Blending Dividend Investing and Index Investing

[mrpercentage]

Mrpercentage, I implore you.  Sit back, and don't touch anything in your portfolio, until you've done some reading.  I'd start with A Random Walk Down Wall Street, and The Bogleheads Guide To Investing.

Good luck!

Random Walk Down Wall Street is turning out to be a good book. Even makes me laugh. And I thought you were a chart monkey. Im not done with it yet.. but thank you.

[mrpercentage]

Nope Im not done yet. You don't see the value of mixing 50% dividend with 50% growth? Seriously?

[Dodge]

Nope Im not done yet. You don't see the value of mixing 50% dividend with 50% growth? Seriously?

That's not a valid comparison.  If there's anything you should learn from my posts here, it's that invalid comparisons can be very misleading in the investing world.  You are committing one of the 4 Advisor Moves That Shouldn't Be Legal, Skewed Benchmarks.  Let's look at your fund choices:

AMECX = 70% stocks, 30% bonds
ANEFX = 90% stocks, 10% bonds

Put half in each and you have a total portfolio of 80% stocks, 20% bonds.  So first I compared this to the standard 80/20 index fund:




Then of course I realized this still isn't a valid comparison, as the bonds in your fund choices are lower quality, there's an international component, and a bit of separation between growth and value that isn't cap-weighted.  This is the best I could come up with to try and match your fund choices:

[mrpercentage]

Damn Dodge.. you have mastered fund comparison. Seriously dude A+

[NICE!]

...

Not only that, are the massively higher fees in the American funds accounted for in these charts?

[milesdividendmd]

...

Not only that, are the massively higher fees in the American funds accounted for in these charts?

Yes they are.

Expenses are deducted from dividends and are reflected in total return data such as this.

[Dodge]

...

Not only that, are the massively higher fees in the American funds accounted for in these charts?

The higher ER is included, but not the 5.75% load.

[NICE!]

Yes they are.

Expenses are deducted from dividends and are reflected in total return data such as this.

As I suspected, they aren't. See dodge's post above. The 5.75% is huge and I'd classify it as highway robbery.

[Financial.Velociraptor]

Hey,

Sort of hate to resurrect an old thread but I've gotten offline messages about this particular thread.  The particular sticking point is whether my comparision of SYLD to S*P at motley fool included dividends in the S*P part.  I've messaged someone at the Fool to clarify the point.  If I'm wrong, I'll eat crow.

[Interest Compound]

Hey,

Sort of hate to resurrect an old thread but I've gotten offline messages about this particular thread.  The particular sticking point is whether my comparision of SYLD to S*P at motley fool included dividends in the S*P part.  I've messaged someone at the Fool to clarify the point.  If I'm wrong, I'll eat crow.

Does it really matter what they say?

Actual S&P500 returns during this time: 33%
Price-only S&P500 returns during this time: 27%

S&P500 return as reported by caps.fool.com when compared against your SYLD purchse: 27%

[johnny847]

Hey,

Sort of hate to resurrect an old thread but I've gotten offline messages about this particular thread.  The particular sticking point is whether my comparision of SYLD to S*P at motley fool included dividends in the S*P part.  I've messaged someone at the Fool to clarify the point.  If I'm wrong, I'll eat crow.

Thank you for resurrecting this thread as it provided some entertainment!

[talltexan]

indeed, it was a nice education for those of us who missed it the first time around.

[Financial.Velociraptor]

Word from TMFTurtle is:

"Yep, we use the SPY as our benchmark, and it includes dividends.

Julie "