Weekly Tips #16

Weekly Tips

Value Investings: A balanced Approach

Weekly Movie
Of the famous Bruce Geenwald Professor of value investment interviewed by the FT reporter. Some thoughts on Value Investing, and Benjamin Graham.

Weekly Tips #15

Weekly Bok

Winning The Loser´s Game:

Timeless strategies for successful Investing

Veckans Film
A rather unusual film clips from MAD-Money, Jim Cramer. Certainly many people would think that he is giving the right impression so unserious, but he speaks for the supply and also pretty interesting ideas. Have to listen no matter what you think about Jim Cramer.

Weekly Tips #14

Veckans Bok!

Less well known book on Investment Income - Income Investing Today. Safety & High Income Through Diversification! A simple and basic book about the different options for those who want to have stable cash flow.

Income Investing Today

Weekly Movies
Is an animated person, Mr. Finchley, who have had wage and do not know what to do with money. The film from 1957 made by the members of the New York Stock Exchange. Pretty cool considering that it is 52 years old.

The main disadvantage of Dividend Investing

I have quite a long time have said almost positive things for the supply of investment but now starting to realize that it has a big disadvantage when compared with the more traditional investments.
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I've noticed that most who become interested in the strategy are those who are between 20-30 years. And there's a good explanation for it. I do not think the majority of 40-50 + is directly interested in dividend policy, since many are not willing to wait 10-20 years before they begin to live comfortably on the dividends.
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I can obviously understand how fun it is to begin to live when you are 60-70 years?
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Perhaps because they are about 20, it is pretty interesting because you can take advantage of the investment, even at the age of 40, which is pretty moderate! How much total dividend to be expected after 20 years of investment?
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Depends on how much you start with and much to invest each month!
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If we say that you start with SEK 0 and instead choose to save 5 000 SEK each month in 20 years!
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Then grow the annual dividend after tax to: 128 286 SEK! The total dividend for tax as you get over 20 years are: 885 775 SEK

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Then I calculated the 10% annual dividend growth + reinvestment of dividends and an average yield of 4%.

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By contrast, if you manage to save 10 000 SEK during the same time, so the result would be:

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256 576 SEK! The total dividend for tax as you get over 20 years are: 1 771 549 kr Which is much better!!

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However, if we manage to begin with tex: SEK 200 000 the first year and at monthly savings of 5 000 SEK during 20 years would reach to:

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180 777 SEK! The total dividend will be: 1 313 395 SEK

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And as it grows from 10% - 12% if you still choose to reinvest, so double digit between 5-7 years. In other words, between 300 000 - 400 000 SEK in total dividends for about: 25 years .

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But that is what is the big disadvantage of dividends investment! That it takes so long to rate-of-interest to work. The first thing 10 years felt not much difference, but the big growth will, in fact, between 15-20, where the growth will be enormous on shareholders' equity.

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It is probably because very few are really interested in the dividend policy. Instead, and other strategies such as: high risk / growth or oil-and råvaro shares become more popular due to the short-term profit opportunity. But while those who are looking for higher returns risk losing more and even if it comes to dividend investment. If direct returns are higher than 7-10%, so you should be extra careful.
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When is a dividend investment can be interesting if you can not wait long?
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Yes! When you have the right amount of money and at the same time want to take small risks and get a hyligt yields between 3-5% annually, which also grows rapidly with inflation.

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But it requires quite a lot of money! If we say that many would be satisfied with an annual total dividend of £ 200 000 after tax. How much money is needed if you get a yield of 4%? 7 1420 000 kr

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There are quite a lot of money! They are probably what the portfolio will be worth about 20 years for them to start investing Eg: 6000-7000 SEK / month in 20 years.

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(So you thought about who will buy a house where the monthly cost will be £ 7 000 more a month due to the hypothecation. Which makes you probably lose 7 000 000 SEK over 20 years. Then husköpet not as interesting and even if husvärdet double. Therefore it becomes very important to try to find the house / apartment at almost the same level as before housing costs. It is certainly very difficult task for many)

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Then the amount of 200 000 and £ 7 million worth of 20 years is another matter! While it is very important to say that I have assumed an average growth of 12.5% including reinvestment and to ensure the growth you have to be very careful which company you buy and what risks you take.

