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Comment by hanniabu | Hacker News Reader

You guys speak of dividends. I'm not good with stocks so pardon my novice. May I ask what you invest in that earns you the best dividends and keeps you diversified? I'm also assuming you reinvest the dividends? Are there any tips you can give for someone wanting to start doing this? Are there any tricks you have that help you pay less taxes? And tricks to how one should diversify?

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I put almost all of my savings into total stock market index funds. I use Vanguard so the expense ratio is 0.05%. Dividends are automatically reinvested so I don't have to worry about that -- from my perspective dividends look no different than the fund's value going up.

Here are some resources that explain why to do this and how:

https://www.reddit.com/r/personalfinance/wiki/investing

http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-...

There are endless ways to diversify. For example, my portfolio is "diversified" across all stocks. But the entire stock market goes up and down, so some people diversify by putting a percentage of their savings in something else, like bonds or money market funds. These tend to have lower historical average returns than the stock market, but they won't necessarily go up and down at the same time so your savings will not fluctuate as much.

I haven't looked into paying less taxes, aside from maxing my 401k.

Wow, lots to look up and learn. Thanks for the leads and taking the time to comment!

Forgive me for taking so long to respond, but it's my suspicion that there's too much money chasing the S&P 500, driving prices artificially high (even for the most obvious dead companies walking) while creating bargains everywhere else in the world. I'm planning to look into REITs and MLPs -- "real estate investment trusts" and "midstream limited partnerships" (oil and gas pipeline operators) respectively -- as an initial wealth-building mechanism, although I might change (especially towards railroad stock) as I start accumulating wealth. Both of these investment vehicles are legally required to pay out most of their profits as dividends, producing sustainable dividends around 10% instead of around 3-4%.

Part of my interest in them is that the world's population is stagnant and will begin to decline soon -- creating an environment in which growth will be impossible, quality will prevail over quantity (goodbye, Caterpillar and General Electric!), and rent-seeking will be much more successful than profit-seeking.

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