|First year of tracking results are here:|
All the retirement literature will tell you that as you get older you put more money into bonds. Have to play it safer they say.
Well, if that is the case, I am going about things all wrong. Perhaps there are more like minded individuals out there.
My goal is to have dividends make a nice contribution when I retire. If things work out, the stocks will pass to my daughters when my wife and I pass away.
I own no bonds, bond funds or mutual funds other than a 401k that is invested 100% in three stock funds. Mutual funds nick you year after year and also have you paying taxes when they want, but I can't turn down the tax deduction of puting a large percentage of my pay in there.
My back up is five, five year laddered CDs', and that my wife will be eligible to start drawing her pension in four years. I doubt she retires at 55, but it is an option. I have no pension, and would like dividends to more than cover whatever % I will need to withdrawal when the time comes.
Upon retirement, my 401k will be rolled into a long ago opened IRA in which I will have to pay taxes on all withdrawals. Hopefully, four years from now I will have at least 70K in the 401k to invest in stocks when I roll it.
Being lazy, I keep my personal account invested in stocks that pay qualified dividends. Keeping track of cost basis is easy that way. No return of capital, etc to keep track of. Besides, Uncle Sam is limiting the tax on qualified dividends to 15% until at least 2010.
I keep reits, trusts, etc. in my old IRA since I will end up paying my tax rate at the time, on withdrawal.
I let the dividends build up in my account while keeping an eye out for another stock to buy. I like to keep a couple of dividend stocks that I do not own on the radar, although sometimes I just add to one I already hold.
I invested in my first dividend stock about five years ago, never thinking that I would end up with each account 100% invested in dividend stocks. I found that I liked money coming into my account on a regular basis and also the fact that the yields help hold the stocks up during periods of market downturns. It just happened.
Feel free to tell me I am crazy, talk about dividend stocks, retirement, taxes, the weather, dogs, or anything else you would like. I will confess to being an expert at nothing other than I am going to keep track of my portfolios and dividends on this thread.