RetireJapan

TokyoBoglehead wrote: ↑Thu Sep 22, 2022 3:53 am

tim wrote: ↑Thu Sep 22, 2022 3:16 am If I have $10,000 and uses Rakuten Securities
and planning to invest it in a diverse blue chip dividend
like KO,JNJ, MCD, AAPL, MA, V and etc. and gradually buy more to diversify.
Rebalance like once a month or once in 2 months.

What are the pros and cons in it ?
Is it better to buy an ETF Dividend instead?

https://www.youtube.com/watch?v=4iNOtVtNKuU

Did you get a chance to look through that Bogleheads book?

I've thought about this as well a few times - keep coming back to this as if the case isn't closed or something is attracting me. I think it is every time that I hear about someone doing real estate rentals and getting cash flow in their hands. The strategy of meeting passive income with expenses to be financially free - dividend stocks/funds just feel a hell of a lot easier with no maintenance and receive cash in hand on your 'property,' shares. If you buy the regular indices and funds, you would have to sell your shares in order to receive any income, like selling off pieces of your land to meet expenses in the real estate analogy, and thus whittle down your ownership; spending your principle.

https://www.youtube.com/watch?v=ZLic7N-vN5g

If dividend investing is bad, or no match for Bogle-esque indexing, why does a fund company like Vanguard (often presented as a model of hands-off indexing), also offer funds like VIG, VYM, VYMI, and so on? Vanguard also offers popular value funds (higher yielding). And the dividend-paying utilities fund VPU is off much less than big bond funds YTD. How about that.

So maybe doing it on one's own is dicey (buying individual stocks on your own), but when Bogle's company is offering things like that--and given the size and trading volumes of those funds and others like them--that would seem to lend dividend investing some serious credibility.

captainspoke wrote: ↑Sat Oct 01, 2022 8:00 am If dividend investing is bad, or no match for Bogle-esque indexing, why does a fund company like Vanguard (often presented as a model of hands-off indexing), also offer funds like VIG, VYM, VYMI, and so on? Vanguard also offers popular value funds (higher yielding). And the dividend-paying utilities fund VPU is off much less than big bond funds YTD. How about that.

So maybe doing it on one's own is dicey (buying individual stocks on your own), but when Bogle's company is offering things like that--and given the size and trading volumes of those funds and others like them--that would seem to lend dividend investing some serious credibility.

I am sorry to be critical but this logic does not fly. Remember, Bogle did not even wants Vanguard to sell ETFs! He was completely against it.

They are now selling access to private equity as well!

It is not "Bogles company" anymore.

7-seasons.com wrote: ↑Sat Oct 01, 2022 6:34 am [The strategy of meeting passive income with expenses to be financially free - dividend stocks/funds just feel a hell of a lot easier with no maintenance and receive cash in hand on your 'property,' shares. If you buy the regular indices and funds, you would have to sell your shares in order to receive any income, like selling off pieces of your land to meet expenses in the real estate analogy, and thus whittle down your ownership; spending your principle.

This is another personal choice type of thing.

The historical record indicates that a dividend investor is likely to have a lower total return (dividends + capital gains) compared to an index investor.

Many people choose a dividend growth strategy anyway, for the reasons above. If it helps them meet their goals, great.

There are various stages in your investing career.

1. Accumulation. This is when you are building your nest egg over time, and don't intend to take any withdrawals.
At this stage, Dividend Payouts are very inefficient because they are taxed, so you cannot roll up the whole amount, but only the post tax amount.
You would be better using a non-distributing method of investing.

2. Distribution. This is the phase when you start to live off of your accumulated wealth in retirement, or other circumstance.
At this stage, Dividend Payouts would be used to live on...
If you have Japanese sourced Dividends on Japanese Companies, and your total annual income is less than about Y6.6M, then the aggregate tax rate on the dividends is more efficient that the Capital Gains Tax Rate on sale of assets.
If you have foreign sourced Dividends on Foreign Companies, and your total annual income is less than about Y3M, then the aggregate tax rate on the dividends is more efficient that the Capital Gains Tax Rate on sale of assets.
If you income is over these levels, then the Separate Method Dividend Taxation is the same as Capital Gains Taxation at 20.315% (15% National, 0.315% Reconstruction, and 5% Residents' Taxes), so taking dividends or selling assets yields the same tax rate.

TokyoBoglehead wrote: ↑Sat Oct 01, 2022 9:04 am...this logic does not fly. Remember, Bogle did not even wants Vanguard to sell ETFs! He was completely against it.
...

Well, I used ETF symbols since that's what I'm more familial with. I'm certain each of those has a corresponding mutual fund (which likely predate the ETF versions). That bogle did not want vanguard to sell ETFs is not relevant to the point. It'd be interesting to get a snapshot of the range of funds that vanguard did offer back in the 90s, [strikethrough]before they went over to the dark side[/strikethough] at the time he was stepping down.

