Dividend Investing For Retirement - What They Don't Tell You

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[@brickchamp4199]

Man that meme! I see your point which you have mentioned on so many occasion. However, you must not forget that although many companies in the UK and abroad grow and/or pay dividends sometimes there is no other way to use the profits they make because they have saturated the market, have their economic moat, competitive advantages etc that the only thing left to do is distribute some of those profits to shareholders. When a company has done all that it can to realise it's potential then a dividend is not only justified it's necessary to reward shareholders for their patience, loyalty and continued support through the good and bad times regardless of whether that makes economic sense or no.

[@TobyNewbatt]

Oh I agree, there's always going to be companies that pay a dividend once they reach a stage where they cant do anything better with the money. It's chasing those payments and going all in on them which is the issue. As a global index fund investor I will own plenty of dividend stocks, and you will too. :)

[@Casualclips17]

Great video as always, food for thought I recently sold my dividends stocks and went all on on etfs

[@Ellis307]

Your recent videos have really made me reconsider dividend investing and also the UK investing environment. You have made me realise that it basically doesnt’ make too much sense, especially when the US is utterly destroying all other markets at the moment. Hopefully, the Brits will be able to fight back a little but I don’t see that happening anytime soon.

[@johndoh539]

Toby, I think your summary at the end is bang on ! You are much younger than me. I am fast approaching my hopeful early retirement, and unlike your 3 years of cash to avoid drawing from a global portfolio, I prefer to have around 5 years worth. This may seem excessive, but I think history has shown that in a bad bear market, from the last peak to a full recovery can be 5 years. Perhaps this is my comfort blanket ! I also own up to having a smallish percentage of my global portfolio in a high dividend yield fund. Well, dividends you know, they help me sleep at night 😂😂😂 Keep it up.

[@anjux3673]

I’m stuck with a couple of dividend paying ITs, where the price has dropped significantly with interest rate rises. Rather than take a hefty loss. I’m taking the dividend until the loss reduces or interest rates reverse and the price rises. I’m irritated with myself however, because Toby, you are right…even though I’m confident the prices will return by the time they do (and I negate the losses), I will have missed out on the bigger returns of just sticking it in something like VWRP…or VEVE if I still want some dinnerdends with my growth.

[@matthewdodd7657]

Great point. Dividend etf do deprecate over time. Investing for the long term is hard at the moment just have a we'll diversify portfolio and try to beat inflation

[@adamcunningham6746]

Great video mate 😎 Thanks for the content. Commenting for your algorithm 👍 Cant beat the Ian Beale meme 😂

[@navitsizauspeh]

Great video! Can you list those 180 companies that have matched or exceeded the performance of the S&P500 with a yield of 4% or more?

[@mundungo5586]

Just use investment trusts that have revenue reserves to smooth income payments.Thats why some trusts have 50 plus years of increasing payments.Your never ever gonna get that with an index fund.Sometimes you only get what you pay for.Each to their own.Good video though.

[@user-gp9bt6fy4b]

I was going to say the same thing. Also reduced risk of spreading your bets.

[@The_Unintelligent_Speculator]

Great insights once again mate.

[@dangercat5844]

Really interesting vid. Thanks Toby

[@valerienewbatt9678]

Great insight into dividends Toby

[@Abdul_Rahman86]

Great video and great break down. I invest in just 2 funds in my sipp. 80% global all cap. 20%VHYL I still like dividends even though my feelings regarding dividends are very bias. I wonder if you know, if you get paid dividends in your sipp, do you still pay taxes?

[@keithclunk3125]

Abdul, both dividend and capital gains are NOT subject to tax within SIPPs and ISAs. VHYL pays around 3.5% per year in divis, but has mediocre growth. JGGI (JPM Global Growth & Income) also pays around 3.5% per year in divis, but adds excellent growth. Perhaps take a look online and compare the two.

