In December 2019, I published my money theory. Point three read:
“Invest ruthlessly in very defensive, dividend paying stuff (I tend to avoid growth stuff).”
That wasn’t a passing comment.
It was core, central of the engine of the whole plan I was preaching:
“Live off dividends and interests and passive income. All active income saved goes to #3.”
I even handed out my broker’s name so readers could start buying income stocks that week.
Today I own zero dividend stocks. Not “fewer.”
Zero.
My children’s investment plans, the regular savings plans I run for them, and the trust structure I’m building to outlive me are all built on a single instrument: an accumulating total-world index fund. It pays me nothing.
By 2019-Nigel’s passive income lifestyle framework, it’s exactly the “growth stuff” I said I avoided.
This post is the reasoning chain between those two positions, because the chain is worth more than either position. Anyone can hand you a portfolio. Almost nobody shows you the working of how they abandoned a conviction they’d published under their own name.
What 2019-Nigel believed, steelmanned
I wasn’t stupid (well, I’d like to believe, NOT all the time…)
The dividend thesis had real logic:
- Cashflow you can see. Dividends land in your account. They feel like a salary you didn’t work for — and for someone whose goal was “fire your boss,” visible income was the whole point.
- Defensiveness. “Defensive dividend payers” sounded like the responsible choice — boring blue chips, not speculation.
- A retirement model you can count. Annual dividends ≥ annual expenses = free. Simple arithmetic, one milestone, very motivating.
I even paid thousands of dollars to dividend gurus to listen to what they teach and do with regards to Singapore dividend investing, and have access to their portfolio…and I matched their holdings to mine too.
It’s really delicious…getting 5-7% dividend yield every year from my dividend stocks and portfolio…
Where the thesis broke
I gradually changed my mind with regards to dividend stocks and the dividend game:
- Dividends aren’t extra money. A dollar paid out is a dollar off the share price. I was treating distribution as creation. Once I saw it as a withdrawal I didn’t choose the timing of, the “passive income” framing collapsed into “forced selling with extra steps.”
- The tax and friction leak. Withholding taxes on foreign dividends, reinvestment costs, the drag of cash sitting between payout and redeployment. An accumulating fund does the reinvesting internally, instantly, without leakage.
- “Defensive” was concentration wearing a costume. A handful of high-yield names in one small market is not defensive. A single fund holding the entire world’s businesses is closer to what I actually meant by safe.
- The yield trap. Screening for yield systematically selects companies returning cash because they’ve run out of better uses for it — or worse, ones propping up a payout they can’t afford.
- The time horizon changed the math. In 2019 I was optimizing for income now — retire by 40–45. Once the horizon became my children and a structure designed to run beyond my lifetime, maximizing total compounding beats harvesting income I don’t need yet. The drawdown question gets solved at the structure level — a defined withdrawal rate — not at the stock-picking level.
What replaced it
One accumulating total-world fund. Bought on schedule (DCA = dollar cost average), regardless of headlines. For me, for the children’s plans, and as the investment mandate of the trust I’m designing.
The honest cost of this position: it’s boring, it produces no income to point at, and there are years it will be down and I will keep buying anyway. The 2019 model was more motivating. The current model is more true.
I’ve stopped paying for motivation with returns.
I sold all the dividends gradually…and though I miss the dividends landing in my bank account, I had swapped it for:
- more aggressive business play (with commercial property)
- less checking/research/balancing individual stock counters to “balance out portfolios”
It’s currently JUST ONE GLOBAL ETF.
I focus on family, business, self care, whatever.
The stewardship layer
This also was because of my intention of building a perpetual trust fund for my future generations, and it’s so much simpler when its 1-2 global ETFs – less complexity and fluctuations, and reliable over long term.
Seeing and anticipating hundreds of years into the future is a blessing (some thinks its a curse) is one of the things that spurred this decision of simplicity and long term reliability.
The point underneath the portfolio
The instrument isn’t the lesson. The lesson is that I published a conviction, attached my identity to it, and then the evidence turned — and the expensive part wasn’t changing the portfolio. It was admitting in public that the old position was wrong, when staying quiet would have cost me nothing.
Most people don’t hold bad portfolios because they lack information. They hold them because they’ve told people about them.
If you’ve published a position — even just to your spouse, your colleagues, your coffee group — audit whether you still hold it because it’s right, or because you said it.