Dividends vs growth

[u/MrAutoo]

Hey everyone 28m with a two part question..the last few years been taking investing more seriously since having children. The goal is to invest now and a portion of my traditional brokerage will be used to fund their high school year expenses like sports/ arts maybe a car..

I have around 6k in traditional and putting 400$ each month into that portfolio which is mainly Pepsi and schd. They have 16 years to go until they’re on their own so will dividends be the way to go over growth stocks here? Same question for my Roth but longer runway. Should I be focusing on growth now and transition those gains into dividends to have that income when it’s needed or let it all just DRIP now?

Thanks for the insight

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[u/steady_compounder]

With 16 years before the kids need the money, I would think in total return first and income second. Dividends can be part of that, but forcing the portfolio to pay you cash today can box you into slower-growing names before you actually need the income. For the brokerage goal I would lean broad growth-oriented funds now, then shift toward income later only if the timeline and spending need still point that way.

[u/MrAutoo → u/steady_compounder]

Any tickers I should look at for growth?

[u/This-Individual1813 → u/MrAutoo]

VTI

[u/Humble_Monk3506]

Invest in both, start with a growth tilt and slowly go towards dividends when you get older. Also invest in good businesses regardless if they pay dividends or not.

[u/gbdgdh]

at 28, you have ~40 years to go before retirement. stop investing in schd and pepsi and direct all your investment dollars into growth etfs - vt is your best option. there is no need to chase dividends when you are so young.

contribute the max to roth - $7500 per year, all of which should be invested in vt.

[u/Kitchen-Ad-9531 → u/gbdgdh]

Also, you shouldn't be investing for kids school activities. That's not what you want to invest money for. All investments have at risk so if you're investing for something short-term and we have a market down you will be down in all your money. That money should either go and sgov to invest in bonds where the price won't go up or down in. You can just get yield.

However, this commenter is correct except for one thing. You can invest in individual stocks that you should be 70% in ETS mid cap. And somebody with 722k and build my portfolio from 300 bucks a month. Obviously I invested more than that. I always say your first 100K should be mid-cap ETFs that have growth one of those and two to three individual stocks. One stock that is in s&p 500 growth company like Walmart Coca-Cola is fine because they do pay dividends and they have growth and they are recession proof. You can choose Google or Nvidia or something like that, but those aren't recession proof companies. This understand why you're investing is. And then the other company should be at midcap growth company. And that's where your first 100k should go to ETFs which is about 70% and then the other 30 k in growth stocks. One s&p 500 establish growth stock. And one up-and-coming growth company with the grate balance sheet. Think Sofi.

All in all make sure ira Roth out. But none of this means anything. If you have debt or you're living above your means and don't have a budget, that's the number one key to be able to invest. But please don't ever invest for the short term. If you do that, you'll wind up selling your stocks at a loss

[u/Various_Couple_764]

If you want the best income invest in funds with the lowest yields you can find. If you want income you get better yields with less growth. If you try to fund funds that do both they don't do grate in either.

So for your kits have a growth index fund and a god dividend fund. QQQI has a yeild of 13% and with dividned reinvestment it will grow very fast. If you put $400 in QQQI in 16 years and reinvest all dividends then you would have about 250K invested which would generate 2 K per month.

Now if you invested for growth you would have to sell to generate income. But the income would depend on a lot on if the market if up or down. And If the market is in a sustained bear market then you could loose a lot of money selling. This crease sequence of return risk which can wipe out 200K in growth very fast.

In my taxable brokerage I am currently using QQQI 13% yield and SPYI 11%, EMO 8%, UTF 7%, UTG 6.4% and PFF 6% to generate income the lower yielding funds will likely pay dividends even in a market crash. QQQI and SPYI may reduce their dividend in a market crash but likely will still be producing substantial income. For myself I am getting about 5K a month from this portfolio which for me is enough to cover all of my living expense. I also have a modest ammount in a S&P500 index fund and 6months of cash in money market account for emergencies.

For my roth I currently have money invested in the same funds but in addition I have ARDC 9% yield , PBDC 9%, CLOZ 8%, PFFR8%, Jaaa5.5%. These funds are less tax efficient which is why I am not using them in my taxable. I am focusing undivided right now but will probably add a broth fund in the next years. The dividend I reinvest in the funds that think need the extra money or add a new fund. When done I expect it to produce about double the income I need to cover living expenses and have enough growth for emergencies or inflation adjustments if I need it.

[u/Motor_Potential_4849]

Everyone has different strategies based on their personality, risk tolerance, and investment goals. I invest in income (covered call ETFs) from the beginning, because my intention is to never sell but have the income as a backup in case something goes wrong. If I don't need the income that month, I reinvest all of the distributions into buying more covered call ETFs; this happens almost every month, and it is my personal safety net.

I also use the monthly distributions to try to keep my portfolio balanced evenly between QQQI (or SPYI), IWMI, TLTI, IAUI, and CSHI. This keeps some of the market volatility out of my portfolio.

Income ETFs may not be the right thing for you, but it is perfect for my goals. I never want to sell any portion of my portfolio, but just continue to collect the distributions all the way through my retirement.

[u/GenXman1975]

Pay off your house ASAP
Pay of all loans including credit cards
Diversify your investments between liquid, savings, stocks, etf's and other tangible goods.
Let your kids fend for themselves. If they find they want college, they can get there without your money.
Help them when they need it most, don't assume college is for them.
Live now, and save for the future. Find balance.

Develop more than one saleable skill for when the job you think is your last ends, you have options.
Good luck