UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next
Author: culcha Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41614  
Subject: Re: A learning curve Date: 9/11/2012 1:52 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
I've been changing a bit too as I both gain more experience and age ... I've never been into stop loss orders or trailing stops. I have no intention of getting into stop loss orders (but maybe-maybe I will do some trailing stops in the future).

The major change for me is that I am thinking more and more about the importance of dividends. I now think of investing not so much as creating an investment portfolio of XYZ value, that I will live off in retirement, but as creating an income stream of dividends that I will be able to use (along with other income streams -- mainly social security and a pension) that I will live off in retirement.

The first approach seems to assume that an investor will need to accumulate a portfolio of a certain value (your "number") that you will then live off by selling a fraction of it over your retirement years. The danger to be avoided is one in which you outlive your money; and that is to be met by using a Safe Rate of Withdrawal from your investment portfolio. Absolute perfection in this would be to have your portfolio exhausted right at the very time of your death; otherwise, the thought is that you might have saved and denied yourself too much in your earlier years. Next best (and, in fact preferable if you intend to leave something for your heirs) would be to still have a sizable portfolio when you die. But the danger, again, would be to outlive your money.

The dividends-as-income-stream approach, OTOH, aims to build up a portfolio whose dividends will suffice to provide your needed income stream in retirement. Steady dividend-growers and stable stocks (in boring businesses that won't change much) are ideal here. Such stocks won't be sold -- in fact, they shouldn't be sold, since they will be needed to provide the income stream.

culcha
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next

Announcements

BMW METHOD EVENTS

The 2009 BMW Method Conference has been cancelled, due to minimum attendance numbers not being met. We hope to continue the annual BMW Method Conference tradition next fall.

Learn about the first four conferences on the BMW Method Website.

The BMW Method FAQ

BMW Method Website
Annual Conference Videos and Other Resources & Services
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement