Dividend Investing: A Seven Step Guide

Dividend investing for intermediate and serious investors has been the topic of my blog since I started it in 2013. I love the slowness during the last week of the year because it lets you step back and get philosophical about the big picture of what you’re trying to accomplish. As a service to new readers, I thought I would create a seven-step guide to dividend investing to offer as much of my condensed investing philosophy in a short period of time as I can.

Step 1: Determine whether dividend investing best fits your circumstances.

One of the most important things you need to recognize is that wealth gets created by finding the greatest amount of net-of-tax returns. This makes dividend investing a poor fit for high earnings in taxable accounts, particularly those in high-tax states like California. A lawyer in California has no business buying AT&T stock so that … Read the rest of this article!

American Investors Hit $1 Trillion In Margin Debt

According to FINRA’s margin statistics posted at the end of the month, American investors now have $1 trillion in margin debt (roughly $800 billion is allocated towards securities and about $200 billion not yet spent). The purported justification for margin debt is that interest rates are low (particularly at a place like Interactive Brokers) and the valuation of the entire stock market is much higher so it is logical that the overall allotment to margin debt would be higher. In that regard, it is true that only about 2% of the stock market right now is reportable margin which is in line with levels over the past 25 years.

Last year, there was $479 billion in margin debt outstanding. What I find troublesome is that the number of small investors, defined as those with under $1 million in investable assets employing margin, has tripled in number over the past year … Read the rest of this article!