How Do You Invest?

[Retired To Win]

In the Great Recession of 2008, I lost whatever confidence I had left in mutual fund managers. And in anyone's ability (including mine) to pick individual stocks that would rise in value. So I switched to investing in the stocks of companies that would pay me a good dividend (6% or better). And I have to say that I am happy with my financial results and with my investing "peace of mind" level.

How about you? What is your investing approach? How well does it let you sleep at night?

[BuckyBadger]

I have read much of what you have written about your dividend investing policy, and I continue to disagree with it - but as you continue to write about it again and again it seems that you're quite committed and I wish you the best of luck.

I also don't trust in anyone's ability to pick stocks (although I apply that to dividend stocks, as well, hence my baseline mistrust of your strategy), either. So I let the market do the work for me and invest in low-cost index funds that own the entire market.

I have only three funds - all index funds - and pay no more than two tenths of one percent for the honor of investing in these funds. I spend approximately 5 minutes a month on my investing and I sleep like a baby with my 70/30 stock/bond asset allocation.

[autoxer]

I invest like BuckyBadger. I just use index funds to track the market, instead of betting on a fund manager or specific stocks to outpace the rest.

[Goldy]

Same as the previous two posters I invest in low cost market funds and ignore it as best I can. I used to stress about it and try to out think the market but I have since found it much more enjoyable to just go along for the ride and largely ignore it. Returns have been fantastic.

[Petunia 100]

Me four. I'm 70/30 for now, and stick to total stock market, total international stock market, and total bond market.

[Retired To Win]

... I also don't trust in anyone's ability to pick stocks (although I apply that to dividend stocks, as well, hence my baseline mistrust of your strategy), either. So I let the market do the work for me and invest in low-cost index funds that own the entire market... I spend approximately 5 minutes a month on my investing and I sleep like a baby with my 70/30 stock/bond asset allocation.

As long as you're happy with what you are doing, that is great. Good luck.

[Green43]

Since I am nowhere near retirement I used the recession to buy my shares at yard sale prices. As a general rule you only "lost" money if you sold the equity.. I was buying shares for a third their current price in 2009. Just my take.

[DREagan8602]

Youve gotta look at the tends of the markets and just ride as long as you can

[jpham540]

I guess I can call myself a hybrid, my majority of my money is in index funds. For 2014 I have started off branching out into individual dividends stock. I will continue to invest in both. I'm at 80/20 allocation. Hope next year the market keep on increasing.

[corn18]

401k is index funds. That's a majority of my investment. My IRA's are self directed and right now they are 50% dividend and 50% cash. Been waiting for a dip to buy more dividend stocks with the cash but so far it's up, up, up so it sits there waiting for a good buy. I am not an active trader so I re-allocate twice a year, if required.

I have been researching what drives the current equities markets and found the engine seems to be retirement funds. I couldn't find an exact figure, but 50-70% of the current 26 trillion dollar value of all the US markets is in retirement funds (IRS's, 401k's, pension funds, etc...). And that engine is fueled every paycheck by all of our contributions. So, in a way, today's market is self sustaining. Unless something changes, a lot of money will continue to go into the stock market and it will always go up. There will be corrections, maybe big ones, but where else can we put our retirement money? Bonds have sucked for decades. Cash is not king because of inflation. Bank savings and CD rates are dreadful. Stocks are pretty much the only choice for growth. And as long as we keep sending $17,500+ into the market each year, it will increase in value.

The only thing I haven't found any solid data on is the effect of the baby boomers withdrawing for retirement. I don't know if they will be withdrawing faster than the workforce is contributing. That could be a long term headwind on the growth of the markets.

Tom

[Tabs]

I am currently in all index funds. Even in bull markets, I am really not sure that fund managers can give me a competitive long term net return. Skepticism aside, index funds also appeal to the bargain hunter in me.

That said, I've also dabbled in stock and options trading before, and I may do that again some day. For now, I don't have the time and energy that I want to devote to that.

[krantcents]

For a very long (30+ years) time, I use a combination of stocks and mutual funds. I use most index funds, however I also spread my risk by selecting sector funds. Besides the usual large, mid and small cap distribution, I include healthcare, high tech biotech and a variety of other types of funds to counteract volatility. My investing strategy is growth because I have a pension and Social Security benefits for retirement. My investments are intended to satisfy my wants and my needs are covered by my fixed (pension + Social Security) benefits.

[a1nipper]

I like index funds but also like other mutual funds. Individual stock picking seems like a crap shoot.

[LivingAlmostLarge]

I'd say we invest about 75% in mutual/index funds and 25% we play with. All 401k is mutual funds we can pick from obviously. Then taxable account is index funds and the play money is in the Roth IRAs.

[bjl584]

Be careful chasing yield. Make sure that the companies that you invest in have a good history of paying dividends and a solid history of raising their payments.