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Dividends vs Index Fund

By Terry Savage on January 22, 2016 | Investments

I’m invested 90% in vanguards total stock market I had a high at one time of around 300 thousand dollars I’m now 65 and retired so my question is I wanted to buy 6000 shares of At&T I’m after the dividend and the way I look at it is it’s not the share price I care about its the divend no matter what happens to the share price I still get that high dividend what are your thoughts on my strategy . I’m not planning on selling in this down market I have very little to no dept and don’t need the money in the vanguard account anytime soon I didn’t panic back in 2008 and I’m not in panic mode now I’m a big fan of yours and mr. Brinkers and thanks to you both I have a modest portfolio Thanks . John

Terry Says:   John, at this stage of life, I understand your desire for income through safe dividends.  By the way, over the long run, nearly 40 percent of the total return of the S&P 500 comes from dividends reinvested!   You should probably move to a more conservative position at this stage of life, as you move into retirement.  But concentrating all that money in one dividend-paying stock is unwise.   You hve a couple of choices. Vanguard has several “equity-income” funds, and with one call or a click of your mouse, you could move to a more conservative position.   OR, you could do some research yourself and choose an assortment of dividend-paying stocks.  The place to start is a wonderful website called www.BigSafeDividends.com.  I have known  Chuck Carlson, who publishes this website and newsletter, for man years — and was honored to write the foreword to his most recent book:  “The Little Book of Big Dividends” available on Amazon and at this website.  I still think it is one of the best investment books ever written (his part, not my intro!).



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