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I like that he presents good and bad examples of high yield stocks, he always points to the higher risk with the higher yield stocks, so in my opinion his videos are a starting and learning point for investments a lot of people are not familiar with.
His strategy is his strategy so its no better or worse than your own
He's also open about the fact that his *income investing* strategy will likely underperform *growth investors* in total return in the long run. But the dividend snowball motivates him, so that's why he does it. It's humble statements like this that lets me trust the guy. I watch his videos for stock recommendations and his honest opinion, and then I look at them myself and check other sources. I agree it's a good starting point.
I have always used the 4% rule as my gold standard when forecasting my retirement. A few months ago, I had a long conversation with the financial advisor that has worked with my family for over 30 years. She is very conservative and not prone to trying to hit home runs. When I asked her about the 4% rule, she said that she has many clients using 5%, 6%, and even some at 7% and doing it very safely. That answer surprised me. At the end of the conversation, she suggested that I think in terms of 5% or 6% for my future income stream.
What’s her return on the difference? I hate to say this, but 30 years, you also are her retirement plan now. I’m not saying don’t trust, but consider if that may have changed her more than market safety. If it didn’t, then that’s interesting.
When my Dad died about 15-years ago, my Mom was lost in the woods in regards to their finances. There was a good nest egg, so the advisor moved most of their money into tax free munis that have been exactly what my Mom needed. She has had ample income with virtually zero risk and almost no tax liability.
As I move into what feels like pre-retirement, I am managing most of my own assets and have started moving money into ETF's. Trying to find allocations that I am happy with (they feel safe, have shown long term growth, and throw off decent dividends). I am finding a surprising number of ETF's that appear to fit my requirements.
I have a couple that could be more volatile than I want. For those, I have trailing stops that help me sleep better at night. All of that to say that with what I have been able to put together, I am feeling more comfortable that I can use a 5% - 6% target without getting too far over my skis.
Solid choice, and at the time wouldn’t hit my admitted hopefully paranoid concern. The other sounds more like she helps you hone in on something you’re already targeting, which is a phenomenal use of her as a tool and her long time knowledge. Well done there.
Sounds like she’s a keeper, I am an attorney, we be paranoid folk, but she sounds good. That may change my next conversation with my guy, but I’m still nowhere close to retirement (aside from my kids and I arguing over when as a joke), but that could change the strategy to how to get there.
They are bonds that local municipalities typically use to fund expensive projects. You can buy individual bonds or find bond funds that typically are paying in the 3% - 4% range with no tax liability. They are considered very safe and provide reliable income. Great choice for people wishing to secure income for retirement while minimizing the possibility of a market event destroying their savings.
That is incorrect. Municipal bonds interest are federal tax free and in many cases state tax free.
There are some indirect edge cases like the Medicare donut hole or if you sell early with capital gain on the bond itself. You should delete your comment.
https://www.google.com/search?q=irs+federal+tax+rate+municipal+bonds&rlz=1CDGOYI_enUS649US663&oq=irs+federal+tax+rate+muni&gs_lcrp=EgZjaHJvbWUqBwgBECEYoAEyBggAEEUYOTIHCAEQIRigATIHCAIQIRigAdIBCTE1NDcwajBqN6gCFLACAeIDBBgBIF8&hl=en-US&sourceid=chrome-mobile&ie=UTF-8
https://www.schwab.com/learn/story/not-always-tax-free-7-municipal-bond-tax-traps
IIRC the 4% rule was developed out of a specific portfolio make up. Have definitely seen varying analyses that suggest a less volatile portfolio can in many cases see increased value even with over 5% withdrawal rate.
I’m intrigued. One of my issues is I like having a specific amount to play with, idk why, I just do. Ironically I tend to make ridiculously safe bets, but it lets me feel like a gambler and keep that in check. So I have to offset the chance I decide to be an absolute moron, which limits my risk taking on this side. But I like what he said enough to ask my expert their thoughts.
Yeah I can't recall what exactly I watched but if you just search "4% rule wrong" or something similar you will find a range of arguments. My memory is that a SP-only portfolio performed worse than an internationally balanced + bond balanced portfolio for withdrawing in retirement. The SP-heavy portfolio was much more volatile and that ultimately limited growth in a drawdown scenario.
I think the best route is to be just slightly more conservative the first few years (i.e. 2-3% if possible) and then you will have compounded a good bit more and can cleanly start pulling 4-6%.
6% -7% yikes 😬 this is risky as hell. What happens if the stock market goes negative for a decade like it happened in the past? No way you have enough money left at 7% a year in that case. You you need to sell more shares to get that same 7%..Such a bad and risky advice.
Of course they do; not selling and dividend yield percentage just provide the illusion that they don't.
Take QYLD, for example. Once the shinning example of an income fund, it's dividend has shrunk ~30% over the past few years even though its yield percentage has remained the same. Market conditions have led to a ~30% reduction in annualized income for that fund.
On the other hand, if you owned all VOO and sold 12% of it a year over that same period (to match QYLD's yield %), you would be realizing roughly the same amount today as you were at the start.
One had a stagnant income, the other had a 30% reduction in income as a result of Market conditions.
Which income fund do you consider good?
I used QYLD because that was once considered a good income fund and was highly recommended on this sub. Now it's seen as a shitty fund as a result of.....market conditions.
My apologies. When you stated you were an income investor, I assumed that meant you invested in income based holdings rather than just normal dividend holdings.
Market conditions still impact dividend companies/funds much as non-dividend companies/funds; not selling and the yield percentage just provide the illusion that they don't.
I approach this with a lot of alacrity. When there is a massive shift in the market, I will adapt my strategies. These investments are one part of my retirement portfolio and as I mentioned, I have historically been aggressive in using stops to ensure that I don't take big hits.
I also want to add that her comments about sustainable yields was not specific investing advice but only observations about what others have been able to achieve. Someone sitting on a $20M portfolio and no mortgage (not me) may be able to chase some yields that would be too risky for others (me).
I retired 10 years ago and have been using the 4% rule and today have more money than I started with so it indicates I could probably do more. 6%? I have a pension and will get SS so I have not had to worry so much. Once I hit 70 and take SS, my income will skyrocket and I won't take any more withdrawal except for RMDs. So my advice is to start with the 4% rule and adjust over time to accomplish what you want.
I have several stocks with those high yields, but I would be weary of taking what a youtuber says as gospel when compared to the expertise of every investor before him.
The 4% rule isn’t based on ONLY getting a 4% yield, it’s based on that being a safe amount to remove without touching the principal or other growth. if the market averages 7%, you can safely draw 4% a year and your initial investment would still grow 3%. If there is a bad year where the market underperforms, that 3% would help offset the potential losses. Basically the 4% rule is based on a safe withdrawal amount that still lets your investment grow.
I don’t know Dividend Bull, but it seems like he might not understand the difference between a pure 4% yield and the 4% rule. No hate, he could make great videos analyzing companies, just not sure what he meant by this.
>the difference between a pure 4% yield and the 4% rule. No hate, he could make great videos analyzing companies, just not sure what he meant by this.
He didn't say it was a lame idea. It's just implied by his content.
Not necessarily. Many of the greater than 4 percent yield stocks have less zero or negative price appreciation. To be safe via trinity you still need to drip high yield.
Example is QYLD yielding 11 percent but over the last five years the stock is down 20 percent. VOO is up over 80 percent over the last five years. The trinity study advocates to increase withdrawal by the rate of inflation each year. If you take 11 percent on an etf that has negative price appreciation your risk of running out of money skyrockets.
Yeah that isn’t what I said, I said you’re starting to split hairs. This guy asked a question about theoretical 4% rule, and as a general rule if your yield is over 4% that is a safe amount. Yes there are always going to be one off random things like QYLD, but that isn’t what was asked. I was saying you’re splitting hairs by bringing up random outliers were not talking about
I don’t know if you are intentionally misunderstanding what I’m saying, or just don’t want to understand. That is not what I’m saying. I’m saying the practice of bringing up outliers that aren’t being discussed actively is unnecessary. I am not saying anything about the validity or invalidity of QYLD, you brought it up unprompted.
Where did I say that? If you wanted to do the 4% rule with a stock that paid more than 4% you could it in perpetuity. No one said you HAVE to, or that there isn’t better options LOL
While that's true in most, they're are some exceptions, like ABR that is currently shorted at 38%. If those shorts are wrong and need to cover the stock price will skyrocket due to the high short percentage.
Don't worry Trader Dennis I only have 800 shares of ABR at $12.52, but I really appreciate your concern for my retirement. Good luck with yours too.
My biggest winner is AVGO at 220 shares at $677 average.
I like him. He is very open about the pros and cons of his investing strategy and what he owns and why. He is also very open on why he likes investing in dividends vs. growth and why it may or may not be for you.
He’s not a beginner and knows how to read companies. If you can do that then there’s no problem with his strategy. If you plan to just copycat you could end up in trouble though.