Note that mutual funds are not available to non-US residents (not even US citizen expats). Aren't the vanguard funds sold here in a wrapper ETFs?

captainspoke wrote: ↑Sat Oct 01, 2022 11:34 am

TokyoBoglehead wrote: ↑Sat Oct 01, 2022 9:04 am...this logic does not fly. Remember, Bogle did not even wants Vanguard to sell ETFs! He was completely against it.
...

Well, I used ETF symbols since that's what I'm more familial with. I'm certain each of those has a corresponding mutual fund (which likely predate the ETF versions). That bogle did not want vanguard to sell ETFs is not relevant to the point. It'd be interesting to get a snapshot of the range of funds that vanguard did offer back in the 90s, [strikethrough]before they went over to the dark side[/strikethough] at the time he was stepping down.

Note that mutual funds are not available to non-US residents (not even US citizen expats). Aren't the vanguard funds sold here in a wrapper ETFs?

All true, but my point is that Vanguard sells lots of crap now.

DIvidend investing makes sense, when you are investing in the S&P500! (400/500 are dividend payers).

Otherwise you are hunting and picking and missing out on all the growth. Oh, and paying more taxes! Not the best strategy empirically speaking.

Is there an article/video or quick explanation on what Vanguard did against Bogle's philosophy?

TokyoBoglehead wrote: ↑Sun Oct 02, 2022 1:43 am...
Otherwise you are hunting and picking and missing out on all the growth. Oh, and paying more taxes! Not the best strategy empirically speaking.

By using the vanguard ETFs I mentioned, you would not be "hunting and picking". For example, VIG hold 290+ names, VYM 440+, and VYMI almost 1300. And that's just three from the vanguard group, others like fidelity, schwab, and so on have their own twists on it.

While market cap is the grand-daddy of factors, uncle jack's savior on the cross, there are other ways to cut the cake--other ways of choosing a cohort of stocks--and if that doesn't happen to be total market or S&P500, so what?

Oh, they don't perfectly match the performance of the S&P? Well, their volatility numbers are also different--std deviation, sharpe and treynor ratios, beta, alpha, and how well they capture up and down moves in the overall market. Maybe some dividend or growth fund has a collection of numbers there that someone prefers? A different risk profile, that happens to fit their needs?

And how about if an investor chooses one of bogle's purest indexes, but also has a bond fund? Isn't that bond fund paying dividends, too? Isn't that one reason to have it? So why are dividends to be avoided when choosing a stock fund when that same investor might have 20-40% in bonds?

*

And Tkydon--excellent points about the stages of an investing career.

captainspoke wrote: ↑Sun Oct 02, 2022 8:26 am

TokyoBoglehead wrote: ↑Sun Oct 02, 2022 1:43 am...
Otherwise you are hunting and picking and missing out on all the growth. Oh, and paying more taxes! Not the best strategy empirically speaking.

By using the vanguard ETFs I mentioned, you would not be "hunting and picking". For example, VIG hold 290+ names, VYM 440+, and VYMI almost 1300. And that's just three from the vanguard group, others like fidelity, schwab, and so on have their own twists on it.

While market cap is the grand-daddy of factors, uncle jack's savior on the cross, there are other ways to cut the cake--other ways of choosing a cohort of stocks--and if that doesn't happen to be total market or S&P500, so what?

Oh, they don't perfectly match the performance of the S&P? Well, their volatility numbers are also different--std deviation, sharpe and treynor ratios, beta, alpha, and how well they capture up and down moves in the overall market. Maybe some dividend or growth fund has a collection of numbers there that someone prefers? A different risk profile, that happens to fit their needs?

And how about if an investor chooses one of bogle's purest indexes, but also has a bond fund? Isn't that bond fund paying dividends, too? Isn't that one reason to have it? So why are dividends to be avoided when choosing a stock fund when that same investor might have 20-40% in bonds?

*

And Tkydon--excellent points about the stages of an investing career.

Those "other ways" would imply you have some special knowledge that would allow you to know which sector would outperform the greater economy. As far as sticking to dividends, it is far too limiting, you miss out on almost half the total market.

I think choosing Dividend Aristocrats is fine, as long as the investor knows statistically they will underperform the broader market.

Jack indeed did not know everything. Consider his stance on internationals. He felt 100% American was the way to go, but he openly admitted that was not a data driven decision, and suggested investors decided themselves.

Further I would not say that Bond coupons = Dividends. Fixed income and stocks are just, different.

7-seasons.com wrote: ↑Sun Oct 02, 2022 6:30 am Is there an article/video or quick explanation on what Vanguard did against Bogle's philosophy?

Nothing quick on hand. But there is this. https://www.amazon.co.jp/-/en/Eric-Balc ... 183&sr=8-1