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That said, at 73, taking the RMD and living on a little more, it feels like it will be a harder wait than back in 87
Well ,yes something certainly has been lost . That money you had was all your for the taking . the decision was made to just keep it in play each day to see what it brings .
But by not cashing out , what you still have is the ability to potentially make it back . It certainly does not mean you ever will or can . So our daily balance is all we have at any given point in time.
Whether someone cares what that balance is would be a different story . They may just choose to see what tomorrow brings and not care what they have today . . they may just choose to only care when they have reason .
thoses losses can be very real to a retiree . my draw is based on that balance each year . 2019 spells a pay cut , so yeah those numbers sure do count .
Last edited by mathjak107; 12-26-2018 at 05:25 AM..
posting the same wrong information over and over about withdrawals does not make it any truer . it is all about total return , no matter how it is achieved . ..... you can't count on dividend paying stocks to swing any less today . they can be just as brutal . looking at an exceptional performer like jnj turned out to be in hind site is cherry picking . why not use at&t , gm , citi , kodak , polaroid , ge or any of hundreds of other blue chip dividend payers ?
just use the broad index's like the s&p 500 or a total market fund for a broad non single company lucjk of the draw picture and you will see how the total return is obtained is irrelevant .
what counts when spending down is total return , inflation , rates and most important the sequences of that combo as the gains and losses come in .
Because you "cherrypick" AT&T as your frame of reference; JNJ is simply a counterpoint.
"at&t is down 22% including dividends ,. it is down more than some of my growth funds" .
The point is your theory is wrong! .... Sequence of risk has to do with the order gains and loses come in based on total return and inflation , not how the return is arrived at .
Down is down regardless if your total return plus dividends is down . PULLING OUT MONEY VIA THE DIVIDEND IS NO DIFFERENT THAN PULLING OUT MONEY FROM A PORTFOLIO BASED ON THE SAME TOTAL RETURN . drawing out a 4% dividend is no different than drawing off equal dollars from a portfolio .
your balance for markets to act on is the same in both cases .
The point is your theory is wrong! .... Sequence of risk has to do with the order gains and loses come in based on total return and inflation , not how the return is arrived at .
Down is down regardless if your total return plus dividends is down . PULLING OUT MONEY VIA THE DIVIDEND IS NO DIFFERENT THAN PULLING OUT MONEY FROM A PORTFOLIO BASED ON THE SAME TOTAL RETURN . drawing out a 4% dividend is no different than drawing off equal dollars from a portfolio .
your balance for markets to act on is the same in both cases .
You were the one to introduce the topic of "cherrypicking"
I was responding to your question:
"why not use at&t , gm , citi , kodak , polaroid , ge or any of hundreds of other blue chip dividend payers ?"
I chose JNJ as a counterpoint but I could select many others.
I rest my case. I trust the readers understand your position and mine.
P.S. ALL CAPS does not render an argument stronger.
Last edited by Maddie104; 12-26-2018 at 07:46 AM..
i just want to make sure that everyone understands you have the same sequence risk whether you take your pay check as a dividend or from appreciation ...
if the total return is the same the results are the same .
the only difference may be the fact dividends can be tax inefficient compared to drawing from appreciation , since the entire dividend is taxable , while taking it from appreciation only the gain portion is taxable . you may or may not have some transactional costs taking it from the portfolio .
but basically there is no inherent advantage either way except ease with the dividend .
Rather amusing that they essentially flushed their tax savings down the toilet. Facebook bought back a massive amount of stock at $200-250. I think $5 billion worth.
Many companies were buying back shares to keep share price up -- less shares equals better earnings/share (ESP). Stocks are largely valued on ESP.
i just want to make sure that everyone understands you have the same sequence risk whether you take your pay check as a dividend or from appreciation ...
if the total return is the same the results are the same .
the only difference may be the fact dividends can be tax inefficient compared to drawing from appreciation , since the entire dividend is taxable , while taking it from appreciation only the gain portion is taxable . you may or may not have some transactional costs taking it from the portfolio .
but basically there is no inherent advantage either way except ease with the dividend .
You don’t have quite the same sequence risk if your portfolio is equities that do relatively well in downturns. “Widows and orphans” stocks like regulated monopolies with dividends baked into law, for example. Defensive stocks tend to drop far less than aggressive growth stocks. Since those widows and orphans stocks that typically don’t collapse usually pay large-ish dividends, there’s some correlation. They behave more like bonds where the stock becomes more valuable as interest rates drop in economic downturns. The local electric company is usually not going to get hammered in a market downturn.
a safe withdrawal rate does not care how the draw is comprised . The same total return will yield the same result. There is no additional Brownie points in any retirement safe withdrawal calculator because your pay came from dividends vs appreciation.
Whether a stock has higher potential total return or lower because of beta has nothing to do with any of my points discussed here.
The argument made that because the return comes from dividends it is somehow better than coming from appreciation is what is being challenged as having no merit —— similar total returns yield similar results when talking safe withdrawal rates.
there is always more risk taking on individual company risk then dealing with just volatility for the most part in broad index's or total market funds
Last edited by mathjak107; 12-26-2018 at 10:49 AM..
Before you panic too much, the Dow went up 1086.25 today. Interpret as you wish.
Boy, I can remember back in 1980 when people were saying the Dow would never again close above 1000, period. In the early 70s it had closed just barely above 1000 (it hit 1003, as I recall) but then it fell back below for about a decade. People said there was a plateau, and realistically we would never go that high again.
Before you panic too much, the Dow went up 1086.25 today. Interpret as you wish.
Boy, I can remember back in 1980 when people were saying the Dow would never again close above 1000, period. In the early 70s it had closed just barely above 1000 (it hit 1003, as I recall) but then it fell back below for about a decade. People said there was a plateau, and realistically we would never go that high again.
Now it leaps that much in a single day.
stocks did so poorly back in the 1970's , that in august 1979 business week , one of the most influential publications of it's day officially declared equities dead
the article timing couldn't be worse . stocks averaged almost 18% a year for 20 years .
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