[@Abdul_Rahman86]

@@keithclunk3125I’m definitely going to. My sipp is in vanguard but I’m thinking of opening a sipp just for dividend investing. A very small 15% of my monthly contributions to my sipp is aimed at dividends. Thanks for the tip

[@adrianellis2433]

Excellent as always. Dividends allow you to take money from your investments at little cost. Remember when you want money from Growth you have trading fees capital Gains and in some instances Currency costs and possibly international taxation

[@TobyNewbatt]

Indeed there's always costs somewhere and it matters to make sure oyu use a paltform with very low fees, and the right type of account to prevent any tax issues :)

[@sirmacca09]

Always so great thoughts. Nice video Toby

[@TobyNewbatt]

Appreciate it!

[@gilbertyalley2995]

Finished watching your video, great gems in there. What are your thoughts on a investment trust and combining VWRL, VEVE & VUSA?

[@TobyNewbatt]

Simple enough, but remember that VWRL already has every stock that VEVE and VUSA cover, so you will be overweighting towards the US and developed world depending on the percentages that you allocate to each one :)

[@gilbertyalley2995]

@@TobyNewbatt thanks mate. Will continue with a simple index (VWRL) and that will allow me to sleep well at night and watch it grow 👍👍

[@ianfraser4]

Many of the points you made about dividend stocks can also be said about growth stocks. eg. (You are not guaranteed growth, you pay tax on your profits when you sell.) Also if there is a long market down turn and you require income you would have to sell stocks at a loss where as as with dividend stocks you could just hold until the price came back up ( as long as the dividend is still payed ). Have you watch the “Compounding Investor,s” channel? Worth a look I think . Thanks for your videos.

[@TobyNewbatt]

Absolutely the same can be said for any stock which is why I’d never go all in on either ‘type’ of investment.. just own all of them 😎 A dividend makes no sense in a downturn as the stock price still drops there’s no free lunch even if it helps your psychology. Yes indeed big fan of the compounding investor. He’s done well with dividends since the GFC and UK stocks. As he says though he knows that this won’t be the case moving forward

[@sethanith3181]

I do love CI’s channel but noticed he’s now moving towards funds/ETFs, I wonder what his returns would have been if he put it all on a global fund when he started..

[@elmayo1665]

I'm sure you could use something like "portfoliovisualizer" to answer that question. @@sethanith3181

[@ChrisShawUK]

It's a common misconception that if you are not a dividend investor, then you are a growth investor. The reality is that dividend investors are active investors by definition. They are hampered compared to other active investors because they can only choose from a smaller pool to whereas other active investors can choose from everything. However, all active investors are at a disadvantage to index investors. Over the long term, active investors have an 80% chance of underperforming the market.

[@Pieter2360]

When a company pays a dividend, its stock price falls by the amount of the dividend, so there is absolutely no difference between collecting a dividend and selling shares for the same amount, regardless of whether the market is up or down.

[@pvelectronics4291]

On your comparison graph, the 2 approaches pretty matched up until the last 6 months - due to the magic 7 / AI bubble. The important thing is whether a company has solid financials. At least with divi stocks they are paying from real profits and generally the share price comes with a sensible P/E. With these magical 'growth' stocks, the P/E can be crazy and the actual share price can arguably be attributed to investor fenzy (FOMO). Any equity, be it growth or divi, can tank, so the key is diversity. I see a well diversified divi portfolio as low risk. Essential is that the portfolio is in a tax wrapper.

[@TobyNewbatt]

Diversify by owning every stock in the market - i.e. an index fund. Simple. You can look at solid financials all you like except there is no way you can know the long term total returns of a stock, unless you know the future :)

[@declanmcardle]

@2:10 and you could incur a taxable event which might expose you to CGT if it's outside a tax-efficient wrapper - not everyone has access to a Roth-IRA or ISA.

[@declanmcardle]

OK, you mentioned it...

[@declanmcardle]

Well, I meant the selling the stocks, not the dividend...I'll just watch the rest of the video first..

[@mcdr1436]

Very informative as always. Would switching my Vanguard FTSE All World EFT VWRL in HL to a VWRP in either Invest Engine or Vanguard be worth it? Thinking of doing this as the fees will be cheaper. Just not sure if doing it now is the best timing. Thank you.