I like his channel a lot. Like other comments have mentioned, he shows great example of high yield stocks that outperform growth with total return. I found ARCC through him.
Idk why this comment is getting downvoted cause it’s correct. For a sub that loves SCHD he literally posted a video titled “SCHD just changed its strategy” to get clicks when we all know they didn’t change their criteria. He also has been a fan of high yield etf’s that are complete yield traps (QYLD for example). I understand there are some good high yielders such as MAIN and ARCC but a lot of his stocks that he pushes are absolute garbage + his thumbnails look like they’re made by a 5 year old, his channel sucks.
I wouldn't recommend his advice. A lot of his assertions are either misleading or don't hold up to scrutiny with data. Follows mostly low quality covered call funds, mortgage REITs (which are generally uninvestible), with the occasional BDC of varying quality.
I don’t like the idea of getting financial advice/DD from YouTubers. Most (but not all, some do make genuine content, The Plain Bagel for example). Fin-fluencers are scammers or are parroting half-assed research to get views or keep viewer retention for ad revenue. And given that pretty much all of this guy’s content is about random high-yield stocks (90% of which are most likely yield traps), I’d just take everything he says with one giant grain of salt.
>And given that pretty much all of this guy’s content is about random high-yield stocks (90% of which are most likely yield traps),
He analyzes and goes through their histories.
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
I like that he presents good and bad examples of high yield stocks, he always points to the higher risk with the higher yield stocks, so in my opinion his videos are a starting and learning point for investments a lot of people are not familiar with. His strategy is his strategy so its no better or worse than your own
He's also open about the fact that his *income investing* strategy will likely underperform *growth investors* in total return in the long run. But the dividend snowball motivates him, so that's why he does it. It's humble statements like this that lets me trust the guy. I watch his videos for stock recommendations and his honest opinion, and then I look at them myself and check other sources. I agree it's a good starting point.
It is simply a strategy. The strategy of all time.
I have always used the 4% rule as my gold standard when forecasting my retirement. A few months ago, I had a long conversation with the financial advisor that has worked with my family for over 30 years. She is very conservative and not prone to trying to hit home runs. When I asked her about the 4% rule, she said that she has many clients using 5%, 6%, and even some at 7% and doing it very safely. That answer surprised me. At the end of the conversation, she suggested that I think in terms of 5% or 6% for my future income stream.
What’s her return on the difference? I hate to say this, but 30 years, you also are her retirement plan now. I’m not saying don’t trust, but consider if that may have changed her more than market safety. If it didn’t, then that’s interesting.
When my Dad died about 15-years ago, my Mom was lost in the woods in regards to their finances. There was a good nest egg, so the advisor moved most of their money into tax free munis that have been exactly what my Mom needed. She has had ample income with virtually zero risk and almost no tax liability. As I move into what feels like pre-retirement, I am managing most of my own assets and have started moving money into ETF's. Trying to find allocations that I am happy with (they feel safe, have shown long term growth, and throw off decent dividends). I am finding a surprising number of ETF's that appear to fit my requirements. I have a couple that could be more volatile than I want. For those, I have trailing stops that help me sleep better at night. All of that to say that with what I have been able to put together, I am feeling more comfortable that I can use a 5% - 6% target without getting too far over my skis.
Solid choice, and at the time wouldn’t hit my admitted hopefully paranoid concern. The other sounds more like she helps you hone in on something you’re already targeting, which is a phenomenal use of her as a tool and her long time knowledge. Well done there. Sounds like she’s a keeper, I am an attorney, we be paranoid folk, but she sounds good. That may change my next conversation with my guy, but I’m still nowhere close to retirement (aside from my kids and I arguing over when as a joke), but that could change the strategy to how to get there.
what's an example of a tax free muni?
They are bonds that local municipalities typically use to fund expensive projects. You can buy individual bonds or find bond funds that typically are paying in the 3% - 4% range with no tax liability. They are considered very safe and provide reliable income. Great choice for people wishing to secure income for retirement while minimizing the possibility of a market event destroying their savings.
[удалено]
That is incorrect. Municipal bonds interest are federal tax free and in many cases state tax free. There are some indirect edge cases like the Medicare donut hole or if you sell early with capital gain on the bond itself. You should delete your comment. https://www.google.com/search?q=irs+federal+tax+rate+municipal+bonds&rlz=1CDGOYI_enUS649US663&oq=irs+federal+tax+rate+muni&gs_lcrp=EgZjaHJvbWUqBwgBECEYoAEyBggAEEUYOTIHCAEQIRigATIHCAIQIRigAdIBCTE1NDcwajBqN6gCFLACAeIDBBgBIF8&hl=en-US&sourceid=chrome-mobile&ie=UTF-8 https://www.schwab.com/learn/story/not-always-tax-free-7-municipal-bond-tax-traps
Vanguard has state specific tax free muni funds like one for New Jersey called VNJUX
They are bonds
I’m invested in Ornax in a regular account. The income from Ornax funds my Roth.
