Is it really safe to rely on dividend payout for our financial freedom? Whats the catch here? Can we really quit our job after we have achieved total monthly dividend $$$ more than our salary? If its that easy.. why are so many people still struggling in their day job?
Yeah, but maybe there's a better way to think of it than "oh I've hit my target for dividends, now I can quit my job". It's not that you can quit immediately, it's that it becomes easier to leave your job when you decide you want to leave, because you're not relying entirely on your salary to keep the lights on and food on the table.
Once you hit retirement age and you quit working entirely, you're not just going to be living off dividends - you can dip into your principal to maintain your 3% (or 4% or whatever) withdrawal rate.
I am really sick and tired of my job now. What is the purpose of our life if we need to stuck in our job for most of our life time?
Maybe what you need is a break from your job, first and foremost. If your boss will give you a month or two of unpaid leave, take it.
I cant help but feel really sad for him and for most of us who need to work and work and work till we die. Is our life really all about working to survive? DW is my inspiration.
I strongly believe no job is worth it. No matter how high your salary is or how fast you can climb the ladder. You are still working for others and you do not have the "real" freedom at all.
Oh the one hand - working for yourself gives you freedom, but in a very real sense you're also working for your clients (or customers, or whatever), because that's where your next paycheck comes from. And running a business has a lot more volatility embedded in it: the majority of small businesses fail - so you're at more risk of losing that paycheck. Not that I don't think running your own business is a good idea; it's just not for everyone.
On the other hand: oh god yes I cannot endorse this sentiment enough. There are so many cliche ways to put this - "nobody ever lies on their deathbed wishing they'd spent more time at the office" is my favourite - but life is not just about struggling through school and struggling through college and struggling through work and struggling through raising kids and then you die! Work is a means to an end, not an end in itself - work is about making the money to pay for the good things in life like hiking expeditions in rugged mountains, and delicious cocktails on tropical beaches with slack-key guitar music in the background, and that schweet classic drop-top Mustang you've always had your eye on.
My worldview is very much influenced by the Bret Michaels philosophical school of thought that was briefly popular in the mid-80s. Here he is on stage, giving a lecture about work-life balance; it's quick (not even five minutes), so turn your speakers up and listen to the whole thing:
I read somewhere that diversification is for the "know nothing" investor and for the "know something". So how many of you guys are diversifying now? How do you define diversifying? If I invest in more then 10 different company.. does that mean I am also diversifying? Or I am diversifying when I investing in the whole market like the spy and Sti?
Sorry for asking such a dumb question..
Hey, this is not a dumb question, this is a really good question.
"Am I diversified?" is a tricky thing to answer, because it's not binary; it's like asking "am I hot or not?". You can be more or less diversified: a portfolio that owns nothing but DBS and Singtel isn't very diversified, but it's more diversified than a portfolio of nothing but DBS; and a portfolio that owns nothing but IWDA is more diversified than our "DBS + Singtel" portfolio because IWDA owns thousands of global stocks under the hood.
And then you've got asset classes - you can own bonds, stocks, commodities, REITs, the list goes on.
The question you could ask, then, is "what's the point of all this diversification? Why do I need to screw around with all these overseas ETFs - why can't I just buy DBS and retire?". The answer is:
diversifying your portfolio makes it safer.
Think about our "nothing but DBS" portfolio - what happens if DBS announces one bad set of profit numbers, or has one single rogue-trader scandal? Your portfolio's going to take it in the neck. If you diversify a little bit - if you buy some Singtel - it's going to hurt a lot, but not as much; if you diversify a lot, DBS's bad profit report won't even be a scratch on your portfolio.
(There are other reasons to diversify - reduced volatility, correlation benefits, rebalancing benefits - but the simplest reason is that it makes your portfolio so much safer.)
I'm about as diversified as you can get: bonds and equities, American and global. I could add commodities if I wanted, and some corporate bonds (my bond holdings are mostly in munis because I like the tax exemption), but at the moment I'm pretty happy. I might buy some commodities and dial up my bond holdings once US interest rates head back up, but that's about the only change on the horizon.
