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Jati
Joined: 11 Mar 2008
Posts: 155
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 Posted: Wed Dec 10, 2008 4:32 am Post subject: |
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Thanks for the compliments. Just trying to help out fellow expat teachers.
Teak/Jati |
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Marcoregano
Joined: 19 May 2003
Posts: 872
Location: Hong Kong
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| Posted: Thu Dec 11, 2008 6:25 am Post subject: |
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Confess I have somehow managed to stay ignorant about these dividend-paying shares - all of my investments are in unit trusts, which were doing OK until the credit crunch, but are now worth less than 50% what they were worth a year ago.
I'm interested to learn more about these dividend payers. I imagine there's usually a minimum share purchase? Also, is it possible to find out in advance how much the dividend payout will be? And is the dividend paid annually or monthly? Very greatful for answers to any of the above. |
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Jati
Joined: 11 Mar 2008
Posts: 155
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| Posted: Thu Dec 11, 2008 1:49 pm Post subject: |
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| Marcoregano wrote: |
Confess I have somehow managed to stay ignorant about these dividend-paying shares - all of my investments are in unit trusts, which were doing OK until the credit crunch, but are now worth less than 50% what they were worth a year ago.
I'm interested to learn more about these dividend payers. I imagine there's usually a minimum share purchase? Also, is it possible to find out in advance how much the dividend payout will be? And is the dividend paid annually or monthly? Very greatful for answers to any of the above. |
I assume that you are a UK resident. What the British call Unit Trusts, are Mutual Funds in the USA, pools of funds which are invested in stocks (shares) and/or bonds by professional money managers. Supposedly these trusts/funds give diversification but consider that a manager -who gets paid for the amount of money under management- is really managing to maximise his or her paycheck, not to increase your returns.
You can get diversification yourself by purchasing the shares of companies across a range of industries, say 5 to 7 at least. While you may not have enough money at this point to get instant diversification, it is something that you can work on over a period of time.
For example, the following non-USA companies (since you are in Hong Kong) would give diversification across the respective industries:
Energy - BP, Total
Consumer Staples - Nestle
Industrials - ABB
Basic Materials - BHP Billiton
Pharmaceuticals - Novartis, GlaxoSmithKline
Technology - ??
Bond fund - ??
Emerging markets - India Fund, Templeton Dragon Fund (China, Hong Kong)
All pay dividends and are solid companies, which means they are less likely to go out of business than smallcap companies.
In the USA, there are several discount brokerage companies that allow you to buy and sell stocks/bonds, hold cash positions (usually in a money market account), provide cheque-writing and debit card services, and have internet-enabled accounts. For example, in the USA, Charles Schwab is a widely-respected online brokerage that provides all of the above.
I don't know how much money you have to invest, but you could cash out your Unit Trusts and then put at least 1k-2k pounds into each of several companies. Hold them in the brokerage account because the broker can reinvest the dividend payments and buy fractional shares. In the USA, most companies pay quarterly dividends (every 3 months), whilst overseas companies that I hold (e.g., BHP) usually only pay once or twice a year. Bond funds will usually pay monthly, which means you get monthly compounding.
I ditched my Mutual Funds several years ago and have not looked back. Those &*@# never passed through dividend payments from companies and absorbed them into the Net Asset Value of the funds. This meant more money under management, which meant a greater paycheck for the manager, not for me.
At first the dividend payments won't seem like much, but if you keep track (using a spreadsheet), you will see them beginning to build up and see the compounding effect. This was a great motivator for me and I am to the point where I don't mind if a company's share price goes DOWN, because I can see the reinvested dividends buying more shares, and thus a higher dividend payment when the next quarter comes around.
Through my discount broker, there is no minimum share purchase. I decide how much I want to put in and then use the current share price to calculate how many shares that would be. I round to the nearest round number of shares, usually higher. In the USA, a 'block' of shares is considered 100 but again the discount broker can buy in bulk and this allows the individual to buy less than a block.
You can find out what the next payout will be by two ways: (1) using the online investment research provided by the discount broker, and/or (2) reading the dividend announcements made by the companies, usually a few weeks before they make the payment. For example, Microsoft just announced that they will be paying out $0.13 per share in January. Since their last quarterly payment was $0.11, this shows that they are increasing their dividend by 18% despite the tough economic environment. AND, since their share price is down, my reinvested dividends will buy me more shares (and thus, more dividend payments) for the next quarterly payout.
