[l2ridehd]

Originally Posted by thevillagesinvesting

Be careful about chasing high dividends.

1) They are not a replacement for the safety of bonds.

Yes, bond yields are very low but since 1928, the S&P 500 has lost money about 28% of the time. The last 2 recessions, stocks have lost about 40% to 50% of their value.

Since 1952, the max 1 year loss for a high dividend strategy was -35%, max 2 year loss was -39% and max 3 year loss was -33%!

In 2008 recession:
- 40% VTI, 10% VXUS, 5% VWO, 45% BND = -18.35% return
- 50% Wellington and 50% Wellesley = -22%
- equal weight MO, GSK, T, BP, SO = -22.28%

2) High dividends are a relatively inefficient way to target value investing.

Be careful.

Good luck.

These facts prove my point. In the 2008 recession the DOW and S&P both fell over 50% while this mix fell only 18%. And he failed to mention that since 2008 that mix has recovered 200%.

If you need the money today buy CD's. Best rates are from places like Ally on line banks. Do a ladder of 1 through 5 year CD's. They even have a "raise your rate" CD if rates go up. If you have 10 years or more of income requirements then a broad mix of low cost index funds is the best answer.

[Bobcuse]

Originally Posted by l2ridehd

These facts prove my point. In the 2008 recession the DOW and S&P both fell over 50% while this mix fell only 18%. And he failed to mention that since 2008 that mix has recovered 200%.

If you need the money today buy CD's. Best rates are from places like Ally on line banks. Do a ladder of 1 through 5 year CD's. They even have a "raise your rate" CD if rates go up. If you have 10 years or more of income requirements then a broad mix of low cost index funds is the best answer.

Excellent information. Thank you very much for your advice!

[justjim]

Annuities have their place---especially for someone you want to guarantee income for in the future. For example, a challenged relative or child, not EVERBODY follows the Market or is capable of investing their own funds. There are others who just want the "comfort" of regular income without the "hassle".

If an insurance company like Met or Prudendial goes belly up---we are all in trouble.

[dewilson58]

Originally Posted by l2ridehd

These facts prove my point. In the 2008 recession the DOW and S&P both fell over 50% while this mix fell only 18%. And he failed to mention that since 2008 that mix has recovered 200%.

If you need the money today buy CD's. Best rates are from places like Ally on line banks. Do a ladder of 1 through 5 year CD's. They even have a "raise your rate" CD if rates go up. If you have 10 years or more of income requirements then a broad mix of low cost index funds is the best answer.

Nicely stated.
Yes, the stock market took a hit, but it has rebounded plus, plus, plus.

"You" should always have $$$ short-term for your ST needs, which will carry you thru any down turn.

After every down turn, there has been an up turn........eliminating the down turn.

[dewilson58]

Since most of us are not going to live another 80 years (looking back at market performance since 1920's)............here is what I've seen over the last 20 years (thru 2012, does not include the amazing 2013 Equity results) :

Equity Index is up 8.10%
Bond Index is up 6.00%
T Bills are up 3.20%
Commodities are up 5.75%
CPI is up 2.45%

Investing is a personal preference.....risk, reward, being able to pay bills and being able to sleep at night.

[gustavo]

Originally Posted by Bobcuse

Thank you for these facts! This is exactly why I have been reluctant to keep my portfolio invested in the markets. High dividend % may be a result of lower stock prices so getting 5% return while the stock values drop is meaningless. If this market continues to be volatile when most believe it has peaked for the foreseeable future (12-18 mos) then I am reluctant to invest at this time. Annuities are tempting (I am 72) but I just can't get comfortable with that idea. I'm looking for a 5 year CD at a nice 3-4% return. That gets me zero risk and income to meet my needs. What is the best product available today with the low risk provided my CD's?

You are all missing the point of the OP and my initial response. When you buy an annuity it's like buying a stock that instantly goes to zero, but continues to pay a 5% income until you die. When you by MO and/or and other combination of the stocks I listed you get the 5% plus anything above zero value is a plus as compared to an annuity. Plus when you die the interest goes to your heirs and any residual value above zero. I rest my case that MO is better than an annuity.