harrison_wintergreen
harrison_wintergreen t1_iyfb3so wrote
I'd like to see those numbers flipped: $100k cash and $710k in 401k. unless there's some compelling need to keep that much cash.
quick dirty estimate, $750k would produce about $30k a year income if invested. that's substantially less than you're accustomed to living on. $100k in the 401k will produce about $4,000/year.
is there a pension or something in the background? if this is all your savings, you are likely nowhere near prepared for retirement.
harrison_wintergreen t1_iyf9ct3 wrote
Reply to comment by Werewolfdad in Is adding dividends to your Roth a good idea to hedge against inflation? by Flameboy465
>What’s wrong with the three fund portfolio?
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indifferent to valuation, at least as commonly practiced, and valuation is probably the most critical part of long term ROI. if one chose to follow John Boggle's advice they would boost bond allocation above Bogle's minimum 20% as Shiller p/e gets elevated and would thus take some action based on valuation. but this part of his advice is commonly ignored from what I've seen on reddit and the Bogleheads forums.
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it's dominated by large-cap growth, when small cap and value stocks tend to give the best long-term results over long periods.
>Dividends aren’t anything special
on the contrary
>In the full dataset [CRSP database of US stock returns 1928 to 2017] there have been 71 periods of 20 consecutive calendar years. Table 2 on the following page shows how the six portfolios measure up on annualized returns and standard deviations over the 20-year periods. Similar to the full 90-year sample, we find a direct relationship between dividend yield and total return. And again, volatility for dividend paying portfolios was lower than that of non-payers. https://www.heartlandadvisors.com/media/Insights/White-Papers/Dividends-A-Review-of-Historical-Returns.pdf
or
>To demonstrate the power of dividends and their impact on performance, consider some research done by Professor [Jeremy] Siegel in his 2005 book, The Future for Investors. Professor Siegel broke down the performance of the S&P 500 dividend-paying stocks into quintiles, illustrating that focusing on only those stocks that provided the highest levels of dividends had a dramatic impact on performance—and risk.
>As you can see in figure 1, the highest quintile outperformed the broad S&P 500 Index by over 1.3% per year, which turned into nearly 141% outperformance over time. And it did this with a lower beta. Even the second quintile outperformed the S&P 500 by over 1.5% per year, for a total of more than 159% outperformance over time, with less risk.
but what does one of the top finance professors at one of the top business schools in the world know?
harrison_wintergreen t1_iyf8yuo wrote
I'm not aware of any data on dividend stocks and inflation.
however,
(a) there's strong data showing that dividend stocks have advantages in bear markets (when the market declines over 20%). professor Jeremy Siegel has called dividend stocks 'bear market protectors' for this reason. you can see this phenomenon happening this year. the overall US market is down about 16% so far this year, but dividend oriented ETFs are doing better: HDV is up about 7%, SCHD is down only 4% DJD is about flat, SPYD is down only 1.5%
for this reason, Siegel recommended a mix of growth stocks and dividend stocks for a portfolio. growth stocks usually perform better in 'bull' markets (when the market is going up) and dividend stocks are superior in bear markets. you can see his advice in the book Stocks for the Long Run.
(b) there's also data showing dividend stocks tend to offer superior long-term performance. year to year? not always. but dividend stocks have offered superior performance over the majority of 20 year periods in the US market since 1928 and with lower volatility. https://www.heartlandadvisors.com/media/Insights/White-Papers/Dividends-A-Review-of-Historical-Returns.pdf
the higher-dividend stocks in theS&P 500 have also beaten the overall S&P 500 index over time, by over 1% year on average. https://www.wisdomtree.com/en-gb/-/media/us-media-files/documents/resource-library/whitepaper/the-dividends-of-a-dividend-approach.pdf
this sub will tell you to just buy a total market index, but they usually can't explain why or offer much in the way to data or justification. they also tend to hate dividend stocks, but again can't really articulate a sensible objection. the best they can come up with is 'dividends are a taxable event', which is fair to point out for a taxable brokerage. otherwise they just repeat the same gripes over and over again without any evidence.
harrison_wintergreen t1_iyfbqsk wrote
Reply to Tips for navigating inheritance and still loving your family at the end by dcdavys
check with /r/legaladvice
>how could I politely request an actual appraisal and not have this devolve into family drama?
'that drive-by is a good start but I'd be more comfortable with a fully detailed appraisal and comps.' this is a totally reasonable request. you can't control their reactions to it, and the trustee should be willing to follow reasonable requests and might be obligated to follow reasonable requests.
> Is an appraisal likely to come in higher and I am essentially shooting myself in the foot?
maybe higher, maybe lower. an appraisal is just an estimate, it's not an offer to buy. people can have this idea that an appraisal is a 100% correct guarantee or something. it's just an educated guess. that's it.