One of dividend investing’s most attractive attributes is its simplicity: you buy a stock, you get paid. Because of that simplicity, dividend investors can enjoy an advantage that eludes those choosing more complex and sophisticated investments: low costs. The issue of investment costs is the subject of an excellent column by Elliot Blair Smith on Marketwatch.com. Smith writes: “Quite often investors end up paying for nothing, when…promised services aren’t performed; or overpay for average returns and underperformance. Some drags on earnings include management fees based on inflated asset values, valuation methodologies that change opportunistically midstream, and layers of unnecessary, or non-independent, experts that become conduits for…“back door” fees. Alternatively, when capable investment managers do beat the market, sometimes they allocate much of the benefit to themselves.”
In one famous example, Harvard professor David Laibson asked MBA students, undergraduates and university staff to select an index mutual fund from a group of four real S&P 500 index funds. Despite choosing from identical funds, none of the subjects minimized fees, which was the only difference among the funds. Dividend investors generally sidestep the quirk in human behavior that leads us to avoid being rational when pricing financial services. If you maintain a discount/low-cost brokerage account through which you buy dividend stocks and rarely trade, you will not only have the best chances to earn a decent return on your money but also save a bundle by avoiding high-cost investments in which you can’t even tell what the costs are.
Source: Dividend.com
Related Articles:
- Searching the World For The Best Dividend Stocks
- What's Your Retirement Vision?
- Stock Dividends - The Gift of Nothing
- What's More Powerful Than Compound Interest?
- Dividends vs. Stock Buybacks
Another Advantage of Dividend Investing
Posted by D4L | Monday, November 09, 2015 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
If you're worried about inflation rearing its ugly head next year, you should probably worry about more likely catastrophes, such as bei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
In this article, we discuss 5 best consumer staples dividend stocks to buy now. If you want to read our detailed analysis of the consumer st...
-
If you've been holding back from investing in your future just because you don't have a lot of extra cash to spare, I've got gre...
-
Dividend stocks cater to investors who want less volatility and stable cash flow. Some dividend stocks offer a combination of respectable yi...
-
I stumbled upon some data a few years back that has altered my investment philosophy. According to data by Ned Davis Research and Hartford F...
-
Following a strong year for the S&P 500 and huge gains for the tech-heavy Nasdaq Composite, it's a lot more difficult to find reason...
-
The company's remarkable consistency and low-risk business model make it a "first-choice investment opportunity," according to...
-
One way to achieve financial freedom is to create passive income, or income that does not depend on your active involvement beyond a certain...
-
If you are here to build a portfolio that thrives in all seasons, consider dividend stocks. They can generate steady returns and provide sta...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.