that is the hoped for outcome but it seldom works out. look at the bank stocks. they were the dividend kings of past years. if you carefully read what you wrote you will see that you made my case. dividends are a wash.
Is it advisable to do this?
- Thread starter osho67
- Start date
No risk no reward.
High risk high reward
Find somewhere in between where you are comfortable and model your risk well .
Diversification is the closest thing to a free lunch. Also, keep in mind, EVERYTHING went down together in 08 so those diversified well still took it in the chin if they panicked and sold at the bottom. Understand your time horizons.
High risk high reward
Find somewhere in between where you are comfortable and model your risk well .
Diversification is the closest thing to a free lunch. Also, keep in mind, EVERYTHING went down together in 08 so those diversified well still took it in the chin if they panicked and sold at the bottom. Understand your time horizons.
the first one is true. the second one is not true. high risk most often means no reward too. hitting singles is the best way to make a reward. not shooting for home runs.
No. The market may go down in which case your account could lose money, something not very likely with a savings account. Margin can magnify losses as well as gains, plus you have the added cost of the margin.
Personally I don't think dividend yield is very predictive of future total returns, and that's all I care about, but I read an interesting approach to retiring on dividend stocks. Essentially ignore the value of your portfolio and focus on the income stream that it produces. In down years the value may go down but dividend yields will likely rise providing protection to your income stream. In good years the portfolio value goes up which will help to enhance your income stream. Note that the data in this article is based on backtested data, his future returns are likely to be less, as are yours.
http://www.osam.com/pdf/Commentary_May10.pdf
Here is a simple alternative approach, relying not on dividends but on buying and holding non-correlated (as much as possible) assets.
http://alhambrainvestments.com/wp-content/uploads/2008/09/the-benefits-of-low-correlation.pdf
Not a trading approach but it will beat a savings account most years.
Terrible advise.
More effective to buy an ETF.
You suggest to pay all those comissions instead?
As stated before -- this is not the place to seek actual investement advise.
OP,
the 1.3% rate IB charges is only relevant if you plan to borrow. I'm not sure why would do that. Most banks and MM funds are paying less than 1.3% on your cash so might as well pay cash for the stocks instead of borrowing
If you plan to have exposure higher than 100% I'd highly recommend you dont do that as a novice in the investing world
the 1.3% rate IB charges is only relevant if you plan to borrow. I'm not sure why would do that. Most banks and MM funds are paying less than 1.3% on your cash so might as well pay cash for the stocks instead of borrowing
If you plan to have exposure higher than 100% I'd highly recommend you dont do that as a novice in the investing world