[@sebascarmonag]

Not sure if I'm mistaken. But there is a way to transfer your investments from one to another, without selling it. I don't remember the wording for this, but it's possible. You might be looking to do this.

[@mcdr1436]

@@sebascarmonag I’ll look into it. Thank you for your reply, I appreciate it.

[@Blasterman86]

I am not a dividend based investor, although I look on whether a company consistently grow their Free Cash-Flow as well as Dividend yield growth, if the company distributes dividends at all (my biggest individual position since 2020 is Amazon which doesn't distribute dividends, and I don't mind at all). I have a mix between high quality stocks and ETFs but no "distribution". In fact, the S&P 500 ETF I have, is the Accumulating one, to avoid unnecessary taxation on my long-term investments, for something that is "neutral", as you explained accurately in your video. Out of curiosity: historically, do you know what has been the dividend yield from the S&P500 distributing ETF? Asking because this is likely the best proxy between getting a consistent dividend (likely a low dividend but consistent) for those who care about that and being invested in good companies. I couldn't find this data but it would be interesting to check.

[@TobyNewbatt]

Check my video I have this exact data for you the long term yield of the S&P 500 in terms of dividends. 💪 In short it’s been declining as more companies do buybacks and the index is filled with growth from the likes of tech stocks vs the old guards before.

[@Blasterman86]

I got the buy back piece, but probably missed the one where you mentioned the yields decreasing on average. Thanks for clarifying and keep up the great work. I often find myself recommending your videos to friends and family (they are great, particularly for those who are not familiar with the main concepts of Investing) and I agree with your general approach on the market and ETFs.

[@gadagaz]

I'm hoping that the laws don't change on REITs any time soon! Using a well known monthly REIT alongside VUSA in a 60/40 (VUSA/REIT) format and hopefully in 30 years they will both let me stop working!

[@tullycottage367]

Great stuff Toby. Keep them coming. I would like to see a vid about starting to change some of a global index portfolio into supposedly less risky investments. The obvious being bonds and money market. I know about the Life-strategy and “pick a year” retirement type products but I would rather keep most of my current portfolio for hoed for growth and just start to put a percentage into less volatile funds as I hope to retire within 5 years. Thanks.

[@ChrisShawUK]

For what it's worth, I think bonds are a more risky investment than an equity index fund. Mainly because the total return from bonds doesn't track well against inflation so your wealth dwindles even more rapidly in drawdown. I stopped work in 2019, aged 51 and plan that I might live another 40+ years. I keep a 4 year expenses pot in cash and the rest is in index funds.

[@tullycottage367]

Thanks Chris. My plan is to keep probably 80% in my index funds but would like to have something less potentially volatile that I can spend in my first few years of retirement if I need it while I let the index funds continue to grow, hopefully, or recover from a crash! It’s really similar to your 4 years of cash thinking, just rather than having actual cash I would like to keep invested in something. Maybe I should have added that this portfolio is my SIPP, not my ISAs so I need to juggle things to minimise tax payments. Cheers

[@ChrisShawUK]

@@tullycottage367 yes exactly ... You need a low risk slice when you are managing cashflow in the withdrawal phase. I use a weird psychological trick with my 4 year cash pot ... I deliberately don't seek out the best return for it (I think at the moment it's getting 3% in a taxed account). I tell myself that I'm punishing myself for holding cash so I don't let it get too big and keep everything else in equity! I'm not recommending that as a general strategy though!

[@nicobass1966]

Good sound advise. It's very intersting as I know a few that are takling dividends from stocks and it is a short term and very risky approach - not for me. Plough more money into stocks and don't take the profits, long term you will gain more. Save and invest with your pension and ISA allowance ( more free cash ) and those that do will be far better off. My approach is make it simple over time and it should all come right. Stock & shares are fine but just remember the tax implications with the new HMRC allowances. It's scary that amount of people that do not have a clue even down to savings accounts and best buys - again thanks

[@TobyNewbatt]

We'll keep doing our best to help spread the good words, lots to discuss as we head into the new financial year on the channel!

[@originallifeclothing4038]

Which global index funds do you invest in toby?

