CDs Remain Useful Despite Low Yields

Some people don't seem to understand that the price of a stock only matters when you are buying or selling. Right now is the perfect time to buy if you have available funds.

If you have a stock that pays good dividends hold on to it and don't worry if the price goes down.
 

rkunsaw said:
Some people don't seem to understand that the price of a stock only matters when you are buying or selling. Right now is the perfect time to buy if you have available funds.

If you have a stock that pays good dividends hold on to it and don't worry if the price goes down.
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you certainly better worry if it goes down . getting a 4% dividend is actually spending 4% in principal as an example . it is no different than selling equal dollars in a non dividend portfolio .

all that counts in either case is your total return . remember a draw rate is based on TOTAL PORTFOLIO VALUE . with every dollar of dividend your money left compounding is adjusted downward by the same amount , dividends are not like interest .

how the spending money is made up is irrelevant . it can be all dividend ,all appreciation or a combo . you need the same total return in all cases to sustain the payout .

if you think about the hypothetical case of a stock staying flat and not overcoming the payout , in theory you would have all your shares but they would be approaching zero worth eventually .

so nooooo , you can never ignore the share price just because you are getting a payout anymore than you can ignore your portfolio value being up or down drawing the same payout .
 
Mathjak I think we are talking about different things. In my case I'm not drawing funds from my account, I'm adding to them. My dividends are reinvested as I get them. Therefore I'm

actually better off if the price is down when the dividends are reinvested so I get more shares.

If and when I decide to sell the stock I will, of course, look for a higher price. But as long as I'm holding and collecting dividends the price doesn't really matter.

If I was drawing funds from my account to supplement my income that would be another thing.
 

actually another myth -reinvesting those dividends when markets are down adds no value because the adjustment and reinvestment are basically a wash at the same price .

if you have 100k in a stock and get a 5% dividend you have 5k in hand and 95k left compounding . the stock is knocked down automatically by exchange computers before the ring of the bell by 5% so 95k will be acted on by the markets . so if you reinvest you have the same 100k bought at the same price or pretty close as you had. in the end you have the same amount you did the night before if you reinvest with the same profit. now you have more shares at lower price making up the same value .

rebalancing adds more value in dollars not dividends . rebalancing is adding more money and buying more shares at a cheaper price . reinvesting does not add a thing you did not already have the night before
 
opinions on the markets are all over the map . in fact some have been bearish since 2008 . in the mean time it has grown great amounts of money over every single rolling 30 year retirement or accumulation period . all 117 rolling periods are within 2% average returns with each other . despite wars , crashes , depressions , recessions and yes even opinions .
 
mathjak107 said:
opinions on the markets are all over the map . in fact some have been bearish since 2008 . in the mean time it has grown great amounts of money over every single rolling 30 year retirement or accumulation period . all 117 rolling periods are within 2% average returns with each other . despite wars , crashes , depressions , recessions and yes even opinions .
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Nothing human lasts forever.

.
 
mathjak107 said:
markets are higher highs and higher lows so eventually over time even the crashes are higher than the peaks earlier . nothing last forever but 117 30 year cycles since 1871 says it can go on a long long time and that includes the worst of times ,
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Like a casino... the timing of cashing out is everything.

Seniors often require more immediate access to their money which might cause them to have to cash out in a down market.
 
it could be , but even if we fall , it is to levels i still would never have achieved if all i believed in was cd's . as long as we are doing what if's those retirees in 1966 were devastated by surprise inflation decimating everything including their bonds and cd's which were always behind the curve .
 
mathjak107 said:
it could be , but even if we fall , it is to levels i still would never have achieved if all i believed in was cd's . as long as we are doing what if's those retirees in 1966 were devastated by surprise inflation decimating everything including their bonds and cd's which were always behind the curve .
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I remember my first CD paid over 9 percent interest [if only I could get that rate now !]

While that CD rate was lower than inflation at the time... inflation is not as financially damaging to those like me who live a frugal debt-free lifestyle.

.
 
well that was back then , and that is you . for many seniors they will be crushed by healthcare , and long term care costs if they inflate . rents and real estate taxes can sky rocket too . and cost of living adjustments have little to do with personal cost of living .
 
mathjak107 said:
well that was back then , and that is you
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Yes... that is me... I handle my personal finances to suit my personal circumstances.
CDs [the subject of this topic] are my personal choice and I am happy with the results.
 

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