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AgAuMoney

AgAuMoney
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  • DGI Investing: It's Riskier Than You Probably Think [View article]
    @triesnottobebroke, '''The goal is to have more money tomorrow than today.'''

    That is DEFINITELY NOT my goal.

    My goal is to establish a reliable and growing income stream to replace the income from my full-time occupation.

    I'm well on track to meeting MY goal.

    (If your goal were my goal I could just put my money in the bank and be done.)
    Mar 8, 2015. 10:54 PM | 2 Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    '''they did so badly during the late 90s.''' '''Look at a KO or WMT as example. '''

    Both of those had huge P/Es by 2000 or 2001. WMT in particular took over 10 years to grow its P/E back down to "normal".
    Mar 8, 2015. 10:53 PM | Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    @mjtroll1, since you brought up '''individual stock vs index risk,''' how could "closet indexers" be subject to "individual stock risk?" Either they are "indexers" or subject to "individual stock risk."
    Mar 8, 2015. 10:51 PM | 1 Like Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    Don't know about 1990, but 'suredividend' published an interesting article talking about the 1989 list. "When 70% have a favorable outcome" is much better odds than you would expect from random.

    http://bit.ly/1DJTlfY
    Mar 8, 2015. 10:42 PM | 1 Like Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    @geekette, '''5-10 years? That is but a blip in an investing lifetime!'''

    Exactly. At 5-10 years you start getting some hints of the wonder of DGI. About 15 years in the power of DGI compounding is building up a nice head of steam. When the current dividend payout is divided by your invested amount results in a silly high percentage yield, you are rolling. That takes years. If averaging a 10% annual dividend increase, in 15 years the dividend will be about 4x the starting amount. That's starting to get really fun. And that, until or unless you sell, is a real return on investment.

    If you sell, perhaps confused by the differing natures of current yield vs dividend growth vs the illusory siren call of capital gains, you won't get there. Your ROI for each holding will always be low because you keep resetting the 'I' and hoping to get in at a good time.

    Selling, buying something else, selling again, etc. is a lot of work and requires you to correctly make each of those decisions. Holding solid companies, while boring for many years, has an amazing effect over time.

    I have a couple of holdings about 20 years old, a couple more nearing that mark, and several from 2002,3.

    When I see those companies working for me and producing more funds to invest every year than I did during my best year it seems almost magic. The market goes up, the market goes down, but the dividends keep coming in in ever increasing quantity. And when the market is down like 2008,9 and every dividend payment buys significantly more shares than it did the year before...

    Call it the 8th wonder, call it magic, call it compounding squared, call it whatever. Whatever you call it the effect of increasing dividend payout buying more dividend producing shares becomes an amazing experience when the annual ROI is silly high and I don't have to do anything but watch the money rolling in.
    Mar 8, 2015. 10:33 PM | 2 Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    @Glenn Abrett, After receiving my next dividend from PG they will have returned over 100% of the money I initially invested in the company. Also my holding is worth several times what I paid for it. Other spinoffs and sales such as the SJM I received because I owned some PG shares have also done well.

    The problem with buying PG at a time like this is as you point out, the P/E is bad, recent growth is bad, etc. I wouldn't buy it right now.

    The problem with selling PG at a time like this, is PG follows the model typical of many large DGI companies... The price and growth sleeps and then it leaps and then it sleeps again. So for a time I don't expect much price action while the premium sinks, and sinks and sinks, yet the dividends keep rolling into my account. Eventually some catalyst will occur and suddenly it leaps. Nothing yet indicates this time will be any different.

    So until my crystal ball is working better, dividend growth, even in PG, is still the best indicator for the future I have found.
    Mar 8, 2015. 10:05 PM | 4 Likes Like |Link to Comment
  • DGI Investing: It's Riskier Than You Probably Think [View article]
    @sheldond, '''Remember the nifty fifty...'''

    You mean the ones that if you bought and held since the list was published you would have still beat the index?