[@TobyNewbatt]

I share all my portfolios here on youtube for you to see :)

[@98password]

What about dividend paying ETF’s? Surely these are a good way to avoid handpicking safe dividend stocks for the long term?

[@TobyNewbatt]

They would be more diversified yes, but then it's still only betting on companies that pay a dividend o total returns in the long run will miss out from all those growth/ value stocks that don't pay one.

[@PDconsultancy]

Hi Toby, Excellent video! I am nearing the point when I am looking at turning on my dividend income in retirement. I have historically used Hargreaves Lansdown (There wasn’t much choice in the UK when I started out). Given how low my dealing will be in retirement would I be better leaving my money with them or moving to another platform? This seems quite difficult to determine and thought it might be an interesting video for all us boomers out there who are worried about having nothing left!!😢

[@tyeng1295]

People think Dividends are a share of the profit (which they are) but they don’t understand that that profit is already baked into the price/market cap If anything Dividends cap a companies growth. It’s a sub optimal investment strategy

[@Greylocks129]

Being in retirement is different to the growth phase. If a regular income is required consider a global OEIC tracker in either Vanguard or Fidelity who have a free automated regular withdrawal facility (monthly or quarterly). And 2-4 years in cash or cash equivalents.

[@ChrisShawUK]

It's flawed to call the pre retirement period "the growth phase". They are better described as the contribution phase and the withdrawal phase. You still need a positive investment return relative to inflation after you retire (unless your total portfolio equals your total expected future expenditure in today's money) Investment strategy shouldn't really change after you retire. I stopped work in 2019, aged 51 and I still follow exactly the same investment strategy, even though I'm also withdrawing to fund my lifestyle.

[@Greylocks129]

@@ChrisShawUK psychologically it’s a bit different as the safety net of a wage has gone. The loss of income is being exchanged for free time but it’s still a tough call despite knowing enough has been saved.

[@ChrisShawUK]

@@Greylocks129 agreed, it's completely different when you switch from contribution to drawdown. Questions like how long will I live, and will I run out of money are looked at more closely and modelled more carefully for peace of mind. But investment strategy has no need to change. You still need to earn positive returns relative to inflation. What worked for you over the last 20 years will most likely work for you over the next 20. There's no need to change investment strategy just because you are now in drawdown.

[@davideyres955]

While you have a point around dividends comparing the S&P500, however in recent time the S&P is being propped up by a few very large performers and the rest of the it isn’t actually performing well. Taking dividends does mean you are getting money now not potential growth in the future, but growth isn’t guaranteed. As with anything balance is the key. You also need to be aware of what you are trying to achieve.

[@lja8187]

Toby, good video as always and easy to make out. You make things as simple as possible which is good. All I have in my ISA is the VUAG and the FTSE Global All Cap Index Fund Accumulation. I don't really wish to get involved in individual stocks with companies. As someone who is after a "passive" experience with Vanguard what do you make of these? Understand you aren't a financial advisor. Just a general comment / question.

[@TobyNewbatt]

Nice and simple, just bear in mind that VUAG (the S&P 500) is already inside the FTSE Global All Cap, so you wil be overweight US stocks. Whether this is good or bad nobody knows in the future, but good to be aware of. It's simpler than a lot of peoples thats for sure :)

[@lja8187]

Thanks. 👍 ​@@TobyNewbatt

[@stevetodd9581]

For me, 4 ETFs (VWRP, VUAG, VHYL, ISF) then the rest are stocks with solid cashflow and growing cash flow or ways that I can understand how they grow is the way forward.

[@joshuat1535]

This is a weird portfolio

[@The_Unintelligent_Speculator]

Nice. I’m in on VUSA, VHYL & VUKE.

[@stevetodd9581]

@@The_Unintelligent_Speculator I used to hold VUSA and VUKE, but swapped to the accumulation version of VUSA because the dividend yield is so small and I can just set and forget with it. Nice mix of ETF’s you have though

[@keithclunk3125]

I see VHYL mentioned quite a bit. Perhaps do a comparison between VHYL and JGGI on Morningstar, for example, and see the difference. Both pay around 3.5% dividend but JGGI (JPM Global Growth & Income) also does what it says on the tin, it grows.