I will leave it at this for now. If you want to dialog a bit more, please PM me since I don't want to turn this forum into an investment seminar.
BTW, I am just a teacher who invests. I am NOT a broker, dealer, newsletter-seller, etc. No come-ons. |
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Marcoregano
Joined: 19 May 2003
Posts: 872
Location: Hong Kong
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| Posted: Fri Dec 12, 2008 6:28 am Post subject: |
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Thanks for the info and advice Jati. I figure it's worth keeping this discussion open - I imagine may TEFLers either have, or would like to have savings in stocks and shares.
One thing I'm still unsure about concerns the actual purchase of these stocks. You mention stock brokerages. However, I can buy into most of the companies you mention directly through my HSBC bank account. Is there any advantage in using a brokerage rather than buying direct through my bank? Do they, for example, enable you to buy smaller amounts of shares? I notice that the smallest buy-in for HSBC shares (which btw are probably great value at the moment) is HK$44,000 (about US$5500) - quite a chunk of money, and more than I'd like to tie up right now in a singlr company. Assuming that that is the case, are there any other advantages of using a brokerage?
Another thing, you mention emerging markets funds - India Fund, Templeton Dragon Fund - as examples of dividend-payers. I presume that's an oversight - these type of funds are exactly where my savings are right now - and they don't pay dividends!
Last edited by Marcoregano on Fri Dec 12, 2008 6:30 am; edited 1 time in total |
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bradley
Joined: 28 Mar 2005
Posts: 235
Location: China
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| Posted: Fri Dec 12, 2008 6:29 am Post subject: |
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| There hasn't been much of a change in Shenzhen. |
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parrothead
Joined: 02 Nov 2003
Posts: 342
Location: Japan
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| Posted: Fri Dec 12, 2008 10:22 am Post subject: |
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Hi Marco,
You, or other teachers, might be interested in an online brokerage. I use www.sharebuilder.com. It's free to set up. I can transfer funds from my (American) checking account into my sharebuilder account where it immediately starts growing as part of a money market fund. From there I can purchase full or partial stocks and have access to company profiles, stock grades, investment strategies, dividend statistics, and so on. Investments can be set up via an automatic investment plan or you can invest whenever you want. Trades are usually made on Tuesdays. Sharebuilder is part of ING Direct, and targets small investors, those of us who don't have $5 thousand dollars to invest in at a time. I can invest as little or as much as I want, and as often as I want. The fee is $4 per trade. Real-time trades are $10. I can then follow my portfolio and learn about which stocks are paying dividends and which aren't, and a variety of other cool features too.
There might be some country restrictions. But I'm sure there is a similar brokerage for Britons. I've been happy with it so far. It's not a bad way to get into investing if you are a like-minded teacher thinking about the future. |
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Jati
Joined: 11 Mar 2008
Posts: 155
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| Posted: Sat Dec 13, 2008 2:27 am Post subject: |
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| Marcoregano wrote: |
Thanks for the info and advice Jati. I figure it's worth keeping this discussion open - I imagine may TEFLers either have, or would like to have savings in stocks and shares.
One thing I'm still unsure about concerns the actual purchase of these stocks. You mention stock brokerages. However, I can buy into most of the companies you mention directly through my HSBC bank account. Is there any advantage in using a brokerage rather than buying direct through my bank? Do they, for example, enable you to buy smaller amounts of shares? I notice that the smallest buy-in for HSBC shares (which btw are probably great value at the moment) is HK$44,000 (about US$5500) - quite a chunk of money, and more than I'd like to tie up right now in a singlr company. Assuming that that is the case, are there any other advantages of using a brokerage?
Another thing, you mention emerging markets funds - India Fund, Templeton Dragon Fund - as examples of dividend-payers. I presume that's an oversight - these type of funds are exactly where my savings are right now - and they don't pay dividends! |
As Parrothead suggests, there are probably online brokerages available for British citizens, for example, check with ING since they also have online banking accounts which pay a better interest rate than most 'brick-and-mortar' banks. I would not go through a traditional bank, which as you can see, want only large amounts of money to be invested.
