Last time I was in Pattaya there was only one small hotel and an empty beach, was about 30 years ago. I here it’s gone downhill
I “invest” for income greater than bank interest. So I have held some shares for many years as they have paid increasing dividends. That is one definition of investor who is not a trader. (I am not good at forecasting capital gains and prefer not to rely on these to top up my pension.) I understand “opportunity cost” but am relaxed about it.
I also “invest” in some companies I am simply interested in, as LK Hyman seemed to be with RDSB and other shares (e.g. ULVR). I have a small investment in AXS. I just like the idea of treating softwood to create wood that lasts for 60 years or more. My money is being used to build new plants around the world. I find it fascinating to follow the progress of this company. This too seems to be “investing” rather than trading. I have a capital gain of 98% but no dividend income yet.
We are not all traders! I think.
Well isnt that an issue? Most income funds must forecast capital gains. Not much point in getting 6% dividend per year…SP suddenly falls 80% (like in 2008 to many) and dividend slashed to zero for a decade.
Great if its worked out for you… But capital growth is a primary search to credible income funds. They wont invest if they don’t see capital growth potential. At the very minimum, during the loading process. And hope price stays above capital input for a few div years.
Not saying your approach is incorrect. But if I was investing in an income fund and they said 'we have no regard for your capital. Just stated div returns…I’d chance Woodford lol.
The best investor I ever knew said this to me :
Perfection is :
“A trader with investor skills. And an investor with trading skills”
I agree. Perfection is probably a hybrid today.
However I won’t argue the point. Many people like to call themselves investors as it sounds better in the local eatery . I’ve personally no issues calling a spade a spade.
No. It’s not investing. Your trading your cash . The company ‘invests’. Not you. You just hope they get it right so your trade profits from their investment decisions.
Btw some decent capital return choices you made there if you traded at the right time lol
Well just broke that golden rule for indices. 7330 Held short for weekend. I just can’t let it go.
Best ftse week in four months. Biggish day today. Near Vertical 5 day rise. Will get slight retrace anyway but analysis suggests big money exiting whilst price not dropping the high . All adds up to a favourite short in stocks alright but weekend throws a curve ball here.
Either the smart money expects some ftse dropping news over the weekend, or I’m in for a rule breaking loss. Wish it was Thursday. That decision would have been a lot easier lol.
That’s your committee telling you what to do.
Yes. But my ten year old committee are so irrational, they normally fit with market norms loool
I imagine a few here would then invest in space rocks.
Hi @Armageddon, I cant agree with your assertion that we are all traders, not in the commonly accepted meaning of those terms anyway. You have redefined them somewhat to support your argument I think !.
Investopedia says the following about traders and investors:
A trader is an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution. The main difference between a trader and an investor is the duration for which the person holds the asset. Investors tend to have a longer-term time horizon, while traders tend to hold assets for shorter periods of time to capitalize on short-term trends.
An investor is any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns. Investors utilize investments in order to grow their money and/or provide an income during retirement, such as with an annuity. An investor puts capital to use for long-term gain, while a trader seeks to generate short-term profits by buying and selling securities over and over again.
By those definitions I am most certainly an investor and not a trader.
Don’t let anyone else define things for you pref. Define your own world
So if you wish to be defined as an investor, so be it.
For me, I’ve held companies years at times. But never as an investment in the company. I dont know much about any company really. So couldn’t call it an investment when I dont even know what they do half the time. It was a long term trade. Price speculation.
Its not your money unless you were actually in on the IPO(s).
Everything after that is traders (or investors) speculating on returns, not one penny of which goes to the company.
Just thought I’d make that point. It is one that gets overlooked all too often it seems to me.
Very true. After the IPO, the only relevance of SP to the board, are bonuses
Naturally - I want the companies I get dividends from to be around for 20 or more years and thus keep my capital intact and in pace with inflation at least.
I should have been clearer.
I find it difficult to get an income from companies that do not pay dividends but show capital growth - I struggle both with the concept and with the practicalities.
