Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Steve Felix who wrote (3832)	2/20/2010 12:06:44 AM
From: Paul Senior	2 Recommendations Read Replies (1) \| Respond to of 34328

I've never considered how many stocks is reasonable for a person who pays no attention to the market. Uh oh -g-, it's something that may require some actual contemplation. Ten seems too many to me, but then again if it's just money being put into them periodically with no consideration of their stock price, it might work. Maybe five? You've got two that are obscure things, so enough of those, I'd say. Maybe something your daughter might have some common knowledge of, say Colgate-Palmolive. People are going to keep brushing their teeth (with toothpaste), one hopes. OTOH, if she reads something negative about CL, she just might get scared out of it. So obscurity may have its benefits. ==================================== Here's one thing I would say to her: "Look, for the entirety of your remaining life, as long as you are on your own and when you have a family and when you are retired, you or somebody close to you is going to be paying your utility bills: Water, Gas, Electric. (aside: I am presuming this to be so.) I want you to promise me, that wherever you live, you buy the stock of at least one of your local utilities, and you reinvest the dividends. Eventually the dividends you receive from the initial purchases and from all the other purchases with the reinvested dividends, will not only cover all your utility bills, but will surprise you with the accumulated value you will have achieved. It's tit-for-tat -- you pay them, they pay you. Eventually, you win. I will get you started by picking one of these utilities now to whom you are writing checks every month." (aside: Assuming young people still write checks(? -g-)) Now maybe it'll be the "wrong" utility stock that's chosen, so okay, maybe pick two. And maybe the local area is kaflooey, so any utility stock in the area or maybe even larger region will be a poor choice. Otoh, as I look at my portfolio of utility holdings, they mostly move in tandem. The ones with higher yield seem to be at lower p/e or price. Higher priced ones seem to have lower yield. The thing is we're only looking at "wrong" vs. "right" in a freeze-frame. In 30 or 40 years of investing and reinvesting the dividends in one or another utility stock (she moves to another part of the country, she switches to buying/reinvesting in the new utility) it should still suffice. It may not be optimum, but it should work. A simple simple little uncomplicated request from Dad easy to remember, easy to do (one hopes) that can go on long after you're gone. Well, I like it. A lot. Jmo.

To: Steve Felix who wrote (3832)	2/20/2010 12:51:20 PM
From: chowder	Read Replies (1) \| Respond to of 34328

Like you, I'm going against conventional wisdom. I don't have my 18 year old daughter invested in mutual funds even though her account is under 25K. If all a person has is 5K to invest, I'm buying 2 stocks of equal dollar value. I'm going with a utility and an energy stock. I was going to recommend KMR, but you have EPD, so that's fine. Since the portfolio is limited, I'm taking the best qualified utility as opposed to the local one, in the event it isn't the best qualified. Every 2.5K that gets added to the account, I would buy a new position in another sector, keeping it diversified and in something they can relate to. KO, PEP, MCD, PG, etc. Where some may disagree with me, I would keep it in Aristocrats because they don't follow the market. I would want their funds in something where if they didn't look at the market, or their portfolio for 5 years, they would still have a comfort level, especially in the event of my untimely death and I wasn't there to monitor the account for them. (My son asked me ... Dad, what do I do if something happens to you? ... I told him everything is written down and his accounts are set up for automatic pilot.) :o) I would have all dividends reinvested! At their age, the focus needs to be on compounding in my opinion. They have the time to let it work.