Thanks for your earlier post. I have done a lot of research on this dividend reinvestment method and on particular shares that may fit its critera. Learning a lot thus far.
Another question on the income & compounding portfolio, though.
This one obviously has a "never sell" philosophy (unless the income stream suffers serious decline or dries up completely.
So the recent market pullbacks / crash / other fancy word would not phase you within this portfolio.
But do you see this as a time to top-up? At 3800 some of the yields for companies that consistently see dividend growth are very enticing. Or do you have an overall "Technical view" of the market and even use it within this portfolio?
A capital base that is workable.
It confirms the Richest Man in Babylon virtues of discipline and consistency.
Agreed; but very easy if you have a vision for your future (not just "I want to retire") and the determination to succeed. I guess my personality type helps too. I am a big picture, long-term over instant gratification type thinker. If you have a vision and can set realistic goals toward achieving them it is very possible.It requires a lot of discipline and the ability to ignore market fluctuations over many years and the swings that brings with your open equity. It also can be difficult for the first 3-5 years as you see very little reward for this period.
Still working on some ideas for a "technical or trading" type fund, but as tech/a and yourself have said already this is not something that I will be able to implement nearly as quickly due to the learning curve. I may find that I never put this in place if I do not feel comfortable understanding the risk management side of things.
Agreed; but very easy if you have a vision for your future (not just "I want to retire") and the determination to succeed. I guess my personality type helps too. I am a big picture, long-term over instant gratification type thinker. If you have a vision and can set realistic goals toward achieving them it is very possible.
Thanks for your help. I am finding the long-term passive income portfolio idea the easiest to plan and formulate. The basic criteria (which will develop further to my tastes over time) make good sense to me.
A very simple but effective portfolio policy for the defensive investor is the 50/50 cash vs index fund approch suggested by benjiman graham.
It is a rather mechanical approach in which the defensive investor holds 50% of his funds in cash and 50% in a stockmarket index fund,
Each time market movements upset the balance by 5% the investor adjusts the portfolio back to 50/50 ratio by either selling or buying the index.
So in an advancing market the investor steadily sells stock and in the declining market he steadily buys stock.
I am finding the long-term passive income portfolio idea the easiest to plan and formulate. .
Still working on some ideas for a "technical or trading" type fund, but as tech/a and yourself have said already this is not something that I will be able to implement nearly as quickly due to the learning curve.
A very simple but effective portfolio policy for the defensive investor is the 50/50 cash vs index fund approch suggested by benjiman graham.
It is a rather mechanical approach in which the defensive investor holds 50% of his funds in cash and 50% in a stockmarket index fund,
Each time market movements upset the balance by 5% the investor adjusts the portfolio back to 50/50 ratio by either selling or buying the index.
So in an advancing market the investor steadily sells stock and in the declining market he steadily buys stock.
Cheers, in my own reckoning it is almost the perfect "crossroads" to start a portfolio like this. I have started drip feeding my salary into some smaller positions based on the higher yields of the banks. I am leaving a decent chunk of cash on the side for buying opportunities at levels 3800 and below.
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I found this calculator on an American website called "Dividends4life."
Obviously it has a flat dividend growth rate and in reality the fluctuations are going to produce different results, but even when using very conservative figures it demonstrates the power of such a reinvestment compounding strategy. It's a good counter-part to the spreadsheet that you produced for CBA.
It confirms the Richest Man in Babylon virtues of discipline and consistency.
perhaps a 30 (cash)/70 (stocks-index) ratio along with mechanical moves in and out at every 6 or 7% mite be more aggressive.
Crank up excel and do some random generation models of rebalancing. Rebalancing does add a little over non-rebalincing but the yield differential doesn’t have to be too much before you are better off going 100% for the highest yield option so long as you have a long enough time frame to ride out volatility.
I think that this is a really good idea from Graham for people who are building a conservative Growth portfolio.Each time market movements upset the balance by 5% the investor adjusts the portfolio back to 50/50 ratio by either selling or buying the index.
I am not sure how you would apply it to a portfolio that is chasing dividend growth to build a passive income (rather than primarily capital growth) such as the one that nomore4s is discussing.
My gut feel is that the re-balancing would be detrimental to the yield on cost in this case.
Any ideas?
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