Conceptually - if I sell shares to realise part of the growth I am eventually left with no shares.
Practically - selling small quantities makes the trading cost horrendous (and I have to take decisions and carry out the trade.)
I do wish II would reintroduce dividend pay away.
Are investors at the IPO stage not speculators too? Speculation does not differentiate initial investors, trading investors or longer term investors.
When I buy their IPO shares I become them, my cash becomes theirs as far as the company is concerned. Hopefully, they get a little or a lot extra from me for taking the initial risk. Thus part of my money indirectly funds the plants etc, and part rewards the IPO investors. (Admittedly, this simplifies the overall algorithm too much as it ignores the impact of market pricing and market price movement and probably a whole host of other variables. Nevertheless, it emphasises ownership - with my shares I own a chunk of the business.)
FWIW: part of my holding in AXS was a rights issue so my money did go directly into plants etc.
Hi @pelim, Yes I quite understand your problem, investments that don’t pay a dividend are a problem for anyone investing for income for all of the reasons that you have outlined. That’s why people investing for income naturally gravitate towards dividend paying investments where you don’t need to sell to extract the income (however small).
Not sure about your 20 year requirement though, are you really going to hold the same investment for 20 years ?. I buy and hold but I’m pretty sure that there will be very few that I’d expect to be around for that long. And if they cut their dividend or share price dropped significantly (presenting a threat to the capital) then personally I would sell and invest elsewhere.
Investment Trusts paying regular dividends are a popular choice for income seekers as I am sure that you are aware. But are you aware of the AIC (Association of Investment Companies) ?. They specialise in Investment Trusts and provide a lot of useful tools for finding and comparing them.
A recent addition to the AICs toolset is an Income Finder tool that allows people with an IT based portfolio to plan out their dividend payments so that they are evenly spread over the year. There is a whole thread over on the Lemon Fool about this tool, see link below:-
Hope you find this useful.
Interesting Sunday Morning read this … thanks
Yes. I am quite happy the RDSB, ULVR, HSBA and a few others will be here for a while yet. They have seen me through the first 12 years of retirement. I monitor them from time to time. Of course, since this period took me through the 2008 crash it has not always been plain sailing. I retain a small interest in a few more speculative developing companies like AXS and SXX but keep my involvement to small amounts of cash. Hard to say whether these will be around in 20 years. My guess is that they will both be provided they are not taken over.
I shall look at AICs and Lemon Fool and learn.
Hi @pelim, Well the problem with all if the investments that you have listed is they are all what I refer to as “single stocks” and as such are often have a very volatile share price and in some cases might deliver an unpleasant drop in your income were the dividend to be cut. Investment trusts (ITs) try to avoid these problems by investing in a range of stocks, bonds, debt or other things (depends on the individual IT) hence removing the risk of non performance due to a problem with an individual share (or other investment) and a lower chance of a dividend cut.
ITs are actively managed and normally have some “theme” which in some way determines the constituents. As a result ITs incur ongoing charges and other costs which are built into the price, but should not be ignored when selecting an IT - anything more than a 1.5% OCF is expensive.
ITs also usually have a Net Asset Value (that being the price per share of all of the trusts assets). Trusts where the price is higher than the NAV are said to be trading at a premium, those where the price is below the NAV are said to be trading at a discount. Ideally buying a trust that is trading at a discount is to be preferred. Certainly buying a trust that trades at a large premium is normally reckoned not to be a good idea. That said investors are still buying LTI which is trading at a 100% premium ATM (!) so people will do it if they think that they will get a sufficient return. Has to be a high risk thing to do though…
PS And yes as Armageddon says Unit Trusts (UTs) and Open Ended Funds (OEICs) are something else again. Dont confuse them with Investment Trusts as they are quite different. ETFs are quite similar to Investment Trusts but usually track an Index and have lower charges - but really deserve a longer description than I have time for right ATM.
Best words I’ve seen here for a long time. I think the risk when trading at a discount, is a lot lower than single stocks , by at least 70% reduced. (Not that you cant lose)
Don’t go to unit trusts as some do, when told IT