Rich And Retired? Don't Buy Dividend Stocks

A few weeks ago a friend of mine, who has sold out of a joint venture and is now retired, asked me how to invest his money. He has already collected several recommendations by bank consultants and investment professionals and while I believe that my Early Retiree Portfolio is suitable for average early retirees, his situation required some adjustments, which I will explain later on in this article.

If dividend stocks were the perfect choice for rich people, Warren Buffett would be crazy to keep almost all of his wealth in a stock that doesn't pay one: Berkshire Hathaway (BRK.A) (BRK.B). I have laid out in another article, why I believe that Berkshire is right to retain all earnings. Some of the reasons laid out in that article also apply to individual investors. In other words: If you don't need it, keep your money invested in productive assets and let compounding do its magic.

Source: Seeking Alpha

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