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Furthermore, I must add that the average dividend growth for the better dividend shares have been between 15-20% in the last 10 years and then I have not counted on reinvestment.

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Those who think I'm too optimistic, so they may expect an annual growth of 10% (including re-investment, which means that the annual growth rate of dividends is approximately 7.5%)

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But if you can not wait 20 years and have too little money, what are the alternatives? How fun is it to get a yield of 2.8 - 3.5% (in dividends, after taxes of 4-5% yield). Not at all fun when there are other investments outside the stock exchange that can provide significantly higher return on equity and a lower risk, then I think of particular real estate.

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There you can get 10-20% return or higher on equity if you have a mortgage of 70-80% of the purchase price. But it's definitely much harder than shares, because it requires much more dedication and time from the investor and knowledge. There is absolutely no easy business. You have to take into account many things. But let's say that you still manage to get a yield of 10% on equity with very low risk.

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Would it be a better investment when compared to dividends? Maybe if you compare with the next 10 years. But what about the 20 years? Probably not, because the dividends are growing much faster than rental income.

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If we say that the dividends are growing 10% annually as rental income should grow in line with inflation 4%.

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What will be the highest growth?

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Rental income = yield of 10% + 4%

annual growth Dividends = yield of 4% + 10%

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annual growth Results: After 20 years:

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Rental income = 21%

Dividends = 24%

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Those who are knowledgeable in real estate think that certainly it is not at all true, which I can agree with because I have only taken into account the dividend / rental income.

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I have not taken account of the overall yield, nor the value of the property. Then capital investment does not have a chance with because of, the high level of hypothecation on the properties. Finally, I would say that the distribution of investment is not for those who can not wait a long time and have too little money. If I am being honest, they should be many other investment opportunities that generate significantly more than 4%. BUT:

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Then there is also adding a lot more time and having to work full time with the investment for it to make ends meet. While the risk is probably much higher, too. Higher risk??

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Or it depends on who you ask. Many probably feel the risk is much lower for example: buildings to be self-determining of the activity and not dependent on the stock market nor the risk of the listed companies' management do stupid things.

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While those are betting hard on other kinds of entrepreneurship seems likely that they take too big risks.

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What makes the stock market is unique:

* You can start immediately and with very little money.

* Highly liquid investment, go and say and buy when you want.

* Probably the best thing about the stock / dividends is that they are growing faster than for example: other traditional investments for example.: Bond, bank and fixed incomes in the form of rents.

* And most important is perhaps that it is one of the best and most stable passive income sources where you need to build up again, in the form of capital and time!

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Conclusion: Dividend Investing is a fundamental great alternative to traditional retirement savings but would not wait too long, so it should be combined with a self-employment or business. The best combination would be if you had a profitable company or business, where you move profits to long-term dividend investment. Which would reduce the investment period 20 years to perhaps 10 years or less! And for those of you who can not wait that long and want to focus on other things that produce results more quickly, I can only say: That you do not need to pick off one or the other. Bet like the rapid investment options but do not forget dividend investment because even with very little money for a long time, you can generate quite a lot! Tex: if you only choose to save 1 000 kr / month for 20 years with a normal growth + is probably the value of the investment portfolio to be worth around 1 million SEK!

Weekly Tips #13

Weekly Bok
An unknown but interesting book – Double Your Money in America´s Finest Companies – The Unbeatable Power of Rising Dividends.

Double Your Money in America´s Finest Companies
– The Unbeatable Power of Rising Dividends

Weekly Movie
To buy or not buy shares? - Urban Bäckström, CEO of Swedish Enterprise. Finally a Swedish movie clip. Now, TV4 has begun to link / share opportunities in their film clips, hoping that more will do the same! Here we learn that it is time to buy stocks and not funds, and also squeeze out URBAN his new book. This is a wise man who will listen!