Consuelo Mack is a long time fan of Professor Burton Malkiel and Dr. Charles Ellis. In fact, she had both of them on her show several times. So naturally, she was intrigued when Burt and Charley joined the Rebalance team and took a central role leading the firm’s Investment Committee and helping to design and monitor the firm’s retirement portfolios. These two legendary financial thought leaders are very sought after by financial services companies, university endowments, and pension plans.
What is so special about Rebalance? Ms. Mack decided to dedicate a 30-minute episode to how the firm is part of a new generation of investment advisory companies that leverage technology and innovative business models to provide consumers with fundamentally more attractive and lower-cost retirement investing options.
In this segment, Professor Burton Malkiel and Mitch Tuchman discuss the importance of dividend producing stocks:
Consuelo Mack: This week on Wealthtrack, putting your retirement portfolio on autopilot. Financial thought leader Burton Malkiel has teamed up with online investment advisory pioneer Mitch Tuchman to offer retirement portfolios of low-cost index funds that automatically rebalance. Why they believe the combination will lead to smooth retirement landings is next on Consuelo Mack Wealthtrack.
Consuelo Mack: How much attention do you pay to income, because if you look historically, over 40% of returns in stocks have come from dividends. How important is that in the Rebalance portfolios?
Burt Malkiel: It is extremely important and, again, probably one of the things where we will differ from some other portfolios is that we even have, almost as a separate asset class, dividend-paying stocks, dividend growth stocks because we think that that is extremely important, and I think is probably the way today that people ought to concentrate in order to get income, because they won’t get it from a total bond market portfolio.
Consuelo Mack: Right.
Mitch Tuchman: And one of the silver linings of having a global portfolio is that, coming into this year, after the U.S. had run so much and dividends were down below 2%, it was the international funds that were over 3%. So, the dividends have been paying off very well in a foreign developed country ETF.
Burt Malkiel: And the other thing the dividends will do is give you the advantage of dollar-cost averaging because what we will do is reinvest those dividends and that is a wonderful way of making your assets grow.