Don’t get me wrong, dividends are fine, but just because a stock pays a hefty dividend does not mean it is a great investment. And the dividends the stock throws off are not “free money”.
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Don’t get me wrong, dividends are fine, but just because a stock pays a hefty dividend does not mean it is a great investment. And the dividends the stock throws off are not “free money”.
This one impacts anyone with money to invest in a savings account, CD, or short term bond of any sort. The historically low savings rates are slashing retirees lifestyles. All the folks looking to earn a return above 0.9% on their savings need to do some digging around.
I would like your opinion and advice on how I should allocate my investments and my daughter’s investments among mutual funds.
The beginning of the year is portfolio rebalancing time for investors. I write a lot about investing as I believe it is an achievable path to long term wealth. If you don’t know what asset allocation is or much about investing at all then this article is for you.
So, if you buy a BOND FUND when interest rates are very low, when interest rates rise and the bond fund price falls, you will experience a loss on your initial funds when you sell since there is no end or maturity to a bond fund!
In investing, you feel great when your statement shows a nice fat annual return like 12% or even 13%. Conversely, when you have a “bad” year with a negative return, you’re disappointed.
A BOND is a loan to a corporation, municipality, or government. When you buy a bond you are making a loan to the bond issuer. In exchange for the loan, you receive an interest payment. The amount of interest you receive is directly related to amount of risk you are taking.
I like how you broke down the stocks and bonds percentages. Do you really think we can expect an average return of over 7% over the next 30 years? My husband and I were just discussing how savings rates are so low and have been for 10 years.
Barbara Friedberg Personal Financeteaches WEALTH BUILDING SKILLS. Pay attention, be patient, don’t overspend on stuff that doesn’t last; save, invest, and you can become rich. Take action to hit your wealth target.
Copyright © 2012 Barbara Friedberg Personal Finance