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A Portfolio I Found That Works For The Average Person
A Portfolio I Found That Works For The Average Person
Portfolio choices for taxable account for growth and minimize taxes?
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The Fidelity utility fund that I use (FSUTX), over 45 years has CAGR returns that are just 1.5% less than the S&P 500. Gas/oil funds like FSENX have done about 3/4 the CAGR of the S&P 500 over 45 years, and they have exceptional years like this one where it was obvious they'd do very well. Maybe you are doing it wrong somehow.
Just look at GABUX's stock price over time. That huge dividend is coming at the expense of the fund's underlying investments. They could be using leverage, or else pursuing aggressive short-term strategies without long-term promise. Either way, it's not generating that much actual return. The risk for her is that the dividends continue to look good until the day they completely stop. And when she goes to sell her stake in GABUX, she'll find it's worth much less than it used to be, and she won't be able to generate enough meaningful income out of what's left. You could make any investment look good by taking investors' money and then giving it back to them in huge chunks and calling it a 'dividend'. That's not exactly what they're doing here, but the same principle applies - you can't just look at the dividend history, but also at how they're generating those returns. (It's also charging a 1.3% expense ratio - woof.) I wouldn't just switch to FSUTX, either. Rebalance into a whole market portfolio with regular withdrawals and she should be able to sustain herself.
Hi, can someone please look at GABUX and explain to me how it provides a 12.5% annual dividend when the stock holdings of the fund don't deliver anything like that to the fund management? It is poorly performing in relation to most utilities mutual funds and poorly rated by for example Morningstar. But then you look at a top rated utility fund such as FSUTX and from the same source (Yahoo Finance) it gives a 2.2% dividend. What am I missing here? I have a relative whose portfolio is heavily invested in GABUX and being an older person it has been set up to provide monthly cash income which she appreciates. I want to figure out how to make the case that (in spite of the 10% difference in dividend) it would be better to be in a top-performing fund with lower expenses and just pull the desired monthly income out of the brokerage fund as needed by selling a few shares. If that's the right case to make. I am also helping her to understand the need for a more balanced portfolio that is not overweight in one sector. I am also going to help get her to a pro advisor as opposed to an amateur like me. So you don't need to jump on the bigger picture issues here, I just really want to understand how this fund pays 12.5% and how that adds up. I even read the prospectus and couldn't find what I was looking for.
Thoughts on my three holdings? I am looking to put money into these three every paycheck for a few years. Looking for advice, cheers! 1. QQQ 2.VTV 3. FSUTX If anyone recommends alternatives to my choices or additions let me know! Cheers and thanks for your time