In my previous article I discussed my dividend growth plan in more detail, by focusing on my diversification criteria. Today I will be focusing on the money management part of my plan.
I believe that managing my money is an equally important part of my strategy, in addition to the stock selection and diversification. My money management plan involves owning equal dollar amounts in the 30-100 stocks that I own. However, I won’t be rebalancing by selling shares in companies which take a large amount of my portfolio, but I will be adding to positions that still fit my entry criteria and which are having a lower weight in my portfolio for one reason or another. Since I am still in the accumulation phase with my dividend portfolio, I will be forced to dollar cost average in my positions. This should minimize some of my risk, but it will most probably also decrease my returns at least in the first several years.
A very important money management issue is taxation. Most working Americans who work and invest in the stock market do so through and employee 401K plan or through an IRA plan, which are tax advantages accounts. These accounts have some limitation on the age at which you can start withdrawing money. Since I plan on retiring on my dividend portfolio earlier than most other people, I wouldn’t exclusively use these tax advantages accounts. I do believe however that they are important in terms of overall wealth building.
The price of not owning my dividend growth portfolio in a tax sheltered account that I will pay is that I will be taxed on my dividend income every year. If you plan on withdrawing your funds after the age of 59, you should definitely consider a 401K or an IRA account.
This concludes my series which cover my dividend growth plan.
Relevant Articles:
- My Dividend Growth Plan - Diversification
- My Dividend Growth Plan - Stock Selection
- My Dividend Growth Plan - Strategy
- Some Cheap Stocks to Consider
Popular Posts
-
The S&P Dividend Aristocrats index tracks companies in the S&P 500 that have increased dividends every year for at least 25 years ...
-
A lot of people would tell you that receiving a dividend is the same as selling stock That's deceptive at best, and an outright lie at ...
-
Today marks the 18th year of the Dividend Growth Investor blog. I started it on my kitchen table 18 years ago, as a way to share my throught...
-
Phil Fisher is one of the best investors in the world. He managed portfolios for a small group of clients over a period of several decades. ...
-
Anne Scheiber worked as an auditor for the IRS. She retired at the age of 51 in 1944, and focused on managing her portfolio for the next 51 ...
-
Warren Buffett’s Berkshire Hathaway just received a dividend check for $204 million dollars from Coca-Cola. Berkshire Hathaway owns 400 mil...
-
As a dividend growth investor you would find that over time some stocks tend to fall off your radar and no longer fit the rising income str...
-
Charlie Munger is Warren Buffett’s business partner at Berkshire Hathaway. He is a successful lawyer, and investor, who was instrumental i...
-
Note: Article was originally posted in August 2020 The Dow Jones Industrials average is the oldest continuously updated stock index in the U...
-
Chevron Corporation (CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldw...
