dealtn wrote:Dod101 wrote:dealtn wrote:Dod101 wrote:DrFfybes wrote:
Ive just noticed the subtlety here, you only sell once per year??
Do you choose a fixed date, try and time the market, or something else?
I ask as over the last couple of months VWRL has fluctuated massivley, losing 10% between early Jan and early March, then recovering in a 3 week period. Additionally the cash you withdraw will (probably, on average) gain more spending 6 months more in equities.
As I'm with ii I get a free trade each month, so that is the route I intend to follow.
Paul
And that of course is one of the flaws in the argument of those converting capital to income by selling. When do you sell? Furthermore many of them will have some dividends accumulating in the course of any year. What do they do with them? If they leave them to accumulate, they are out of the market (and are thus partly living off their dividends anyway) If on the other hand they reinvest the dividends, they could be buying one month and selling the next.
The problem with those theoreticians is that they are just that. If you are dependent on investments and nothing else to live off then you have to be very practical and throw the theory book out of the window and discover what actually works.
Dod
And the same problems exist when the Directors of the company are the ones deciding how much "income" you get, and when.
You are still faced with the potential situation of getting too much, or too little, or at the wrong time, and then having to decide what to do about it. For many that are in the accumulating phase of investing you need to consider dividends paid as cash and being, as you describe, "out of the market". No doubt it could be annoying when any surplus income arises when the markets are at all time highs, and some may feel angst about market timing issues associated with that reinvestment.
What you seem to be missing when you criticise "theoreticians" is that some are actually practicing such. It isn't just theory. Furthermore those who rely solely on the decisions of companies and their directors are just as exposed as those that choose to take control themselves. Arguably more so.
It isn't for everyone. There isn't a fanatical crusade to convert "non-believers" to do something they don't do, or are uncomfortable doing. But many seem content to criticise others, and push falsehoods, yet find it uncomfortable when these are challenged.
I am not in the least uncomfortable when challenged and am not trying to prove anything.
Fine.
So why use sentences such as "And that of course is one of the flaws in the argument of those converting capital to income by selling."?
Simply say, as others do and believe should be done, that it is "better" or preferable to do it the way you choose to, for you. For others it might be different. and even for those who don't invest, who might be described as "theoreticians" don't be so dismissive of well researched, and long taught, finance theory.
Exactly what it is, 'finance theory'. I live in the hard practical world and can be dismissive of theory if I want, thank you.
Dod