17 April 2012

At Whites IFM we keep returning to the concept of value investing where shares are viewed as part ownership in a company rather than certificates whose prices rise and fall  in line with market fluctuations. As a shareholder you are entitled to your part of a company’s earnings, paid as dividends. We encourage investors to look at shares as an entitlement to a flow of income (dividends) rather than a bartering chip than is bought and sold in an attempt to make a trading profit. For retirees looking to their investment portfolios to provide a regular and reliable income, this concept is of particular importance. In this article in today’s Australian, the concept of focusing on cashflows, rather than hoped-for trading profits, is discussed. It serves to reinforce our view of shares as a store of future income rather than a potential trading profit.