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I read with interest the September article on dividend stocks. I agree with the philosophy of sharing the profit of highly successful companies through dividend payments. Income can also come from bonds, REITs, and preferred shares of stock.
I felt I had to learn about this topic since my experience in hiring financial experts in managing my money was less than satisfactory. I would like to start a discussion about this by relating a couple of experiences.
I learned about a local group that managed investments in stocks and bonds. They would transfer money into my checking account and would expect to pay me 5 percent income from my investments. They told me explicitly that they watch the investments like a hawk and and that was why I was paying him 1 percent of the money every year.
He sold off most of my investments and bought stocks and bonds. He was particularly interested in the bonds of a coal company. No known connection, but when President Obama said, “You can own a coal company, but I’m going to bankrupt it,” the bonds lost 80 percent almost overnight. I fired him, but thought I’d learned a lesson: No one cares about your money like you do!
One other mistake, I almost made: Invited to a free dinner in a really great restaurant. It was an excellent meal, and I followed up with a free private consult. He assured me he could guarantee my retirement and was ready to sell me an annuity. He was a salesman who could sell ice to an Eskimo.
I almost turned over my money except for one question. He wanted me to sell all my dividend stocks and buy the annuity. My concern was that I had a large profit in all the stocks and would get hit with a big capital gain tax. He told me there would be no tax on the profit when the money is used to purchase an annuity—a bald-faced lie, as explained to me the next day by my CPA.
Since then, I have doing all the reading and investing myself. There is a learning curve, but there is a lot of material out there to learn from.
—Bruce Lebowitz, DPM (retired)