Bogle on Earning Dividend Income From Stocks
May 16th, 2012 | Posted by Global InvestorsI was following an interesting discussion about living off of dividend income from stocks over at the Bogleheads forum, and member Beagler posted a link to a excerpt on income investing from the book Bogle on Mutual Funds.
You may know that John Bogle is the founder of Vanguard, now one of the largest fund organizations in the world and a pioneer in low-cost index funds. But what I really like about his books is his focus on common sense as the foundation for his advice. An example of this is his Gotrocks parable [pdf] adapted from Buffett. But back to this excerpt. He first points out how stock dividends have been a good way to create an income stream over the long run that grows faster than inflation.
Of course, by investing in common stocks you assume the risk that dividends will decline during periods of recession or depression [...] What is truly remarkable is that the record of dividend payments by U.S. corporations heavily favors rising dividends over declining dividends, almost irrespective of prevailing business conditions.
Here’s a chart of the historical S&P 500 annual dividend, inflation-adjusted. (Note this is absolute dividend, not dividend yield percentage.)
Now, the problem is that you can also pay too much for dividends. He shares an example of how if you were comparing the dividend income from a diversified stock portfolio yielding 3% and growing at 6% annually or a long-term bond yielding 7% each year, it would take 26 years for the dividend income to total the bond income payments.
Unfortunately, defining what constitutes too high a price for dividends is a fallible exercise, one that must take into account not only the average historical valuations for stocks but the current valuations for other investment alternatives as well. History suggests that stocks are relatively expensive when the price paid for $1 of dividends is above $30 (i.e., a yield of 3.3%) and relatively cheap when the price paid is less than $20 (a yield of 5%). However, stocks may well be attractive at a yield of, say, 3.5% if there are compelling reasons to assume that their dividends will increase rapidly or if yields on other classes of financial assets are relatively unattractive.
In the example shown in Figure 2-5, buying a portfolio of stocks at a 3% yield rather than a bond at a 7% yield might not be a sensible investment, especially considering the incremental risk incurred in holding stocks. When stocks yield 4.5% and bonds yield 6%, that may be quite another story.
What would Bogle say right now, when the S&P 500 yield is ~2% and 30-year Treasury bonds are ~3%? The relative difference between the stock yield and the bond yield is less than 1%. I would argue that his last sentence would suggest stocks are actually preferred over other classes at this point.
Now, I’m not turning in a stock bull, and I still have about 70% stocks and 30% bonds in my portfolio, but this line of thinking makes me happier with my 70% in stocks. I’ve also been looking more at living off of dividend income in “early retirement”.
Related posts:
Bogle on Earning Dividend Income From Stocks from My Money Blog.
© MyMoneyBlog.com, 2012.
View full post on My Money Blog
Report from Business and Military Leaders: Nation Benefits from Oil Boom, but Global Oil Market Reve
May 11th, 2012 | Posted by Global InvestorsThe current oil boom is creating tremendous economic benefits for the nation, but unfortunately, it won’t shield the United States from the price volatility that is inherent in the global oil market, according to a new report from business and former military leaders on the Energy Security Leadership Council (ESLC), a project of Securing America’s Future Energy (SAFE).
The ESLC report, “The New American Oil Boom: Implications for Energy Security,” examines the notion of energy independence, which is typically defined as ending reliance on foreign oil, in light of the renaissance in domestic liquid fuel production, rising demand from… View full post on Live News from PR-USA.net
1 Year From Now, I Had a Plan…
May 7th, 2012 | Posted by Global Investors 
About a year ago, I wrote my company long term plan. This post was divided in 4 sections according to a time horizon (1, 3, 5 and 10 years out). Since I’m a financial planner, I know a thing or two about effective planning. Plans do change in time and most plans are not realized as forecasted. But the power behind a plan is in revision and adjustments. If you don’t go back to your initial plan and look at where you have been, where you are at right now and realize the difference from the plan you have, then your plan has been worthless. It is darn important to follow-up. Not because you need to stick to your plan but to understand what went well or went wrong and what you can do to move forward.
