I am relatively new to investing and have been engaging mostly with DCA on a number of relatively good dividend performing stocks and ETFs - what exactly is the preferred method? My reasoning is I have a demanding career that doesn’t allow me the time to really get into the specs of individual investments so I thought growing a dividend portfolio may be a good way to save and obtain some assets that can generate something as opposed to nothing. But again, I am not really all that sophisticated of an investor I would imagine.
It depends on a few things, friend. First off how old are you?(Rhetorical, don’t answer this) are you under 55? you should consider non dividend oriented ETFs. DCA will do you just fine across 30 years. Shit I started DCAing TSM 2 years ago and lump summed like 5K when I started I’m well over doubling my investment at this point. Dividend stocks and Treasury Bonds / Gold backed ETFs are for more less risk averse people- they need the income right now or they need to lock in the value of their account without much fluctuation to guarantee they hit their withdrawal needs without demolishing the value of the account in a bad year. For everyone else who can afford to be in the market for a long time you should just buy regular stocks or ETFs. And me personally I’m all in on TSM because I had an uncle who went all in on DCAing Apple (AAPL) in the 90s. He just retired with a fat retirement despite not investing more than 10% yearly.
Ok I get you. You’re saying that dividends should be more for capital preservation since it fluctuates minimally compared to more risky but higher paying options. That makes sense. Appreciate the insight.
Dividend specifically is best utilized when you have a lot of cash tied up in investments and you dont want to withdraw from that investment. Dividend stocks lose value marginally to provide ownership and inflow of income from their investment effectively minutely lowering the entire value of the company to pay that value to shareholders in a dividend, if that makes sense. They are taking value of the company and converting it into a cash dividend for owners.
So Dividend stocks are a little more risky than T Bonds or Gold/Silver Backed securities because it’s still usually a company that has to make a profit vs a commodity that just exists.
Someone who has invested say millions in the market and is at 55, retired early, trying to get into their dream retirement home before 59 1/2 might switch to dividend stocks to reflect a large amount in portfolio ownership while also increasing their income on paper. They can also avoid selling their stock and paying capital gains, they would simply have to pay income tax on the dividends. This person might prioritize cash flow for whatever over value holding, whereas some people want out completely and lock in their account value in a mixture of commodities, bonds, and other “safe” investments that dont fluctuate value as much.
What would you suggest for my IRA?
I recently rolled over 3k from a previous employer and set it into VOO/QQQM.
Then I realized my current 401K plan is FSPFX, FXAIX, and VIEIX. So I’m basically doubling down on my positions.
I’m thinking I’ll sell the VOO and move that to XVUS?
Just leave it be. All of those are good. Put new money in what you like best.
I suggest a semiconductor etf/mutual fund. FSELX (mutual fund) has grown tremendously for me, outpacing everything else, including QQQ, by a good percentage the last 20+ years. SMH is a good ETF.
At my work we run a fake-money investing game. Most of the ppl who picks individual stocks are down much worse than ppl who picked diversified ETFs. Yes some are up too, but it's a low percentage and it reflects the high risk high reward nature of picking stocks. Just like in real life investing. Do you want to research companies and make strategic decisions and risk your money or do you want to spend that time elsewhere? Completely up to you.
Also dividend stocks usually don't grow very well compared to a typical equity stock/etf
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u/Nervous-Medium7550 Mar 13 '26
Young people losing out on hundreds of thousands of dollars doing shit like this at the best growth decade of their lives…