Last year Globe & Mail interviewed 12 investors, from Bay Street to Wall Street to Silicon Valley, about how to make money now. Here’s what Satish Rai had to say about investing:
What can a boomer approaching retirement do?
I have a simple piece of advice for boomers: Live off the dividend income, not capital gains from stocks or bonds. If you need the capital gains, you have to try to time the market when you buy and sell. But if you’re able to sustain your lifestyle with dividend income—plus OAS [Old Age Security], CPP [Canada Pension Plan] and your pension plan—you won’t have to worry about fluctuations in the value of your portfolio. You’ll have a very good retirement, because there’s enormous opportunity around this.
This is worth repeating and underlining: Live off the dividend income, not capital gains from stocks or bonds. If you need the capital gains, you have to try to time the market when you buy and sell.
Dividends (the money paid to you the shareholder) are key, forget about timing the market. With sufficient dividend income you don't have to worry when stock prices go up or down.
This advice doesn't only apply to boomers, it also applies to anyone just starting to invest. The younger you are the more time you have to build a portfolio of quality dividend paying stocks. You'd be surprised you may even be able to live off your dividends before you reach your retirement age!
According to the Globe & Mail:
Satish Rai, 50, joined TD as a management trainee in 1986 and began applying more analytical discipline to the bank’s investment decisions. He is now in charge of investments at TD’s $217-billion asset management division and runs the bank’s own pension plan.
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