I’m also a big fan of commitment. There is no point talking about something if it’s just to write it on a blog to be forgotten. This is why today I’m reviewing what was written a year ago.
Last year, I wanted to accomplish several things in this company during the short span of 12 months:
- 10 niches sites up and running
- 2 sites (besides blogs) up and running
- Make over 10K/month (I made $10,514 in May 2011)
- Have 4 eBooks for sale
My goals were pretty ambitious and several things went sideways during the last year. We went “all-in” without a true direction. We didn’t have a huge plan. In fact, we just had goals… I must say that I’m somewhat disappointed with where we are at today when I look at my aspirations of a year ago. But, nothing is all gloom and doom.
We do have some serious niche sites running and generating over $350/month now. We do have our 10 niche sites but they are not as big as we thought they would be 12 months later. We were expecting these 10 sites to make $100/month each in orderto generate $1000/month from this part of this business. I actually think that we will make it, but it’s harder than we thought. Our latest sites are well built and make a the bulk of our niche site income. Here are our 4 biggest niche sites (all generating over $40/month):
The “2” big sites are still under construction. This is probably our biggest “failure” as we didn’t make enough time to have them fly. On the other hand, it gave us the time to create a super nice structure around them. Both designs are done and the sites are live right now. However, we are still working on the content before officially launching them. The only advantage I see is that they are already getting search engine authority since they are live and updated regularly. We expect to launch both sites by the end of Q3.
When we wanted to make $10K/month on a regular basis, we were already “almost” there last year. But now, I can say that it’s great success. Even if we are currently decreasing our number of private ads, we have compensated those losses by bigger Adsense income and affiliate marketing. After 4 months of operation, I can say that I’m confident we’ll make over $120K in gross income for 2012.
eBooks… ish… do I really have to talk about this one? You know how my 2nd eBook launch went (read here if you don’t!) but we are not discouraged. In fact, we learned a lot and tried something else recently with some good success (more details here). Our current project is a 2 version eBook on dividend investing (Canadian and US). Both books are completed and have been sent for editing/formatting and we will also have a complete site built for us for this launch. I expect to sell over 300 copies in 2012. It’s pretty ambitious but it will also be confirmation that I have (or haven’t!) learned from my past experience and that I can create, market and sell a great product! With an investing newsletter over 5,500 members strong, I’m confident that 5% of them will buy my book. The rest will come from an affiliate program and other referrals. So maybe I’ll be able to say “mission accomplished!” in 6 months .
I wrote that I was expecting the company to use leverage again to buy another site in the 3 years to come. Well, this happened faster that we thought! We actually made our big purchase about 3 months ago. While we are still integrating these sites into our network, I can say that the investment return is already showing. Our company currently owes around $82K in total. Yup, you read it right… 82K in debt! But this debt is dropping by 3K a month since February. We have put in place an aggressive debt reduction plan. In 27 months, we will be debt free and running a highly profitable business. OR…. we will be leveraged again and be making a lot more money .
Our second project for 2014 is to offer membership websites or other kinds of paid services. Well this will probably happen in 2013! The funny thing about our first 12 month plan is that it was tossed away by several other “opportunities”. This is why we started working on different projects instead on focusing on what we thought was important. So we already know what our membership product will be, how we will manage it and the platform / design has already been purchased. So all we need is manpower to generate content and setup the launch (this is already being put into place). To be honest, as soon as we can launch our eBooks and finish our 2 major websites, we are starting to work “full time” on this project: Canadian Aristocrats They Have it Too.
The main goal will be to make over 20K/month in 2014. As we are currently generating slightly over 10K/month, this is a 100% increase in 2 years. There is still a lot of work left but if everything that we launch works, I don’t see why we couldn’t achieve it. Worse comes to worst, we just have to buy 10 sites that make 1K/month over the next 2 years… lol!