[@ryanmilner7169]

May as well just have a global etf like vwrp looking at this portfolio

[@Dinosaur656]

For me, my plan for retirement is to receive enough dividends to pay for my life and reinvest so hopefully my income will always grow.

[@Pieter2360]

Excellent explanation.

[@DSonBlue]

I get the key message re: divs not being guaranteed- nor is the share price etc. BUT isn’t this equally true of any other type of investment, whether that’s a stock or even an index fund? I guess you could argue that the obvious one (S&P) pretty much always grows - over the long run - but even then, another pandemic would affect pretty much everything, right?

[@TobyNewbatt]

The point is that focussing on dividend stocks limits what you can invest in. Point two as you stated - ALL STOCKS are at risk in the wider market yes. The key point here is total returns are all that matters - and saying that you will just live on dividends only and not touch your capital is flawed thinking. Your capital can get eroded away just like in any other investment. The solution - own everything :)

[@DSonBlue]

@@TobyNewbatt Total Return, yep agreed. I guess the stock value is more likely to decline due to handing out div payments, so you’re down overall in the long run. Good point.

[@87vortex87]

Honestly, i bought ASML in 2008 because i believed in the EUV technology they where investing in. Still have the shares. But that was 1 good company out of the 15 i owned. Some got taken over, like Tele Atlas, and some got taken of the stock market such as Boskalis. Now, almost two decades later, I'm mostly invested in ETF, for about 75% of my portfolio.

[@TobyNewbatt]

I still enjoy some stocks on the side too, but I'm exactly the same that most of my investing will be passive index funds. :)

[@ftr841]

I think a lot of people like the psychology. Oh, some dividends, which I can use for groceries. Next year there is enough for groceries, a takeaway etc. With low cost ETFs you can do a bit of growth and dividend investing anyway

[@ftr841]

Can you do a video on when passive investing becomes active investing? So someone who invests is say Isf, midd, and vusa - is that passive or active? All low cost ETFs but still making an active choice to invest in different indices.

[@neilc7358]

Isn't the main reason buybacks are becoming more popular in the USA, is that tax is still deducted even within a tax efficient wrapper? And do you think the FTSE will follow this trend as investment accounts outside a tax efficient wrapper will be subjected to more tax? As alway nice advice which is delivered in a clear and logical way. Well done.😊

[@TobyNewbatt]

A buyback doesn't cause any tax event I'm not sure what you are referring to there? It's deferring tax if anything and moving it to a capital gain later on. In the US the closest thing they have to an ISA is a ROTH but the limit is only $6k a year so this is why a lot more people end up having tax to pay upon receiving dividends. I do think this trend continues in the larger/ growth style stocks. For the ones on the FTSE 100 at least I think they will remain paying divs as this is one of the only attractive things about them. If they stopped paying dividends and went to buybacks I can honestly see their price as people chase the dividends...which is silly :P

[@neilc7358]

@TobyNewbatt Thanks for taking the time to reply. I thought that there was a 15% With Holding Tax that is applied to all US dividends received here in the UK, and that's why buybacks are preferred because it's more tax efficient to USA residents also. Sadly, I only hold a single USA stocks, and this currently doesn't pay dividends. I've slowly started to move away from stocks to index funds and ETFs, the wife made me after watching your videos. I guess that makes you both right....Keep up the good work....

[@TobyNewbatt]

@@neilc7358 yes that’s correct 15% US withholding tax on foreign residents only though not US holders. So yes buybacks are better for us if you think about it. You’re welcome thanks as always for the support. I still have some stocks to play with on the side it’s a crazy fun time at the minute but I’ll always stay majority index 👊

[@jonathanreevescad]

Surely this is why you need diversity in divided stocks?

[@TobyNewbatt]

Yes indeed, but then why bet on only dividend stocks? You miss out on a huge part of the market. Its all about total returns at least that’s what matters for most 😎

[@ChrisShawUK]

How is diversity in dividend paying stocks going to offset the lower total return than the index?

[@JayJamsSpams]

How many people actively invest in high dividend shares but don't know about ISAs? Not many I'd suggest.

