Is it advisable to do this?

Quote from osho67:

I have usd 500000 and interest I receive from my savings a/cs is not much. If I open a portfolio margin a/c with IB , IB will also lend me at 1.3%. I buy good shares with good dividend yield and hold it for long term . My return at least will be better than savings a/cs .

Will this work?

If yes how do I select good dividend US stocks?

If no what else can I do where my capital is near enough safe and I have good reasonable income. If stock buying approach can work I can in future buy european or UK stocks as well. I am a UK citizen.
I have not been able to get reasonable income from my ISA and some tractor funds. I donot mind investing in good funds which will give me good dividend yield or even good prospects for growth.

Many people must be facing this dillema and what do they do?

Please give advise. Thanks.
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you do realize that dividends are a wash? if you have a $50 stock that pays a$1 dividend the day after the dividend is paid you will have a $49 stock and a $1 dividend.
there is some merit in selling puts on dividend stocks as a way to enhance yield but it is far from easy.
 
Quote from Free Thinker:

you do realize that dividends are a wash? if you have a $50 stock that pays a$1 dividend the day after the dividend is paid you will have a $49 stock and a $1 dividend.
there is some merit in selling puts on dividend stocks as a way to enhance yield but it is far from easy.
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The puts will generally price in the dividend. No free money there.

Also, in some jurisdictions holding puts over ex-div will effect the way the dividend is taxed.
 
If you really were an accountant, you should not need a "professional advisor." Every city in this country has had multiple cases of so called "professional advisors" that have been exposed as scammers.

In addition, it sounds like you have time on your hands anyway, so you should be able to manage your own investments. However, I do not like your idea of buy and hold + leverage as you are just asking to get killed in the next major downturn.
 
Quote from steve3001:

If you really were an accountant, you should not need a "professional advisor." Every city in this country has had multiple cases of so called "professional advisors" that have been exposed as scammers.

In addition, it sounds like you have time on your hands anyway, so you should be able to manage your own investments. However, I do not like your idea of buy and hold + leverage as you are just asking to get killed in the next major downturn.
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Thanks, I agree with what you have said about leverage. If I donot use much leverage (I donot know how much) , do you think I stand a good chance of earning more than savings a/cs? If I buy 100 stock for each company and assuming average price of share is $100, I can buy shares in 50 companies. Sure there can easily be 50 reliable companies with good dividend.
 
You just have to decide what you want to risk --

1) Risk your capital in stocks

2) Risk not outpacing inflation in cds/savings

There is no right answer, only you can decide that. Sure the dividend yield looks nice on some stocks, but your principal can also decrease on those (as well as increase).

In theory buying a big basket of individual stocks would help mitigate any down swing in the market, but there will always be risk to your principal.

If you are of age, maybe look at the different annuities out there that let you participate in the market but come w/ downside protection as well. Annuities can get expensive, so make sure to check out all fees involved.
 
Keep it simple. Buy half SPY, sell a 12 month OTM CALL and use the other half to sell an equal position in a OTM PUT 12 months out.

ie: 600 shares SPY, 12months out sell 6 calls 5-10 points OTM
sell 6 puts 5-10 points OTM 12 months out

ie if spy is at 134 you sell the 140 calls jan 2012
and sell the 130 puts jan 2012


reinvest dividends via DRIP.

never over leverage, your max leverage should be lets say 4% of total portfolio value.

and deposit cash over time to cover the 4% leverage over 12 months.
 
Quote from KINGOFSHORTS:

Keep it simple. Buy half SPY, sell a 12 month OTM CALL and use the other half to sell an equal position in a OTM PUT 12 months out.

ie: 600 shares SPY, 12months out sell 6 calls 5-10 points OTM
sell 6 puts 5-10 points OTM 12 months out

ie if spy is at 134 you sell the 140 calls jan 2012
and sell the 130 puts jan 2012


reinvest dividends via DRIP.

never over leverage, your max leverage should be lets say 4% of total portfolio value.

and deposit cash over time to cover the 4% leverage over 12 months.
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I am not sure whether you are joking or you are serious.

At the end of year suppose spy is more than 140 ,I willbe left with no stock or if Spy is less than 130 ,I will have 1200 stock.

At 134 my cost is 134x600=80400. I have said I have 500k

And what about dividend income?

The sole purpose of this thread was - can I earn more than my savings a/cs?
 
Quote from Rationalize:

Get professional advise from a licensed advisor.

Do not take advise from the internet(s).
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Terrible advice. Most licensed advisors are salesmen - sharks in suits, trying to rip you off with the highest commissions and kickbacks possible. Their collective performance is terrible, only a small minority are good at their jobs. Do not trust them.

Read this: http://www.amazon.co.uk/Little-Book...2101/ref=sr_1_1?ie=UTF8&qid=1305743815&sr=8-1

Then set up a diversified passive index-fund portfolio and sit on it.
 
Quote from Free Thinker:

you do realize that dividends are a wash? if you have a $50 stock that pays a$1 dividend the day after the dividend is paid you will have a $49 stock and a $1 dividend.
there is some merit in selling puts on dividend stocks as a way to enhance yield but it is far from easy.
More...

Please tell me you're joking! Historically, dividends make up half of total stock market return.

If a $50 stock pays a $1 dividend, it is generally earning at least $1 per annum. So without the dividend, the stock would rise to $51+X (where X is the capital gain or loss depending on market and corporate performance) within 12 months due to accretion of corporate earnings. With the dividend, the stock pays out $1 and goes to $50+X within 12 months.

In both cases the stock becomes more valuable over time (other things being equal) due to accumulated earnings, whether they are retained by the company and used productively, or paid out to investors as a dividend.
 
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