In 2016, I’ll be 35. I already wrote that my windows of opportunity will start to shrink after this countdown. This is why the current 5 years are crucial for me, my company and my pockets!! The big plan is to show a $1M net worth for my 35th birthday. I’m now focusing on paying off my debts and both my investments and home will increase in value. However, we all know that if I show $1M in net worth at 35, the bulk of my assets will be my company. I’ve already mentioned that I would need my company to be worth 864K to become a millionaire by 35. This is roughly a 20% annualized revenue growth. It is still quite a challenge (now that we have to survive Google once again!) but I don’t think it’s impossible.
I mentioned on this blog that 2012 will be a “do or die” year for our company and this is really the case.
If our niche sites don’t grow and generate $1K/month by the end of the year,
If our 2 big sites are not generating money by the end of the year,
If I don’t sell 300 copies of my new eBooks,
If I can’t sell membership subscriptions to my new sites in 2013,
I won’t be able to bring this great sideline to the level of a great company.
What I like to see is I’m not too far away from my 12 month projections. While this is definitely not where I thought I would be on many points, I’ve also developed other projects and already bought 2 great websites (which wasn’t in the short term plan).
So I’m now ready to crush the rest of 2012 and boost my monthly income to $15,000 by the end of this year!
Readers, when is the last time you wrote a plan and looked back at it? How did it go?
View full post on The Financial Blogger
Selden Teen Paralyzed in Tragic Accident Returns Home with a Little Help from Nari
May 4th, 2012 | Posted by Global InvestorsOn Saturday, May 5, 2012, members of the National Association of the Remodeling Industry (NARI) NYC/Long Island Chapter will come together for the completion of a community service outreach program, which began in July of last year, benefiting a local family; the Rosa’s, from Selden. Andrew Rosa was 15 years old when he was riding his bike near his home and was struck by a driver, leaving him with severe traumatic brain injury and in a vegetative state. Just in time for summer, they are proud to report that the project has been completed and Andrew will be coming… View full post on Live News from PR-USA.net
How to Actually Work From Home
April 26th, 2012 | Posted by Global InvestorsHow can you actually work from home?
No don’t run away just yet. This isn’t another piece on how to make money online or how to work from home. This piece is all about actually working from home. This article is for those of you that are already making money online and just want to improve the process.
I always thought that working from home was the coolest thing in the world. Now that I’ve increased my online income through freelancing and running my own blog, I find myself “working from home” most of the time. It’s still pretty cool, but it can get pretty interesting at times. It’s really easy to get lost and create the worst schedule in the world if you don’t know what you’re getting yourself into.
What are some practical tips to help you actually work from home based on my experiences?
The first tip might seem a bit counter-productive, but it’s actually the most helpful. If you’re not productive at home then don’t work from home. Get out of the house and go somewhere else. Go to the coffee shop, library, park, or any other random spot. Find a place that you feel comfortable and can focus. Once you find that spot you’ll want to go there all of the time.
What time will you work? Where will you work? Will you respond to emails during dinner? Will you bring your laptop over to your buddies place?
Where am I going with these questions? You need to set boundaries early on. If you create any boundaries, then your work can take over your whole life. Trust me, I’ve had many friends and girlfriends get mad at me because I didn’t set limits and would work when I shouldn’t. Once you set boundaries you’ll seen your quality of work improve because you won’t be cooking pasta while finishing blog posts.
You need to work with your body when it comes to energy and time management. Maybe the reason that you hated a 9-5 gig is because your body just doesn’t function well during the day. Speaking from experience, I get my best work done in the middle of the night. I don’t lie to myself. I base my life around my energy and my focus.
If you want to work from home you have to work with your body. It’s going to take a few weeks for you to figure out how to work with your body. This also entails determining the following about your body:
When you work with your body, you’ll be able to get the best results.
