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Doug Carey, CFA

 
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  • Can Procter & Gamble Save Your Retirement Portfolio? [View article]
    I would never recommend investing in just one stock. I state in the article- "It is important to note that I am not recommending investing in just one stock. I am recommending investing in a basket of solid dividend paying stocks that have characteristics similar to P&G."

    "Although I will focus on Procter & Gamble in this discussion, the strategy here applies to many companies that have a solid history of increasing (or at least not cutting) their dividends over time, even during recessions. Other companies that fit this mold are Johnson & Johnson (JNJ), Coca-Cola (KO), Exxon (XOM), and Wal-Mart (WMT)."
    Nov 29, 2012. 09:54 AM | 2 Likes Like |Link to Comment
  • Can Procter & Gamble Save Your Retirement Portfolio? [View article]
    Yes, it is a good point to make that 401k plans have very limited choices most of the time. That's why I like to recommend IRAs over 401ks once the company match is gone. I wrote about this a year ago- http://seekingalpha.co...
    Nov 29, 2012. 09:51 AM | 1 Like Like |Link to Comment
  • AT&T Vs. Johnson & Johnson: Dividend Yield Vs. Dividend Growth [View article]
    Thanks to all for the nice feedback. You guys made my Thanksgiving! And I agree with you Cranky- Owning both JNJ and AT&T is a good strategy. I own both in my retirement portfolio and plan on holding them for a long time.
    Nov 22, 2012. 10:41 AM | 2 Likes Like |Link to Comment
  • AT&T Vs. Johnson & Johnson: Dividend Yield Vs. Dividend Growth [View article]
    I assume you mean their debt has a AAA rating? Their debt is in fact rated AAA, one of the very few non-insurers to have it. I love Johnson & Johnson. They are a core holding of mine.
    Nov 21, 2012. 05:26 PM | 1 Like Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    Thanks for the good feedback. Our goal is to have the most comprehensive retirement planner for consumers on the market.

    Healthcare costs- Indeed this is a very big issue and worthy of an article all to itself. I try to keep most of my articles focused so I don't include all potential costs.

    Monte Carlo- This is definitely not a magic bullet and it does not take into account the randomness of serious life events. For this I highly recommend people run what-if scenarios on social security payments, health care costs, etc. Then they can see how these impact their plan and the probability of running out of money in retirement.
    Nov 19, 2012. 10:40 AM | 1 Like Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    Good point. I did not include that and in fact it would make the results worse.
    Nov 19, 2012. 10:36 AM | Likes Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    I am a fan of your strategy and I use it myself to a large extent. However, many people out there still invest in the typical equity funds and bond funds. That's why I used them as an example. I have written previously on how people can have a more secure retirement using dividend growth stocks- http://seekingalpha.co...

    But this strategy isn't for everybody. So we need different strokes for different folks as they say.
    Nov 16, 2012. 05:21 PM | 1 Like Like |Link to Comment
  • How Higher Tax Rates Can Affect Your Retirement Plan [View article]
    I'm not necessarily endorsing Treasuries. In fact, I barely have any myself. This was just an example of a typical couple that happens to have a decent chunk of money in Treasuries. I have written before about how investing in fixed income right now is not the best idea- http://seekingalpha.co...
    Nov 15, 2012. 09:33 AM | 1 Like Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Folks, the proof is in the numbers I laid out. The numbers don't lie. Inflation is a hidden tax and this is a well known phenomenon. It's very easy to replicate this. Simply take the following extreme example: You invest $1000. You receive a $550 dividend. The tax rate is 15%. Inflation is 50%. Put the numbers in a spreadsheet and it's clear that even though the before tax return is slightly higher than inflation (55% vs. 50%) the real return after taxes and inflation is negative. In fact, it's -3.25%.

    As a side note, the same issue applies to bonds. In fact, it's much worse since income tax rates are usually higher than 15%. Try running an example with a bond that pays a 51% coupon while inflation is 50% and the income tax rate applied is 35%.

    As further proof, run two examples in this calculator- http://bit.ly/RKDcQ0?skn=

    Run one example where the nominal return is 2% and inflation is 1%. Then run an example where the nominal return is 11% and inflation is 10%.
    Nov 8, 2012. 10:43 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Really? OK, time for some history. From 1914 through 1924 the CPI inflation rate averaged over 7%. From 1940-1950 the CPI averaged over 7% as well.

    From 1971 through 1981 the CPI inflation rate averaged over 12% per year!

    Are you convinced that it isn't impossible yet?

    Go here for the data- ftp://ftp.bls.gov/pub/...
    Nov 7, 2012. 04:07 PM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    " If you beat it by 1% you are getting ahead of the game"

    Yes, if you beat inflation after taxes. I'm a big fan of dividend-growth stocks. But my article does point out some problems involved with using them to beat inflation, especially if inflation moves higher from here. That's why I show the benefit from having them in tax-deferred funds. Also, even though I didn't mention it and I wish I had, the potential increase in dividend tax rates coming up will only make this problem worse.
    Nov 7, 2012. 01:25 PM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    6% compounded over 10 years is 1.06^10 - 1= 79%
    Nov 7, 2012. 10:58 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    Of course dividends can grow faster than inflation. But my article was simply showing what happens to those dividend payments as inflation rises. Even if dividends are increasing faster than inflation, if the inflation rate skyrockets the tax bite will become worse and worse.
    Nov 7, 2012. 09:02 AM | Likes Like |Link to Comment
  • Can You Beat Inflation With Dividends? [View article]
    I did not assume dividends stayed the same. I assumed the total return from dividends stayed the same or moved with inflation. Very different. This implies dividends are rising.
    Nov 7, 2012. 09:00 AM | Likes Like |Link to Comment
  • What Will $1 Million Get You In Retirement? [View article]
    And thanks for the comment. Monte Carlo can be useful if the starting assumptions are reasonable. Some advisors use 10% return assumptions for equities, which in my opinion is ludicrous. Garbage in garbage out. But with conservative starting assumptions I believe Monte Carlo is a great tool, even for dividend paying stocks since dividends can of course be cut.
    Oct 25, 2012. 06:34 PM | Likes Like |Link to Comment
COMMENTS STATS
334 Comments
542 Likes