest calculations. $2.93 (annual dividend) divided by $50 (what you paid) equals 5.86% dividend on your cost basis. So you've doubled your money in 10 years and you're getting 5.86% spending money.



How complicated is all that?? LOL

There's not a single name there that you'd lose sleep owning...

I have two of those no brainers. Your advise is always great. Slow and steady is a good motto I go by..

How much time a day on average do you spend on investments?

[GregWeld]

Originally Posted by Solid LT1

Me....I'm into paid off real estate...income producing...and...heavy metals....AU, AG, Lead/Brass the sure stuff

I wouldn't place metals in the "sure stuff" category... Gold is down 25% from it's recent highs. And Silver is down 36% in the same period ---- so I'm not so sure where you think this is a sure bet.

Real estate is a great investment -- as long as it's INCOME PRODUCING. Paid off real estate is a feel good statement... as leverage in real estate will produce better returns over time. I'm not going into the math -- but because other people read these posts... and this is a learning thread... The basics are if you put 100K down payment on a rental house - and you sell it for 50K more than you paid 3 years later. The RETURN is calculated on your actual investment (the 100K). You'd have made considerably less return had you paid all cash. So the "paid off" statement is cocky and feels good.... but not very accurate in many ways without some kind of explanation.

Like ALL investments --- it depends on a persons individual circumstances and what their situation and needs are at any given time. My feeling is that all investments need to only fit those of the individual. Investing is emotional -- and only the person owning the investment needs to feel good about it. Some folks can't stomach owning stocks - and love bonds.... or real estate... or life insurance.... or annuities. Others would consider some of these as TERRIBLE investments.

[GregWeld]

Originally Posted by Stuart Adams

I have two of those no brainers. Your advise is always great. Slow and steady is a good motto I go by..

How much time a day on average do you spend on investments?

Every morning... from when I get up (6 AM) until Gwen makes me do something else... LOL


I'm really never "not" doing investing. Even on a road trip I've got CNBC on the satellite radio. But I'm not moving money in and out or trading... or trying to scam the next big deal. I just find "the market" interesting in general. The hard part is to separate the "trader talk" from INVESTING. I like to stick with my particular strategy - which pays me great income regardless of what "the market" is doing today or next month. I also like commercial real estate for the same reason... the renters keep on paying. The mortgage goes down and the rents go up. I like that delta!