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Dave Nadig
1:59
Howdy, folks, and welcome to ETF.com LIve!
As usual, you can enter your questions below, and I'll get to as many as I can in the next 30 minutes or so.
2:00
Today's soundtrack, is Paul's Boutique in honor of it's 30th anniversary:
lou
2:00
If I buy a dividend ETF does the fund automatically re-invest dividends or can I get a check from the issuer on every payout for the ETF?
Dave Nadig
2:01
So, pretty much all ETFs are designed to distribute any dividends they receive.
So if you see a fund that says it has a distribution yield of 5% -- that will in fact be distributed.  Usually quarterly, sometimes monthly, depending on the fund.
The dividends would be just like getting a dividend from a stock -- it'll show up as a transaction in your brokerage account as a dividend paid.
2:02
Just like an IBM dividend would be.
Depending on your brokerage platform, you may be able to flag an ETF position for automatic reinvestment, but that's a function of your brokerage account, not the ETFs themselves.
Raymond S.
2:02
Should (ETF) investors position their portfolios any differently because the yield curve inverted?
Dave Nadig
2:03
That would require a pretty broad brush to answer: ETF investors come in all shapes and sizes.  Some folks manage a portfolio VERY tactically, day trading around news.  Others are "fire and forget" investors who look at their portfolio once a year and do some basic rebalancing trades.
Neither one is "right" - they're just radically different approaches.
2:04
Most of our readership I know from experience is either long term investors or financial advisors (whose clients are in turn long term investors)
for THAT cohort, reacting to every move in the bond market, or every earnings season, is essentially a version of market timing.
2:05
and the math would suggest that while you might get lucky, over any meaningful period, youre more likely to lose trying to time the market and make adjustments on the fly like that.
To the broader question implied however: I'm of the somewhat unpopular opinion (and this is my opinion, not some kind of 'house view') that there are many signs of softening in the US economy right now.
the 500K payroll adjustment, the earnings declines, trade concerns, PMI softening, etc. etc...
2:06
nothing dire, but more negative signs than positive.
But again, unless your TRADING it shouldn't mean you make big changes to your overall allocations.
Owen
2:06
Hi Dave, is there a formula you’d recommend to determine how much money you need in retirement? Thanks!
Dave Nadig
2:06
Hi Owen, this is a BIG QUESTION!!!!
2:07
IN short, you need to consider so many factors: your income now, your age, your expenses, whether you've got debt to service and so on.
And then you have to have your own assumptions about things like "will social security still be there" and "what do I think the equity market will do between now and then".
2:08
There's literally a whole industry of folks building models to support financial planning there.  But there are some free tools I think are decent to give you some guiderails:
TIAA has a good one:
And I think Vanguard has a lot of good info on this as well:
2:09
And while I don't have the link bookmarked, AARP has a ton on this topic as well.
C. Griffin
2:09
Are ETFs more for buy-and-hold investors or for frequent traders?
Dave Nadig
2:09
Good follow up to the previous questions.  The answer is "both."
And really, there are whole corners of the ETF market that are quite clearly for one or the other.
2:10
For instance, even if we just considered "Gold ETFs" -- well, GLD is the easiest to trade by far, and with a very large handle (in the 100s) you get minimal spreads if you daytraded it.
But it's also the most expensive core gold ETF, so if you were looking for long term buy and hold exposure, you might consider BAR, which is only 0.17% annually.
(but would be more expensive to day trade).
2:11
Similarly, the whole complex of leveraged and inverse ETFs are all designed to be traded vehicles, held for a short time to express an immediate opinion.
While, for example, the Schwab and JP Morgan line ups are designed to be low cost beta you hold forever.
On the one hand, that's great!  But on the other hand, it does put some responsibility on you as an investor to do the homework (which, by being here, you clearly are!!!)
Dwyer
2:11
Hello Dave. I saw on your site a headline about potential 100 year bonds. How would that work? You couldn’t redeem them in your lifetime. Does the govt assume you’d transfer them to your kids, or …?
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