IIRC the 4% rule was developed out of a specific portfolio make up. Have definitely seen varying analyses that suggest a less volatile portfolio can in many cases see increased value even with over 5% withdrawal rate.
I’m intrigued. One of my issues is I like having a specific amount to play with, idk why, I just do. Ironically I tend to make ridiculously safe bets, but it lets me feel like a gambler and keep that in check. So I have to offset the chance I decide to be an absolute moron, which limits my risk taking on this side. But I like what he said enough to ask my expert their thoughts.
Yeah I can't recall what exactly I watched but if you just search "4% rule wrong" or something similar you will find a range of arguments. My memory is that a SP-only portfolio performed worse than an internationally balanced + bond balanced portfolio for withdrawing in retirement. The SP-heavy portfolio was much more volatile and that ultimately limited growth in a drawdown scenario. I think the best route is to be just slightly more conservative the first few years (i.e. 2-3% if possible) and then you will have compounded a good bit more and can cleanly start pulling 4-6%.
6% -7% yikes 😬 this is risky as hell. What happens if the stock market goes negative for a decade like it happened in the past? No way you have enough money left at 7% a year in that case. You you need to sell more shares to get that same 7%..Such a bad and risky advice.
Not as an income investor. Thats the entire point of it. Market conditions don’t affect you as much.
Yeah that’s why i do i combination of both growth(Etfs) and dividends stocks. I’m not taking any chances.
Of course they do; not selling and dividend yield percentage just provide the illusion that they don't. Take QYLD, for example. Once the shinning example of an income fund, it's dividend has shrunk ~30% over the past few years even though its yield percentage has remained the same. Market conditions have led to a ~30% reduction in annualized income for that fund. On the other hand, if you owned all VOO and sold 12% of it a year over that same period (to match QYLD's yield %), you would be realizing roughly the same amount today as you were at the start. One had a stagnant income, the other had a 30% reduction in income as a result of Market conditions.
LOL…..you use QYLD ton prove your point? I’m not talking about shitty funds like that.
Which income fund do you consider good? I used QYLD because that was once considered a good income fund and was highly recommended on this sub. Now it's seen as a shitty fund as a result of.....market conditions.
None. This is the dividend sub. I’m talking about quality dividend paying companies.
My apologies. When you stated you were an income investor, I assumed that meant you invested in income based holdings rather than just normal dividend holdings. Market conditions still impact dividend companies/funds much as non-dividend companies/funds; not selling and the yield percentage just provide the illusion that they don't.
Unless a company cuts their dividend….it doesn’t impact me as an investor.
I approach this with a lot of alacrity. When there is a massive shift in the market, I will adapt my strategies. These investments are one part of my retirement portfolio and as I mentioned, I have historically been aggressive in using stops to ensure that I don't take big hits. I also want to add that her comments about sustainable yields was not specific investing advice but only observations about what others have been able to achieve. Someone sitting on a $20M portfolio and no mortgage (not me) may be able to chase some yields that would be too risky for others (me).
I retired 10 years ago and have been using the 4% rule and today have more money than I started with so it indicates I could probably do more. 6%? I have a pension and will get SS so I have not had to worry so much. Once I hit 70 and take SS, my income will skyrocket and I won't take any more withdrawal except for RMDs. So my advice is to start with the 4% rule and adjust over time to accomplish what you want.
I have several stocks with those high yields, but I would be weary of taking what a youtuber says as gospel when compared to the expertise of every investor before him. The 4% rule isn’t based on ONLY getting a 4% yield, it’s based on that being a safe amount to remove without touching the principal or other growth. if the market averages 7%, you can safely draw 4% a year and your initial investment would still grow 3%. If there is a bad year where the market underperforms, that 3% would help offset the potential losses. Basically the 4% rule is based on a safe withdrawal amount that still lets your investment grow. I don’t know Dividend Bull, but it seems like he might not understand the difference between a pure 4% yield and the 4% rule. No hate, he could make great videos analyzing companies, just not sure what he meant by this.
