In the world of investing, reaching high returns is a goal for both new and seasoned investors. The journey toward this outcome often involves a portfolio with a mix of dividend-paying stocks and growth-focused stocks.
While dividend-focused stocks provide steady cash flow, growth-focused stocks aspire toward substantial capital appreciation. The former mostly appeals to those seeking a reliable source of income, while the latter attracts investors who prioritize long-term wealth accumulation.
For one Reddit poster, deciding how to start with a $10K rollover IRA has sparked a lively debate. The investor, eager to dive into the dividends paradise, hopes to build a good foundation for financial abundance. Still, because of his limited experience with investing, he’s turned to Reddit for advice.
His main question, “If you had $10k to invest, how would you personally make the most of it?” has triggered various suggestions and bold recommendations.
The poster’s goal is to achieve a reliable income through dividends, but he’s also open to advice on maximizing his returns. Reddit’s r/dividends community wasted no time and dived into his question, offering several strategies.
Several commenters suggested the poster invest his $10K in broad market index funds like SPY or VOO if he wants consistent growth in the long run.
“If I only had $10K, I wouldn’t be putting around with dividends. I’d be investing in index funds, trying to grow my pile of cash,” a Redditor says.
“Buy index funds and hold them,” another comment reads.
One Reddit member of the r/dividends community suggested the S&P 500 fund, saying that the $10K would generate cash in the long run.
“S&P 500 stock. I would not worry about dividends if I started over! If you were 20 years old and put in $10,000, that would be worth a crapload of money!” the Redditor says.
Focus on Time in the Market, not Timing the Market
A recurring piece of advice in the comments was that staying invested over the long term is more crucial than trying to predict the market’s highs and lows and invest based on these fluctuations.
“Time in the market, not timing the market. It’s an expensive lesson I learned,” an investor wrote in the thread.
One comment highlighted that investing in stocks is a long-term game and should be considered so to be successful.
“Historical return over the full life is all we can focus on. Meaning the longer you’re in the market, the better chance of success. It’s not a 15-year game. I say it’s a 30-year play,” the comment says.
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If You Want Reliable Income, Go for Dividends
While index funds and growth stocks dominated the discussion in the thread, some Redditors advocated for dividend-paying stocks if the poster was set on getting a regular monthly income from his investments.
“A nice split between market-leading dividend investments: REITs – O, VICI, ARE, AMT, FCPT, WPC, CCI; BDCs – BXSL, MSDL, FSK, OBDC, MAIN; and ETFs with a high yield like SCHD, SPYI, QQQI, JEPQ,” a comment says.
A Reddit member suggested that the poster invest equally in VTI, QLD and SSO.
“QLD, SSO and VTI split into thirds,” his suggestion reads.
Diversify, Diversify, Diversify
Reddit likes to recommend investors diversify and this is also the case here. The thread has plenty of advice on how to diversify across asset classes and sectors.
“If you want growth and dividend – MSFT, META, NVDA, BX, SCHG. Basically, large-cap growth is your friend,” a comment says.
One Redditor suggested allocating 50% to the S&P 500, 25% to SCHG and 25% to DRGO or SCHD.
“50% S&P, 25% SCHG, 25% SCHD OR DGRO,” his comment reads.
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Don’t Over-Focus on Dividends in Taxable Accounts
Some Reddit users warned investors against focusing on dividends in taxable accounts because they can reduce the returns.
“Dividends make even less sense in a taxable account,” a Redditor said.
Instead of taxable accounts, investors in the r/dividends community recommended tax-efficient funds and/or growth stocks.
“In a taxable account, theoretically growth stocks have the advantage of not recognizing annual taxable income as much as you have with dividends,” a comment says.
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This article ‘If You Had $10K to Start Over, What Would You Do?’ – Reddit Goes Wild With High-Yield Dividend Investing Strategies: These 5 Dominate originally appeared on Benzinga.com