When you first get started with working from home, you’re going to follow the typical pattern. You start off by thinking that you have all of the time in the world. You realize that you forgot to do the laundry. You then hit the gym. Then you meet a buddy for lunch. Then you stop by at the mall. Then you suddenly realize that it’s night time and you haven’t done anything. Just like in college, your deadline is approaching. You stay up all night. You get to bed at five in the morning. You wake up after noon. This pattern continues. You got your work done, but you had to wing it.
While I don’t advise winging it, the reality is that it’s going to happen once in a while. All I’m saying is that you try to limit this problem unless you absolutely have to. The worst habit that you can create through working at home is attempting to wing it every single day.
That’s how you can actually be productive from home. I hope that this article helps you work better from home. This is based on my own experiences and nothing else.
View full post on The Financial Blogger
Creating Retirement Income Only From Dividends and Interest?
April 25th, 2012 | Posted by Global InvestorsWhat happens when you finally want to live off of your portfolio? Most withdrawal methods call for a combination of spending dividends and selling shares to cover the rest. But what if you wanted to live only off of dividends from your stocks and the interest from bonds? I was curious to see how this would have worked out historically.
Let’s say you had $100,000 invested in a mutual fund, and you had to live off the dividend income produced from those shares without any additional buying or selling. I found historical price data and dividend distributions for select funds from Yahoo Finance that went back to 1987-1990, and added up the trailing 12 months of dividends to see how much money they would have generated over a year’s time.
The Vanguard Wellesley Income Fund (VWINX) is a low-cost, actively-managed fund which has been around since 1970. It is composed of approximately 35% dividend-oriented stocks and 65% bonds (mostly corporate for higher yields). This conservative allocation is designed to create a steady income stream with less focus on capital appreciation. Let’s see how $100,000 invested in 1988 would have done in terms of income:
In 1988, interest rates were relatively high and $100,000 of Wellesley shares would have created nearly $9,000 of annual income. In 2012, that same set of shares would be worth $156,000 and your income would be about $5,400 annually. The income produced had some swings, but overall did not seem to track with inflation although the share price did better. According to the CPI, $100,000 in 1988 would buy as much stuff as $180,000 today.
The Vanguard 500 Index Fund was the first index fund available to the public and is now one of the largest funds in the world, passively following the S&P 500 index of large US companies since 1976 and thus always 100% stocks. Even though this is not a dividend-focused fund, it still does produce a regular stream of dividends from the companies it tracks:
In contrast, $100,000 of the Vanguard 500 Fund would have only created about $2,700 of income in 1988, but that income has grown over the next 24 years to about $8,800 today in 2012. Also of high significance is that the value of your $100,000 worth of shares from 1988 would be worth around $500,000 today.
This is just a limited snapshot of two funds, but it would suggest that you can’t just buy an income-oriented fund that has a large chunk of bonds and expect to sit back and spend whatever dividends are spit out. However, things would have turned out much better if one was reinvesting a big chunk of those Wellesley dividends when the overall yield was high. I can still envision a income-oriented portfolio, but I will have to set a reasonable withdrawal rate that isn’t too high and have the discipline to plow the rest back into buying more shares.
Related posts:
Creating Retirement Income Only From Dividends and Interest? from My Money Blog.
© MyMoneyBlog.com, 2012.
View full post on My Money Blog
Blue Cash Preferred from American Express Review: $150 Bonus + 6% Back on Groceries
March 8th, 2012 | Posted by Global Investors
Improved offer! The Blue Cash Preferred from American Express Card offers a whopping
In addition, there is now a $150 welcome bonus for new cardholders when you spend $1,000 or more within your first 3 months. The card has a $75 annual fee, but keep in mind that spending $25 a week on groceries, that 6% back will earn enough cash ($78) to pay for the annual fee by itself. The Blue Cash Preferred also has 0% APR interest on purchases for 12 months.
The regular Blue Cash Everyday from American Express gives you $100 cash back bonus after spending $1,000 in eligible purchases in the first 3 months, pays 3% cash back on purchases at supermarkets, 2% cash back on gas and department store purchases, and 1% cash back on everything else and has no annual fee.
