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You invest in stocks like AT&T, Verizon etc. for the long term. Yes, AT&T lost as did all stocks but thery have since recovered and more. I bought Verizon for $28 3 years ago and it is now $47 plus I have received dividends. In using the drop of stocks in 2008, you are neglecting that home values also dropped and your equity was frozen because you couldn't refinance nor get a line of credit.
Can you address how poorly AT&T has done vs SPY? It's a much longer issue than 2008
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You should really look at more than dividends. Since 2008 T has returned 11% or 21% with dividend reinvestment and over that same time SPY has returned 56% or 65% with dividend reinvestment
Since 2001 it's 14% vs 84% or with reinvestment 41% vs 107%
Since 96 our 102% vs 294% or with reinvestment 161% vs 342%
Can you address how poorly AT&T has done vs SPY? It's a much longer issue than 2008
Actually I do not own AT&T. I only used them as an example. I actually own Verizon which I consider a better company. I don't know anyuthing about SPY except their dividend is just 1,8%.
My goal is to protect my income stream rather than capital gains as I have been retired for 8+ years. I don't wish to sit on top of half a million dollars that isn't dping anything for me. Of course that is based on havoig a low fixed mortgage rate that is available now and has been for the last few years.
Actually I do not own AT&T. I only used them as an example. I actually own Verizon which I consider a better company. I don't know anyuthing about SPY except their dividend is just 1,8%.
My goal is to protect my income stream rather than capital gains as I have been retired for 8+ years. I don't wish to sit on top of half a million dollars that isn't dping anything for me. Of course that is based on havoig a low fixed mortgage rate that is available now and has been for the last few years.
VZ also underperformed SPY for both time periods as well. SPY is an exchange traded fund that is made up 504 companies.
VZ also underperformed SPY for both time periods as well. SPY is an exchange traded fund that is made up 504 companies.
I told you that capital gains are not what I am after. I want to have a pretty dependable income stream which is what Verizon provides and SPY does not. If you had read my post, I said that I have been retired for 8+ years so I have to live off my investments plus SS etc. In a downturn, I would need to sell if I didn't hsve a sufficient income stream. If I was 25 years younger then I would have a different strategy where capital gains trumped dividends.
I told you that capital gains are not what I am after. I want to have a pretty dependable income stream which is what Verizon provides and SPY does not. If you had read my post, I said that I have been retired for 8+ years so I have to live off my investments plus SS etc. In a downturn, I would need to sell if I didn't hsve a sufficient income stream. If I was 25 years younger then I would have a different strategy where capital gains trumped dividends.
Your original post touting AT&T had nothing to do with your goal. People overvalue dividend income and I don't think it's any different here
People overvalue dividend income and I don't think it's any different here
I'm not sure what that even means.
People value dividend income because they don't need to sell their shares to realize it, which you have to do with non-dividend earning stocks, and often the tax rates for dividends vs stock sales are different. The income from a dividend stock also tends to be very regular, as opposed to the roller coaster of capital gains.
Also if you sell stocks and have to rebuy, you are buying at the current price, whereas most people who are attempting to live off dividends bought at prices far into the past. Compare this to a house on the coasts, ie has lots of value locked in and if you sell to extract value you lose out on future value, which could be just income or inheritance.
In short, different people have different goals.
Also, QED, but the fact that AT&T has performed below the market index shows that actually people don't "overvalue dividend income" unless you somehow live in opposite world.
Last edited by TheOverdog; 01-06-2015 at 10:18 AM..
People value dividend income because they don't need to sell their shares to realize it, which you have to do with non-dividend earning stocks, and often the tax rates for dividends vs stock sales are different. The income from a dividend stock also tends to be very regular, as opposed to the roller coaster of capital gains.
Also if you sell stocks and have to rebuy, you are buying at the current price, whereas most people who are attempting to live off dividends bought at prices far into the past. Compare this to a house on the coasts, ie has lots of value locked in and if you sell to extract value you lose out on future value, which could be just income or inheritance.
In short, different people have different goals.
Also, QED, but the fact that AT&T has performed below the market index shows that actually people don't "overvalue dividend income" unless you somehow live in opposite world.
- You keep stating how it's a bad idea to use the loan for the downturns, but your ONLY alternative strategy is live below your means? Why would you assume the sales rep is not already living as cheaply as they could? You say your budgeted cashflow should be nowhere near your high months, okay and who says that it is? Why do you assume that the person is living BEYOND their means or spending more than they can afford to spend?
- You say if they lose their job, they can just FIND another in a few days, what ECONOMY are you working in? This Economy is horrible, to think you are going to lose one $75k gig and just hop on another tomorrow is bad planning. It might take you 1-2 years before you find another good $75k gig.
- You say that the Sales Rep just had a lack of preparation and that's why they need to draw down on a line of credit or a loan? Have you EVER ran a Sales Office? Sometimes you have deals that are held up in Pipeline and you need to do some marketing, etc. and you would use the line of credit as a temporary draw down until the sales come in. It's all about good management and PROPER management of the debt as a TOOL, which you agree is a good tool but yet continue to say people are STUPID for using it??
- You say that a 6% rate is unrealistic for a non-purpose Personal loan, but when I say that using access monies from the Federal Student Loan for this purpose is better instead (due to the low rate), you STILL say it's stupid?
- Stop talking about what 9 out of 10 people would be BETTER doing when 9 out of 10 people don't have the SAME SITUATION.
There's no convincing you. You are probably an old Baby Boomer that's more than likely OUT OF TOUCH with the market that Generation Y is facing. There's NO stability out here, NONE whatsoever. You have a job today and it could be GONE TOMORROW. So many people in my Generation and a lot of others, are preserving their CASH ON HAND (no matter if it's savings or loan proceeds) to properly handle down turns should they come.
So you can sit up here on your high horse talking about how STUPID it is, but yet you have no real alternatives other than "live below your means" like the hell people aren't already doing that.
For the record, the ONLY alternative is live below your means.
This being brought to you by the Evil Boomer that faced 10% unemployment, and 13% mortgage interest rates when I was at your age. Not out of touch, just deal with reality. Something the GenYers have little of, I'm realizing.
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