I came across this well-known YouTuber, and he says that if you decide you no longer want to hold onto a stock, you can sell it at any moment to withdraw your initial investment. Additionally, you won’t lose your original investment or principal.
Naturally, the share price and dividend yield percentage are the changes that count. If not, is this accurate?
If you purchase ABC stock for $10.00 and it pays a $1.00 dividend each year, the stock price will typically drop by $1.00 after the ex-dividend date, leaving you with ABC valued at $9.00 and a $1.00 dividend credited to your account.
However, ABC’s price could still fall to $5.00. There is no guarantee of recouping your initial investment, you always face the risk of losing money.
Here is the video link: https://m.youtube.com/shorts/lKQNmcE8Zvk
Alright. He is making the assumption that his phone bill will stay the same, that VZ (Verizon) would always charge $40.00, and that the dividend yield will never fluctuate.
Don’t listen to YouTubers, he is just talking out of both sides. Nevertheless, I appreciate that you raised this query. That’s excellent.
Not everyone says that.
Invest with the goal of total return. Not dividends.
Employ the overall market index. Once you’re retired, add bonds and cash to provide stability in case the market collapses.
The main advantage of dividends is psychological. You can simply invest in a total market fund and sell stocks based on your financial plan instead.
What if you decide against selling? Or if you are anxious about selling since you don’t know when to do it? It is not really that easy.
Certainly, it’s that straightforward. He mentioned it’s a psychological issue. You highlight these psychological factors. If you’re aiming for a 4% return, you can sell an amount equivalent to 4% minus any dividends received each quarter. Dividends are simply a mechanism that prompts action. Essentially, you’re receiving money from your own investments.