The India Fund (IFN) and Templeton Dragon Fund (TDF) are both closed-end funds (unit trusts) sold on the New York Stock Exchange like stocks. They *do* make distributions: dividends, long-term capital gains, short-term capital gains, and investment income.
For example, IFN paid out distributions of $4.89 per share in 2007 and $14.63 per share in 2008. So, for a fund that cost me $47 per share, I received back (and reinvested) $19.52 per share in just two years; that is nearly 42% in distribution yield! The reinvestments bought an extra 50 shares total (80 original purchase) which means that I will see an increase in my dividend payments by 50/80 (62.5%) this year. That is compounding in action. TDF has not paid as large an amount in distributions but enough to make it worthwhile.
Teak/Jati |
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Marcoregano
Joined: 19 May 2003
Posts: 872
Location: Hong Kong
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| Posted: Sun Dec 14, 2008 6:07 am Post subject: |
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Thanks to Teak/Jati and Parrothead for the advice. I will certainly look into the online brokerage idea here in HK, though to be honest I don't have much wonga to invest at the moment, especially as most of my existing savings are snarled up in unit trusts that have nose-dived - seems to me I have to wait until they bounce back, otherwise I stand to lose.
Still a tad confused about those unit trust funds you mention Jati - the India Fund and Templeton's Dragon Fund. If funds like these ones pay dividends, why would anyone invest in ones that don't? - which seems to be the case with the majority of funds. |
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Jati
Joined: 11 Mar 2008
Posts: 155
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| Posted: Mon Dec 15, 2008 1:52 pm Post subject: |
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| Marcoregano wrote: |
| Still a tad confused about those unit trust funds you mention Jati - the India Fund and Templeton's Dragon Fund. If funds like these ones pay dividends, why would anyone invest in ones that don't? - which seems to be the case with the majority of funds. |
The India Fund and Templeton Dragon (TDF) are not unit trusts per se (mutual funds) but rather closed-end funds. Unit trusts and mutual funds create and destroy shares as people invest money or withdraw money, respectively. Thus the Net Asset Value (NAV) and fund price are one and the same.
Closed-end funds create only a certain number of shares which then change hands on stock exchanges like stocks. The price and NAV can be quite different depending upon the demand from buyers and supply by sellers.
I have held TDF since 1996 and it did not always make distributions. There was a time when the price was so low relative to the NAV (selling at a discount), that one of the major fund holders -Harvard University investment fund- began to agitate for turning TDF into an open-end fund, like a mutual fund, so that the price = NAV and people could more easily exit the fund (no need for a buyer). In order to head off this challenge, the TDF managers decided to start distributing money twice a year in order to close the gap between the price and NAV. (Not sure how this works, but I was glad to get a regular distributions.)
Since then the annual distribution has grown to where I am looking at around 15% annual yield based upon what I have invested, not a bad return. My understanding is that the distribution comes from short-term and long-term capital gains, dividends passed through, and investment income.
I don't know why other funds do not make distributions, but I would avoid them. Basically, fund managers get paid a percentage (1-2%) of the assets under management, which is the NAV times the number of shares. If a manager does not pass through gains, investment income and dividends, then the NAV is higher and, thus, the manager's paycheck. I figured this out when I saw that some of my mutual funds had not gone anywhere in two years (same price, no dividends), but certainly the manager got a few hundred dollars from me for "managing" the funds. (This is the mutual fund/unit trust industry's "dirty little secret".)
It was at that point that I decided that I wanted ALL dividend payments, capital gains and so forth. I sold most of my funds and starting buying shares outright.
Check out www.schwab.com or www.sharebuilder.com and see if you can get an online account. It was the best decision that I have ever made financially; that and establishing a budget. |
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parrothead
Joined: 02 Nov 2003
Posts: 342
Location: Japan
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| Posted: Tue Dec 16, 2008 6:18 am Post subject: |
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| Thank you for your tutelage, Jati. Investing and saving money is very addictive. Thesedays I approach it as an expenditure, like paying rent or my phone bill. I don't miss the money I set aside for investing. Being a couple of decades away from retirement, even if my portfolio goes down in the short-term I see the current economic climate as an opportunity. With good companies I can enjoy the dividends, and dollar-cost average all the way down. |
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Marcoregano
Joined: 19 May 2003
Posts: 872
Location: Hong Kong
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| Posted: Tue Dec 16, 2008 7:40 am Post subject: |
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Thanks again. Having taken a look, it would appear that www.sharebuilder.com is for US residents only, but www.schwab.com seems to be international, and I will have a closer look when I have time with a view to setting up an account. I have also had a look at what's locally available in HK, but the websites don't seem quite so user-friendly.
