Inflation Insurance For Your Retirement

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” -Ronald Reagan

When approaching retirement the main question a retiree will try to answer is “How much money do I need to cover my annual expenses“.  While this is certainly a question that has to be answered, there is another one that must be considered as well – “What will my annual expenses be in 10, 20, or 30 years?”

The term “fixed income” is used far too often when discussing retirement investing and planning. Fixed income suggests you should be able to decide today how much income you are going to need each year of retirement. But because of inflation we know that our expenses are not going to be fixed, so we should not plan for our income to be either. If you plan to withdraw the same amount from your retirement account annually then you will be losing purchasing power each year due to inflation. And many people underestimate the effect inflation has on their retirement plans. While we have seen wide swings of the inflation rate with highs above 10% in the late 70′s and early 80′s, the general rule of thumb is to plan for an annual rate of 3%. So how does that 3% affect your spending power over time?  READ MORE

Dividend Investors Should Ignore Price Fluctuations

In this day and age we are bombarded with stock market information anywhere we go. You can find stock prices on many TV channels, newspapers, the internet and mobile phones or tablets. This excess of information creates information overload which creates the urge to buy and sell stocks in nanoseconds. This could prove hazardous to your wealth however. Research has shown that investors who actively trade the markets generate lower returns that index funds. In fact, investors would be better suited to just ignore price fluctuations and simply focus on fundamentals. READ MORE

Disclosure: Long WMT, MCD,ABT

TAGS: [KO] [WMT] [MCD] [JNJ] [ABT] [PG]

Dividend Growth Investing is a Perfect Strategy for Young Investors

Imagine your perfect day. You wake up when you are rested, without the need of any alarm clocks. You then do some working out , followed by having a nice healthy breakfast. You then read at your leisure, have a lunch later in the day to beat the 11:30 – 1 pm crowds, and then review your brokerage accounts. You notice dividends from several companies are deposited today, and you decide to transfer them to your checking account. You check for any major items concerning your portfolio holdings, and spend a few hours researching a new dividend stock.

After that you get more time to concentrate on your activities, be it volunteering at the local homeless shelter, mentoring high school students, learning a new language or simply catching up on some good books. Later that day, you might decide to enjoy a few with your mates/gals. This dream is brought to you by dividend investing.  READ MORE

Disclosure: I am long KMR

TAGS: [KMI] [KO] [PM] [PG] [JNJ] [KMR]

A Reminder Of Why You Stick With Dividend Stocks

Sorry for the long delay since my last post. I've been very busy and I've had little time to dedicate to original posts of my own. I'm slowly working on analyzing additional banking stocks to consider for my dividend growth portfolio and hope to have that completed soon. In the meantime, here is a Seeking Alpha article from an author I've enjoyed reading.

One of the unfortunate side effects of buying an overvalued stock is that, almost by definition, there will be a period of time in which the total return rate that the investor enjoys will likely trail the growth rate of the firm (provided prices are rational and do not transition from "overvalued" to "more overvalued"). This fact can make it worthwhile to pose the following question: If I currently own a stock that is trading above a price that I would be willing to pay to purchase additional shares, what is the point of continuing to hold it? READ MORE

Disclosure: I have no position in the stocks mentioned in this article

TAGS: [CVX] [JNJ] [PG] [XOM]

2 Big Dividends to Avoid (and 1 to Embrace)

The following post comes from the Motley Fool. It serves as a nice reminder that bigger is not always better when looking at dividend yield.

With yields on ultra-safe debt stuck in the gutter, many investors are reaching for higher income through dividend-paying stocks. That's a fine strategy -- as long as you're comfortable with the extra risks involved.

To minimize those risks, you won't want to reach too high. Dividend yields that are more than about 4%, for example, are usually worth extra research. You'll also want to screen for dividends that are backed up by strong earnings and sales growth. Ideally, those dividends will have a good chance of rising -- or at least staying put.  READ MORE