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I generally wouldn't buy any kind of investment from a bank. Banks charge high fees and their funds are not any better than what you can get from a mutual fund company. In fact, they're often worse. Unless you have over $1,000,000 to invest, banks aren't worth it....and probably not even then.
I think a fund like Vanguard Wellesley Income is good for those who are scaredy cats. 60% investment grade bonds, 40% dividend paying stocks. It lost less than 10% in the market meltdown of 2008 and has solid 7% returns over the latest 10 and 15 year time periods.
That's been my impression with the banks. -- Although I've probably averaged 5-6% there, the fees are high. I have recently picked-up some Vanguard Wellesley (for 'scaredy cats') and also to validate my perception about bank management. (The annuities are elsewhere and another matter).
Mathjak's note about 'cherry-picking' numbers resonates here. It seems like the bank is always telling me I'm getting a 10-percent return, but, it always seems like they are picking the window.
Upon retiring 8-years ago (in the midst of the 2008 crisis), I concluded I didn't have the skills or temperament for chasing the stock market up and down. ......
....
Still, I keep wondering if I couldn't do better than now (4-6% ROI). I've slipped a few bucks into some Vanguard funds ........
I for one never chase the market up and down. I do make some investment and allocation changes on a gradual basis over the years. So you have had your money in secure investments since 2008. You have missed out on years and years of high returns. Now you have decided to invest in the stock market. Let me know when you finally decide to go all in. That is likely to be the time I will be cashing out on many of my holdings.
Upon retiring 8-years ago (in the midst of the 2008 crisis), I concluded I didn't have the skills or temperament for chasing the stock market up and down. Instead, I put money in annuities and a managed fund, both of which cost me quite a bit in fees and neither of which have produced stellar results. But, I certainly like the idea of stress-free investing.
I keep watching the market (or more specifically, the market headlines) and it seems like every time a 'butterfly flaps its wings in Timbuktu,' it causes major fluctuations in the U.S. stock market. My impression is that many only invest re-actively and play the market like a blackjack systems in Vegas.
Still, I keep wondering if I couldn't do better than now (4-6% ROI). I've slipped a few bucks into some Vanguard funds to see if they don't perform as well as my 'managed funds (Wells Fargo), without the fees. Additionally, my annuities are about at a 10-percent annual income stream level - which I will probably turn-on when my RMD's kick-in (2-years). We already have a comfortable income stream and don't really need the money, but, I can't help wondering if I should be more aggressive in the stock market or elsewhere - and why? --- Thanks for your advice.
A word of caution about not really needing the money. We have both posted in common threads over the years and retired about the same time. Each of us don't NOW need our investments in a critical way like others do because of fixed income streams. However as we look out over the next decade I realize that investment pool down the road can be really critical and help drive the quality of life we elect to BUY at a certain point. We have looked at CCRC's ( Continuing Care Retirement Communities) and the more cash you can bring to the table the higher quality lifestyle and living you can buy with medical security.
Ever heard of bonds? Ever heard of the Ibbotson 28/72 rule? I GUARANTEE you that the guy who sold you those annuities never mentioned diversification. BTW what type of annuities did you invest in?
These numbers don't look right...what is the source of this graph?
but that is a very very conservative model for someone very gun shy .
it is not something i would recommend for maximum growth nor a 4% draw rate in retirement . i certainly would not call it a rule . in fact once bond rates start to rise you have to be very careful about what the bond side consits of and how interest rate sensitive it is . agg or a total bond fund would be a lousy choice in a rising bond rate environment or rising inflation , especially when it makes up 72% of the portfolio .
i would call the standard total bond fund very risky in that scenario being made up of more then 50% gov't bonds and treasury's .
but for someone interested in a low volatility portfolio it is an option . in retirement i use a bit more on the equity side at 35% equity's but then again i don't draw 4% inflation adjusted from it either so it is fine .
Last edited by mathjak107; 07-03-2016 at 03:36 AM..
You checked the box that says "Include dividends". As I said in my post, 6.5% is the price appreciation which does not include dividends.
Such a comparison is problematic, when trying to make an argument based on history. Dividend rates have drifted down in recent decades, and this was well before Fed actions on interest-rates, so we can't blame big bad government. Today the dividend rate on the S&P 500 is somewhere between 1.5% and 2%. In the 1970s it was around 6%.
The upshot is that we must compare overall annual return... dividends plus capital appreciation. If dividends are low, it doesn't mean that capital appreciation will be low, because it is conceivable that corporations will seek to reinvest in themselves instead of distributing payouts to shareholders. Of course, it is also possible that corporations will misallocate capital.
The overarching question is, whether stock markets in the ensuing decades will perform as they have thus far in the 21st century, or if our 16-year-nightmare will finally be over.
In this year’s first quarter, fully 392 of the 498 firms in the S&P 500 that have reported to date, have reduced their outstanding shares from last year’s fourth quarter. And 140 of those reduced share counts by 4% or more. If the latter’s earnings are simply flat — their earnings per share would increase by 4% or more.
Today the dividend rate on the S&P 500 is somewhere between 1.5% and 2%. In the 1970s it was around 6%. ... it is conceivable that corporations will seek to reinvest in themselves instead of distributing payouts to shareholders.
Stock buybacks. There are lots of examples of companies with crappy stock performance that have really dumped a lot into buybacks. What if IBM had taken that $125B since 2005 and invested it in more productive plants and R&D?
Dividends should be tax deductible at the corporate level.
you can't make dividends tax deductible. if they didn't pay the dividend then you are saying you want the rise in share price to be tax deductible .
the dividend is giving you a piece back of your share price . it isn't profits , it is what ever the board votes to give you back from your investment dollars even if the company lost money that year .
that would make zero sense . giving you back your investment dollars can never be tax deductible .if you took a dollar out of the company share value the company is just worth 1 dollar less in share price .
if you pulled a dollar out of your bank account and put it in your pocket would you say that dollar you took out should be tax deductible ?
Last edited by mathjak107; 07-03-2016 at 04:08 PM..
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