If you spend less than a combination of $175 per month on groceries and $100 on gas per month, then the Blue Cash Everyday would give you more money back overall. Otherwise, the Preferred above works out better. Both cards offer the simplicity of cash back on the major “need” categories of groceries and gas, great for those that don’t like dealing with rotating categories or don’t travel very much.
Related posts:
View full post on My Money Blog
Coming Soon MatchRate PLUS Ultra Assessment From An Stay At HomeMomma
February 27th, 2012 | Posted by Global InvestorsView full post on Live News from PR-USA.net
Purchase Quality Ready Made Curtains from Montgomery
February 13th, 2012 | Posted by Global InvestorsMontgomery
Tomlinson are considered to be the UKs leading designer and manufacturer of
soft home furnishings. Located in the North West of England they specialise in
producing both made to measure and ready made curtains and blinds. Their unique
and stylish range of fabrics has something to suit every single homeowners
individual taste and style.
View full post on Live News from PR-USA.net
Slate Card from Chase: 0% APR For 15 Months + NO Balance Transfer Fee!
February 7th, 2012 | Posted by Global Investors
New, improved offer! The Slate Card from Chase is now available with 0% APR on both balance transfers and purchases for 15 months, and the best part: NO balance transfer fee! There are different flavors of this card, but you should see it mentioned right at the top of this specific offer link. You can literally borrow money for free and pay it back in 15 months with no interest (keeping in mind you’ll still need to satisfy the minimum payment each month until then). No annual fee.
This is a limited time offer, and very rare these days to find a no balance transfer fee 0% APR offer that is available to all (as opposed to being targeted only to specific customers). You can verify in the Pricing & Terms section of the application, down in the Fees box:
None on transfers made within 30 days of account opening. All other transfers: Either $5 or 3% of the amount of each transfer, whichever is greater.
Make sure you initiate that balance transfer within the first 30 days.
Lower your interest on balances!
This is a great opportunity for those people with good to excellent credit but are still working hard to lower their debt payments with no fees at all, as now you can have all your money applied directly into cutting down your principal instead of having it go towards interest. That way, your balance owed will go down that much faster.
Chase Blueprint is a free feature on select cards that lets you break down your balances into things that you want to pay in full each month and bigger purchases that you wish to pay off over time.
Earn interest with the money?
It’s been a while since I did any sort of credit card arbitrage, but you can still get some pretty high rates with certain rewards checking accounts. For example, Consumer’s Credit Union has their Free Rewards Checking account paying 4.09% APY interest on balances up to $10,000 if you make 12 debit card purchases + one billpay per month. The rate is even guaranteed at least through June 30, 2012. You can join with a $5 one-time fee, even integrated into their online application:
All credit unions have a common bond and their members need to be associated with it in order to join the credit union. At Consumers Credit Union (CCU), our common bond is the Consumers Cooperative Association (CCA). You join CCA by paying a one-time fee of $5.00.
Another good option is U.S. Savings Bonds. Series I bonds bought right now will earn 3.06% for the first six months, and then an unknown rate based on ongoing inflation after that. Even with zero inflation, it will still earn more than any 1-year bank CD… and I really don’t see zero inflation.
If you wish to get cash from this balance transfer offer without it being classified as a “cash advance”, one idea is to ask for the balance transfer as a check or electronically transferred to your bank account. You may need to call them for this. Another option is to request money to be transferred to other non-Chase credit cards that you have, ideally already with a balance on them. This will create a negative balance, after which you request a refund check be sent to you. I know that Citibank had a feature on their site to request a credit balance refund, which only showed up when you have a negative balance.
Slate Card from Chase with No Balance Transfer Fee application link
Related posts:
Slate Card from Chase: 0% APR For 15 Months + NO Balance Transfer Fee! from My Money Blog.
© MyMoneyBlog.com, 2012.
View full post on My Money Blog
Recent Blog Posts:
Popular Blog Posts:
Subscribe to our RSS