[@TobyNewbatt]

I’d wager that it’s way more than you realise 👍. But also don’t forget other countries have way less favourable allowances than we do.

[@ruthxo]

This is super helpful / thought provoking - thank you 👌👌👌

[@TobyNewbatt]

Welcome thanks for watching

[@Dr.JubairsFinance]

Another well reasoned video Toby

[@TobyNewbatt]

Thanks as always buddy

[@malcolmyounggolfcoaching]

Will definitely rewatch this video, I knew I’d be short of income and changed my low return investment over for a dividend fund which to be fair has not only paid out for four years and increased but I get the loss I now see in the fund stocks may not recover. However for now I’m just reinvesting everything back in to my higher yielding investment fund which for now seems to be my best strategy

[@AdrijusGuscia]

Some valid points but why sell stock when you can use it as collateral if push comes to shove? That way you don’t lose the principle, keep the dividends and get some cash which you can repay later. It’s not gonna be magical solution but it is an option if you keep your principal rather than sell it.

[@ChrisShawUK]

It's all capital (or principal as you quaintly describe it). Dividends are a return of capital to shareholders (as are buy backs). If you have £100 of stock and receive a £5 dividend, you now have £95 of stock. So if you want to use your shares as collateral, you have less collateral on your hands than you did before

[@VmcgHD]

Christ what a mine field. I have an ISA with a few ETFs (most of the money is in that portfolio). Another portfolio (in the ISA) of UK dividend paying companies (its doing crap). Then a number of portfolios outside the ISA. One USA dividend paying portfolio, one AI company portfolio, one Aerospace & defence portfolio and one Shipping portfolio. Plus a couple of other companies I own shares in (both UK companies). I also have a company pension where £2700 going into that every month. Hopefully the pension will be worth something in 25 years time and I hope the ISA will be worth something too. The idea of dividend payments is attractive as passive income but I’d need to invest some £400,000 into those I think to earn £2-3000 a month. I’ve no idea how the tax will work on US dividend paying stocks either! 🤷🏻‍♂️🤷🏻‍♂️

[@VmcgHD]

@@SmurphMcBalls Thank you. I’ve filled in that form on the trading 212 account. So, I assume I’d only pay 15% tax with respects to US dividends. But I’m sure HMRC would still tax me on what dividends I receive. It’s pennies at the minute so probably under the dividend tax free amount. I have a financial advisor so I’ll run it all past them. 👍

[@shimsteriom4191]

Brilliant video. Nice to see you're wearing a fluff free t-shirt 😎😂

[@TobyNewbatt]

Just for you, no more hoodies before filming 😂😂

[@shimsteriom4191]

@@TobyNewbatt 🤣😂

[@nintendokings]

Haven’t even watched but I guarantee it’s: - dividends aren’t guaranteed - you get better returns if you diversify Saved you 15min

[@TobyNewbatt]

Amazing! Can you do the same for the Lord of the Rings Movies as well? :P

[@nintendokings]

@@TobyNewbatt Let's see your KZbin vids earn 17 Oscars first ;) But sure: - Humble countryside fellow in Middle-Earth attempts lengthy jewellery return process [ALMOST DIED] Added a wee clickbait in the title for ya

[@TobyNewbatt]

@@nintendokings 😂😂😂😂😂 thanks. That’s saved me 9 hours. Perfect!

[@juri2001]

that is a great piece of advice

[@TobyNewbatt]

thanks for watching

[@user-hp9eg3gf6s]

Practically Only 4 Things matter while you retire, Dividends are not one of them ! 1. Total Real Return (Real not Nominal, based on your personal cost of life) 2. Volatility (Not being too high that it wipes you out completely) 3. Sequence of returns (Real not Nominal) 4. How much you withdraw *But you might want to have factor exposure (apart from the market factor) and one of the biggest factors is value stocks that happen to return more of there profits in dividends (although still total returns matter). And yes lately Growth stocks have performed verry well lately, but the best asset pricing models do suggest that value stocks (whether they pay a dividend or not) will outperform growth (whether they pay a dividend or not) over the long run, but with more volatility that is not fully correlated with the volatility of the whole market providing better ratio of volatility to returns if you have a value tilt on a whole market portfolio.

