A lot of personal-finance guidance begins and ends with a simple idea: Invest steadily in an inexpensive index mutual fund. Nothing very wrong with that. The index fund provides diversification and is inexpensive, and steady investment eschews the idea that you can time the market. But received wisdom seems suspect these days. Which prompts the quasi-heretical question: Would it be wiser to buy a basket of five high-dividend-paying stocks rather than sticking with that index mutual fund?
The answer depends a great deal on your own temperament. If you hate risk, stick with the fund. A core aspect of any long-term investment strategy is sleeping well at night. If you are comfortable with a bit more risk, you should consider accumulating the individual stocks, perhaps as an augment to a fund-focused strategy. Dividend payers have become popular because their relative yield has started to look pretty good compared to everything else. Ten-year Treasurys yield 2.5%, and after inflation is taken into account, a scant 1.7% in real terms. Corporate-bond yields have similarly dropped. Bank accounts, certificates of deposit and money-market funds also sport very low yields.
Source: Wall Street Journal
Related Articles:
Dividend Stocks Do Beat Funds
Posted by D4L | Thursday, October 07, 2010 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
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...
-
GameStop (NYSE:GME) lost about 40% of its market value over the past three years, as rising digital downloads and declining mall traffic thr...
-
In a capitalistic society, opportunities to generate (mostly) passive income are all around us. Dividend growth investing is one of the most...
-
These elite income producers have rallied this year. Their brilliance at producing passive income seems to have caught the market's eye ...
-
Since the market highs in July, stocks have been under considerable pressure. Indeed, 10-year Treasury yields are at the highest level since...
-
Buying dividend stocks can be tricky. Oftentimes, stocks that pay exorbitantly high dividends have underlying financial problems, and their ...
-
While optimism in the broader market remains robust – particularly for hyped-up sectors like technology – investors may still want to consid...
-
If you are looking for reliable dividends, these three Dividend Kings should be right up your alley. Dividends are paid at the discretion of...
-
A strong dividend investing strategy may be to focus on high-quality names that score well on several dividend-related metrics. In other wor...
-
Despite all that work, its valuation remains dirt cheap. That's a big reason why its distribution currently yields more than 9% despite ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.