I wonder if you guys use a regular monthly system of share buying (ie. by standing order), which seems to be one way of investing if you don't have large sums for share-buying. Or do you hang back until you have enough saved to buy a standard 'lot' of shares? (I think 'lot' is the official term!?). |
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Jati
Joined: 11 Mar 2008
Posts: 155
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| Posted: Wed Dec 17, 2008 1:55 am Post subject: |
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| Marcoregano wrote: |
| I wonder if you guys use a regular monthly system of share buying (ie. by standing order), which seems to be one way of investing if you don't have large sums for share-buying. Or do you hang back until you have enough saved to buy a standard 'lot' of shares? (I think 'lot' is the official term!?). |
When I started out, I invested in mutual funds and used automatic monthly withdrawals to build a portfolio. Automatic withdrawals are great because they force you to budget savings like a cost, and they facilitate dollar-cost averaging. But, like I said, mutual funds mostly serve the mutual fund industry, i.e., the manager always gets paid from your savings whether or not you see a net gain.
When I sold off my mutual funds and began buying stocks, I decided to put around $2k-$3k into any given purchase, to lower the % lost to the broker's fee. Schwab charges $12.95 per trade, which is low relative to full-service brokers (e.g., Merrill Lynch @ ~$50 per trade), but not the lowest out there. There are some online discount brokers offering $4 trades. With a broker like Schwab, you can make purchases less than a 'lot' (100 shares in the US) because Schwab aggregates their purchase orders. Thus, they also reinvest dividends for you, if you so choose, because they can aggregate those purchases for all of their customers and you can buy fractional shares.
Because of my change in style, I now wait until I have a new batch of money ($2k or so) before investing. But the automatic withdrawals got me started into budgeting the saving of money for investment. Now that I have the investing 'bug' (agreeing with what parrothead said), I have no problem saving money for investing.
To answer your PM'ed question, you can do research on individual US stocks (or foreign ADRs) by setting up a portfolio using Yahoo! Finance.
http://finance.yahoo.com/
Enter the symbols of companies whose shares you want to research. I like to put in the value of "1" into share ownership and the price of the share on the day that I first enter that symbol. Then, I can follow the price movement as I check in daily or weekly. Yahoo! Finance will tag stories for each of the symbols that you set up in your portfolio. This allows you to keep track of what analysts, both pro and amateur (Motley Fool), say about the company, its dividend announcements, and etc.
Finally, take the Motley Fool articles with a large grain of salt. These are written to be 'come-ons' to buy their gurus' investment newsletters. After a while, I decided that they weren't worth reading and I usually stick to 'Seeking Alpha', CNBC, Wall Street Journal, and other news outlets instead. No one looks in the rear-view mirror as well as a Motley Fool writer! |
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parrothead
Joined: 02 Nov 2003
Posts: 342
Location: Japan
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| Posted: Sun Dec 21, 2008 3:27 am Post subject: Re: Have You Been Affected By The Recession Yet? |
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| spamghod wrote: |
I've been buying gold for several years and frequent several jewelery shops picking up small amounts of gold. I've noticed I see a lot more Koreans trying to sell gold jewelery these days. I gather the jewelers don't give them a reasonable amount, or at least what the people think they should get.
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I've got to ask. What do you do with it? I'm familiar with investing in gold, but I don't know anyone who actually hoards gold. The whole idea of actually stashing it away like a pirate seems so doom and gloom to me. Do you buy it and sell it periodically, keep it in a safe deposit box, hide it in your cookie jar? Just curious. |
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Lhenderson
Joined: 15 Dec 2008
Posts: 135
Location: Shanghai JuLu Road
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| Posted: Tue Dec 23, 2008 6:23 am Post subject: |
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| I just picked out the most attractive students....told them I would pass them.............. |
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