[@malcolmbirkett1347]

Im last again but not to worry i have good news today. RELX results just came in. They have announced a new buyback and a increase in the dividend 😊😊

[@TobyNewbatt]

Drinks on Malcolm everyone 😜

[@GGletgo1]

What if u ingnore dividends and just look for companies with a healthy balance sheet and reasonable growth.

[@TobyNewbatt]

Sure you could try that but everyone else sees the same balance sheet. All that matters is total returns and if you can predict which companies will beat the market you’d be the richest person on earth 😉

[@TheBigShort11]

@@TobyNewbatti can predict it and i outperform since 35 years, with couple of millions its easy, with couple hundred of billions you can never outperform nowdays

[@TheBigShort11]

Just diversify and you should do fine, better than dumb etf money

[@clarkeysam]

I dont understand why people are so attracted to dividend paying companies when you can get a globally diverse index fund for so cheap and expect a higher return.

[@The_Unintelligent_Speculator]

🤫 Don’t tell them.

[@ba8898]

Many wrongly believe they're receiving free money.

[@ericscott6864]

Capital Gains are taxed on growth stocks/ETF's. Taxed on dividend stocks/ETF's. Point is to balance them to pull from a little bit when they are favorable. Diversification. I have 24 stocks diversified. 12 ETF's diversified.

[@ChrisShawUK]

Has the total return from your diversified portfolio over the last five years exceeded the total return from the s&p over the same period?

[@ericscott6864]

@@ChrisShawUK yes it has

[@ericscott6864]

My total return after ETF expenses and after inflation beat the over all market by 1.9%

[@ericscott6864]

I beat the S&P 500 by 3%

[@ericscott6864]

I am in the US. So what I can invest in is different from the UK or EU

[@timlodge8267]

Sell more big issues.

[@timlodge8267]

Not if you hold the shares in a ISA you can get the dividends payed into your bank account tax free.

[@TobyNewbatt]

Indeed and I mention this in the video 😎

[@johndoh539]

Are you sure. I thought if you hold shares in an ISA account, dividends would automatically be paid directly back into your isa account. Then if you wanted the money you would have to withdraw it out of the isa account ?

[@TobyNewbatt]

@@johndoh539 I read Tim’s comment as saying he can get the dividends to his bank account AFTER it gets paid into his account. There’s no shortcut, but some brokers you can set it out to pay you once they receive it in your ISA. It still hits your isa first hope that makes sense?

[@timlodge8267]

@@johndoh539 I have an account ISA with HL I can reinvest the dividend or take the cash which can be payed in my bank.

[@joshuat1535]

Another reason why dividends are garbage is because there's no way to avoid witholding tax taken by a foreign country. You can avoid these taxes with synthetic ETF. But usually these are accumulating ETFs.

[@TobyNewbatt]

Yes this as well. Not much we can do about it though I’d always rather have a physical etf

[@Dritkant]

While this is true, at least in my country we have a tax agreement with a lot of countries, including USA, where the tax withheld I can deduct from the tax I have to pay myself.

[@sammybrennan9515]

See your point but ovs not having all your eggs in one basket

[@LawrenceTimme]

Easy tip, just be so rich the dividends are just extra pocket money.

[@wallace-bv4rl]

I think the dividend aristocrat data/ performance would have benefited from survivor bias. So the fact that with benefit of hindsight the best dividend payers don’t match the S&P 500 is actually even worse than it looks. I think…..

[@TobyNewbatt]

I guess the S&P 500 also has an element of survivorship bias too, but yes I tried to give the dividend stocks their best possible chance to shine.

[@wallace-bv4rl]

@@TobyNewbatt if it was the S&P 400 which only included the companies that were in at the start and remained in then yes it would have a comparable survivor bias. Again I think that would be the case. Anyway love your work and I’m only being picky (a funny YT trait, it’s catching 😂)

[@ronnietaylor9377]

Buy backs seem to do nothing for the share price Glen and BP are prime examples

[@TobyNewbatt]

Unfortunately a buyback or a dividend can’t magic a good company 😎

[@MrPurle]

I'm just here for your Ian Beale content... :)

[@TobyNewbatt]

I have nothing else... :P

[@timlodge8267]

You need company’s with big moats and defensive.