    Or did you have some other more selective memory in mind where mentioning the nifty fifty might prove some negative hearsay...
    Mar 8, 2015. 09:55 PM | Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    '''When the differences between two things are fundamental to the core definitions, and the similarities are not tied to their core properties, as is the case with SS and welfare,'''

    I would agree, except that the fundamental differences attributed to SS are the fraudulent portion, which goes directly back to the math.

    '''prior SS contributions'''

    taxes taken under duress of implied or explicit threat are NOT contributions.

    Here are some numbers:
    first SS tax paid is reported to be in 1977
    total SS tax paid is over $222,000 as of 31 dec 2014
    $2550 estimated benefit in 16 years

    That is theft. A rose by any other name... but this is not a rose.
    Mar 8, 2015. 09:43 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    @Smarty, ''' The poverty rate has ranged from 11% to 15% over that span, rising and falling with the economy itself.'''

    Which has always been the case. With the statistics since the 1960's it is obvious the additional drains from the social security "trust fund" did not change that basic fact.

    Give the politicians a nice pool of money like the SSA and they will spend it. Maybe not the first few years. Yet it has always happened and then "fixing" social security is necessary. The "fix" is thru greater taxes and lesser benefits to the future recipients and it works. The pool builds up and the politicians do something else to spend it. The pool is threatened and they "fix" it again. And again. And again.

    Why are perverse incentives to hard to understand?
    Mar 8, 2015. 04:34 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    '''a cut to SS may be necessary. Say it is a 25% cut. My earlier questions remain. Is this bad system better or worse than the obvious alternatives of pure welfare or expanded poverty?'''

    worse. Because it leads people to make worse decisions because they have an erroneous belief in the efficacy of the bad system. Because it is a welfare system already, but people have the mistaken belief it is not, even after supreme court decisions, executive and legislative proposals and changes and the math all make clear it is welfare already.
    Mar 8, 2015. 04:26 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    '''talk about math if you wish to'''

    I wish to.

    If you want a welfare program, that is political. If you don't want a welfare program, the math has to work.

    If the math does not work, the only way people participate is if they are fooled into thinking the math is good, or if they are forced to participate against their will.

    I am being forced to participate because I know the math does not work.
    Mar 7, 2015. 04:24 PM | 3 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    @rnsmth, '''Sounds to me like your agenda is political. '''

    Not one bit political. 100% math. Show me the math.
    Mar 7, 2015. 04:17 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    <<SSA is either a fraud or a welfare program. >>

    @rnsmth, it is both (which depends on your perspective) and because I can do math there is no need to look up a definition which has no rational basis other than some political agenda.

    The only refutation possible is via math, so show me the math.
    Mar 7, 2015. 04:13 PM | 2 Likes Like |Link to Comment
  • Bogle's Views On Retirement Income [View article]
    @Smarty, anyone that does not understand the SSA as a tremendous rip off simply cannot do math.

    The lump sum they have taken from me and from my employers since 1977 could be invested now to generate the same benefit they are estimating for me.

    Assume:
    - 4% annual withdrawal at 67
    - lump sum investment now
    - 8% CAGR for the years until my full retirement age of 67
    - 0% return 1977 to now

    If you think 8% future CAGR seems unreasonable, you should also think 0% since 1977 is unreasonable.

    I should be starting with at least 2x the lump sum they have taken. Then I would only need 4% starting now to beat their estimated benefit at age 67.

    More likely I should have 3x the sum they have taken, in which case I need less than 1% CAGR between now and age 67 to exceed their estimated benefit.

    SSA is either a fraud or a welfare program.
    Mar 7, 2015. 03:53 PM | 3 Likes Like |Link to Comment
  • The Roth Advantage No One Talks About [View article]
    '''Why do you say you can't use money from an IRA to pay taxes on the conversion'''

    Because the money from the IRA used to pay taxes will be taxed and if you are under 59.5 you will pay a penalty in addition to the taxes.
    Mar 5, 2015. 11:34 PM | 1 Like Like |Link to Comment
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