"Dividend distribution" erodes investment returns

If you are optimistic about investing money in a certain investment target, you should pursue the long-term growth of the target and earn capital gains, rather than dividend income.

Take the recently popular ETF as an example, on the ex-dividend date (Ex-Dividend Date) the ETF price minus the dividend amount. Money doesn't come out of nowhere, and the ETF's market value is reduced by how much the ETF holders are allocated . Therefore, dividend distribution only solves the emotional needs of investors, because dividend distribution will make investors feel that they do not need to sell stocks and can get an extra sum of money out of thin air, but actually distribute dividends to themselves from the assets they hold.

In addition, the amount reduced by the ETF will not be credited to the investor's account until the Payable Date, so the amount subtracted from the Ex-Dividend Date to the Payable Date is basically a waste of time value , because if the underlying continues to rise, this period of time will be lost. The amount of dividends can no longer continue to accumulate assets for you (because it has been allocated and has not been reinvested), and will be taxed by the government ! ! In addition, because the money has not yet been used, it also reduces the liquidity of your overall assets, and the dividend distribution is also depleting the company and increasing administrative costs . As a shareholder of the company, how can you find trouble for the company you hold Woolen cloth? (laugh)

When the investor's account receives the dividend amount and reinvests the target to enjoy compound interest, the brokerage will charge a handling fee for trading, and there will be a bid- ask spread when placing an order, or the problem of price slippage will occur in a rush to make a transaction, which will occur invisibly. Additional expenses deplete investors' assets.

Some people may refute that dividend distribution can "create cash flow" for me, right? Investors will hold ETFs or stocks, and when they need money, they can sell the stocks and realize them, isn't it also cash flow?

Continuing the above, if the past history of the stock market is used as a sample to infer that the future is credible, then basically the expected value of the long-term return of the stock market will be positive, so instead of returning the funds to investors with dividends, it is better to continue to accumulate in the market. Let the part grow (capital gain) .

Isn't it good to pay dividends? Actually there is. If you are lucky today, you will encounter a continuous decline after the dividend distribution. Because the amount of the dividend distribution is fixed, it will not participate in the decline and avoid losses.

Found it? Deducting the most uncontrollable luck in investment, investors should choose targets with low dividends and low yields , or even ETFs of the same type should buy accumulators rather than dividends in order to maximize their potential. Reduce the related costs derived from investment and move closer to maximizing returns.