[@TobyNewbatt]

I’d agree for sure but then everyone else can see a big moat as well and that gets priced in. A big moat might be great but at the wrong price you lose

[@kaled17]

Most of the problems mentioned in the video are solved by holding etf like schd ,

[@TobyNewbatt]

No that’s exactly the problem 🤦‍♀️. SCHD is another ETF that only has dividend payers that will likely underperform over a long time period with total returns.

[@PDconsultancy]

It’s also not available as far as I’m aware for uk investors

[@MrSummitville]

If your dividends suddenly get "cut in half" then you are not diversified. So then, why are you giving investment advice ?

[@TobyNewbatt]

You didn’t watch the video. Hope you have a great day though 👍

[@musheopeaus4125]

That meme should be inserted every 24.5 secs whether it’s needed or not

[@TobyNewbatt]

😂😂😂

[@ChrisShawUK]

Oh Toby ... What have you done? I'm off to have a roam around the comments ....

[@TobyNewbatt]

Forgive me Chris I have unleashed hell 😂

[@whatthedeuce3006]

hi

[@geoffrey4540]

So buying a ETF is the simple way to cover the market

[@TobyNewbatt]

A low cost global index fund, which can be purchased as an ETF, is the simplest way to go yes

[@tonyh1460]

Can never have enough Ian Beale meltdown 😂, put a smile on my face

[@declanmcardle]

"Don't put your savings in jepidy!"

[@snazmeister]

Your comparison with NOBL and VOD is very flawed. As NOBL contains mostly SP500 dividend-paying companies, but not growth-only firms. Whereas VOD contains a completely mixed bag of firms. So, far from Apple's to Apples comparison. You might well be against dividend investing (which was my primary takeaway), but if you're going to compare ETF's, at least do it fairly.

[@TobyNewbatt]

VOO is the S&P 500 - it's considered one of the best measures of the market. The point in the video is about owning everything not just dividend paying stocks...that's the whole point.

[@porschecarreras992cabriole8]

Toby you are always raising alarm bells around dividends and you don’t think they are good value. I think they have a place and time and I run a SIPP now that has high dividend stocks and some ETFs and a stock ISA with only Vanguard ETFs. They race each other at the moment so let’s see who wins in a year. But it would be foolish to have all pension portfolios with high dividends and I plan to stop when I hit £1k payment a month. Diversification is the key and spread your risks around! Thanks for listening😜

[@TobyNewbatt]

I hope you got through the whole video because my conclusion is pretty much the comment....own everything don't just own one type of stonk :)

[@porschecarreras992cabriole8]

@@TobyNewbatt I never miss the end of the show! We are in agreement of course and I was reinforcing this

[@TobyNewbatt]

All good! I read it differently...which is why comments are so hard to interpret :P@@porschecarreras992cabriole8

[@jackumentory]

Well done for trolling everyone!

[@TobyNewbatt]

😉

[@juliat50]

All about technology for real gains. Tesla and Bitcoin paid my mortgage off at 29. Perfectly understand scaling back the risk as you get older. If you are young take some shots at the stars. Just about keeping up with inflation with an Index fund is a slow and hard way to do it. You will never leave the matrix until your best years are behind you.

[@ChrisShawUK]

When you are young, you can afford the time to get rich slow. I started investing at age 30 and stopped work in 2019, aged 51. I only ever invested in index funds and my return over that period was an average of 3.1% above inflation. Time is the best part of being young. If you squander compounding when you're young, you can't get it back in your 50s

[@jonathanreevescad]

Almost first

[@TobyNewbatt]

I think you may have got it in the end 😂

[@philipholmes6253]

Statement of the obvious after creating a strawman investor (just invested for dividends).

[@TobyNewbatt]

Many people invest solely for the dividends and use them as income. If you like I can show you entire online forums and communities?