Recent comments in /f/personalfinance

ellieappa t1_iyf92ch wrote

Reply to comment by FckMitch in How to handle the finances upon the death of my father? Can I just move things on my own? by beautifulcan

That's cleaner option and just work through distribution after death. There are banks, however, that won't let you set TOD ( I have one like that) or not allow multiple people on TODs. If there isn't accessible fund set aside to cover funeral and other expenses it makes it difficult to access those accounts legally in a timely manner unless he or his sister is on that account as well.

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harrison_wintergreen t1_iyf8yuo wrote

Reply to Is adding dividends to your Roth a good idea to hedge against inflation? by Flameboy465

I'm not aware of any data on dividend stocks and inflation.

however,

(a) there's strong data showing that dividend stocks have advantages in bear markets (when the market declines over 20%). professor Jeremy Siegel has called dividend stocks 'bear market protectors' for this reason. you can see this phenomenon happening this year. the overall US market is down about 16% so far this year, but dividend oriented ETFs are doing better: HDV is up about 7%, SCHD is down only 4% DJD is about flat, SPYD is down only 1.5%

for this reason, Siegel recommended a mix of growth stocks and dividend stocks for a portfolio. growth stocks usually perform better in 'bull' markets (when the market is going up) and dividend stocks are superior in bear markets. you can see his advice in the book Stocks for the Long Run.

(b) there's also data showing dividend stocks tend to offer superior long-term performance. year to year? not always. but dividend stocks have offered superior performance over the majority of 20 year periods in the US market since 1928 and with lower volatility. https://www.heartlandadvisors.com/media/Insights/White-Papers/Dividends-A-Review-of-Historical-Returns.pdf

the higher-dividend stocks in theS&P 500 have also beaten the overall S&P 500 index over time, by over 1% year on average. https://www.wisdomtree.com/en-gb/-/media/us-media-files/documents/resource-library/whitepaper/the-dividends-of-a-dividend-approach.pdf

this sub will tell you to just buy a total market index, but they usually can't explain why or offer much in the way to data or justification. they also tend to hate dividend stocks, but again can't really articulate a sensible objection. the best they can come up with is 'dividends are a taxable event', which is fair to point out for a taxable brokerage. otherwise they just repeat the same gripes over and over again without any evidence.

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FckMitch t1_iyf8j1m wrote

Reply to Need help cleaning up IRA/401k by Trytofindmenowbitch

This is what I did:

  1. Check that plan allows it . I had to fight the company by pointing out the plan and the IRS allowed it. The administrator had said no.

  2. Rollover only the gains - I left a little over the post tax amount in the account

  3. Backdoor thé what was left in account to a Roth and paid the tax on the difference

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BigRedKetoGirl t1_iyf89d5 wrote

Reply to Job offer and counter-offer by peptalks93

Take the new job. Chances are that your current job just wants to get someone else in place before they let you go. They know you are already looking elsewhere. Don't put yourself in a bad position just to help them out.

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bluto69 t1_iyf87ve wrote

Reply to comment by DemDave in Quest Diagnostics Refusing to Refund Overpayment Due to Insurance Reassessment by Kintsukuroi85

Thanks DemDave. I will give Monica Toney a bit to see if she can remedy this. If not then I'll escalate. I'm just glad to see other options now that I've suffered for too long with this headache. Granted, my situation isn't as challenging (or probably as costly) as others here, but it's definitely still frustrating.

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Grevious47 t1_iyf7y47 wrote

Reply to Is adding dividends to your Roth a good idea to hedge against inflation? by Flameboy465

I am not understanding why dividends would be a hedge against inflation. What is your reasoning there? In what way do dividends hedge inflation?

I'm guessing you might just be misunderstanding what dividends are. A dividend fund is going to have stock holdings in companies that provide a dividend or they are going to hold stock and then artificially generate a dividend from those holdings by doing things like covered calls. In either case these are still stock holdings, they can still very much go down. There isn't anything about dividends that is risk free in some way nor is it at all related to the inflation rate.

Imagine you had two funds. Both of these funds invested in companies within a sector that perform exactly the same in terms of their performance. Fund A invests in companies that do not provide a dividend, Fund B invests in companies that do. You invest $1000 in each.

Fund A gives a 10% return which is realized in growth. You end up with $1100.Fund B gives a 10% return which is realized in 6% growth and a 4% dividend. You end up with $1100.

When a company issues a dividend it comes out of their value. If there valuation has their total return at 10% and they issue a 4% dividend that means that their returns came 6% from growth and 4% from the dividend. The 4% isn't on top of the 10%, its part of it. You can see this in stock valuation. If a companys stock is valued at $100/share and it issues a 4% dividend then its stock valuation will drop to $96/share.

Within your three fund portfolio are going to be companies that issue dividends and thus those funds (at least the non-bond funds) will give you a dividend as part of their total return. Selecting a dividend fund would just mean that more of the return is in the form of a dividend, not that the return is higher.

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FunTripsToUS t1_iyf7squ wrote

Reply to comment by AskMeAboutMyStalker in Job offer and counter-offer by peptalks93

> I've been a manager for several years. when a software engineer I value puts in notice, I go in to hyperdrive trying to get a raise, bonus, promotion, whatever approved by my CEO to retain them.

  1. What stopped you from doing that before they put in notice?
  2. When they did put in notice, was their reason salary?
  3. If so, why did they have to discover the gap and not you, the manager?
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Jkpoker13 t1_iyf7ng3 wrote

Reply to comment by WorstPapaGamer in Got a job with 401k, should I hold off on contributing to save up for a house? by [deleted]

I agree with this though but 5% is comically low. I know you are just making a point but folks should be maxing out 401k to the point they can afford.

You are basically putting money away for retirement and lowering your taxable income. Less money paid for taxes and more money in account for retirement- sign me up.

Basically you get to keep more of your money. I would rather make 80k and have 20k going into 401k Vs making 90k and having 8k go into 401k. I like the thought of keeping as much of my money away from income taxes or at least pay the least amount I can due to finagling.

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greyAbbot t1_iyf7kjr wrote

Reply to Is adding dividends to your Roth a good idea to hedge against inflation? by Flameboy465

Do you have a reason to believe that dividends would be a hedge against inflation? If so, what is it? Because I don't know of any. Perhaps if you explain why you think so, we could respond.

The only other thing I'd say is that, while it's great you're getting started on your Roth, 3 portfolios is already a large number to be dividing 1000 by, and adding a 4th would seem to add more fiddling than could possibly be worth it. If you value your time, you'll cost yourself more in lost time than you would make by maximizing the average gain of diversification.

When you're starting out, by far the most important factor in your future wealth is how much you contribute, not the exact allocation you use. Personally, I'd just go with one index fund until I got to about $10k.

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