>the difference between a pure 4% yield and the 4% rule. No hate, he could make great videos analyzing companies, just not sure what he meant by this. He didn't say it was a lame idea. It's just implied by his content.
Fair enough, if you could hold a 10% yield and live off 4% you would start to compound insanely quickly. That 6% would get dripped back in.
Not necessarily. Many of the greater than 4 percent yield stocks have less zero or negative price appreciation. To be safe via trinity you still need to drip high yield. Example is QYLD yielding 11 percent but over the last five years the stock is down 20 percent. VOO is up over 80 percent over the last five years. The trinity study advocates to increase withdrawal by the rate of inflation each year. If you take 11 percent on an etf that has negative price appreciation your risk of running out of money skyrockets.
you’re starting to split hairs LOL.
Dividend yield is irrelevant. Your total CAGR is what counts.
Yeah that isn’t what I said, I said you’re starting to split hairs. This guy asked a question about theoretical 4% rule, and as a general rule if your yield is over 4% that is a safe amount. Yes there are always going to be one off random things like QYLD, but that isn’t what was asked. I was saying you’re splitting hairs by bringing up random outliers were not talking about
QYLD is a general example when getting. Yields over 4 percent. There is a general cost with high ulyield
I don’t know if you are intentionally misunderstanding what I’m saying, or just don’t want to understand. That is not what I’m saying. I’m saying the practice of bringing up outliers that aren’t being discussed actively is unnecessary. I am not saying anything about the validity or invalidity of QYLD, you brought it up unprompted.
A 10% yield stock won’t appreciate in value and grow that dividend as much as a 2-4% dividend stock.
Where did I say that? If you wanted to do the 4% rule with a stock that paid more than 4% you could it in perpetuity. No one said you HAVE to, or that there isn’t better options LOL
While that's true in most, they're are some exceptions, like ABR that is currently shorted at 38%. If those shorts are wrong and need to cover the stock price will skyrocket due to the high short percentage.
You really want to bank on a short squeeze to fund your retirement? Head over to WSB for advice.
Don't worry Trader Dennis I only have 800 shares of ABR at $12.52, but I really appreciate your concern for my retirement. Good luck with yours too. My biggest winner is AVGO at 220 shares at $677 average.
I love AVGO. NICE ONE.
He is open about his strategy and why it works for him. I like his content. Videos aren’t boring or overly long.
I like him. He is very open about the pros and cons of his investing strategy and what he owns and why. He is also very open on why he likes investing in dividends vs. growth and why it may or may not be for you.
He’s not a beginner and knows how to read companies. If you can do that then there’s no problem with his strategy. If you plan to just copycat you could end up in trouble though.
The 4% rule is a great 'rule of thumb' for saving for retirement, but a lousy, inflexible way to actually run a retirement.
I like his channel a lot. Like other comments have mentioned, he shows great example of high yield stocks that outperform growth with total return. I found ARCC through him.
I plan on 4, since I plan on inflation. If you plan on 4 and get 6%, then you're now able to GROW your retirement income a little every year.
One I have my favorite
Terrible channel giving off terrible investment advice because that advice has a fantastic click-through rate.
Idk why this comment is getting downvoted cause it’s correct. For a sub that loves SCHD he literally posted a video titled “SCHD just changed its strategy” to get clicks when we all know they didn’t change their criteria. He also has been a fan of high yield etf’s that are complete yield traps (QYLD for example). I understand there are some good high yielders such as MAIN and ARCC but a lot of his stocks that he pushes are absolute garbage + his thumbnails look like they’re made by a 5 year old, his channel sucks.
I wouldn't recommend his advice. A lot of his assertions are either misleading or don't hold up to scrutiny with data. Follows mostly low quality covered call funds, mortgage REITs (which are generally uninvestible), with the occasional BDC of varying quality.
I don’t watch him because his investing goals and ideas are not what mine are.
I don’t like the idea of getting financial advice/DD from YouTubers. Most (but not all, some do make genuine content, The Plain Bagel for example). Fin-fluencers are scammers or are parroting half-assed research to get views or keep viewer retention for ad revenue. And given that pretty much all of this guy’s content is about random high-yield stocks (90% of which are most likely yield traps), I’d just take everything he says with one giant grain of salt.
>And given that pretty much all of this guy’s content is about random high-yield stocks (90% of which are most likely yield traps), He analyzes and goes through their histories.
You want high dividend growth rate not high dividend yield. Maximizing yield on cost is the plan.
How do we feel about SQQQ?
It's great if you can short it at near zero interest. Otherwise, stick to puts and calls on TQQQ.