Greencheese
Recycles dryer sheets
- Joined
- Oct 6, 2013
- Messages
- 265
Can someone explain to me how investments such as Vanguard Dividend Index Funds work and how they should be approached for early investing?
Originally I had the idea to purchase stocks in a basket of industries to build myself a sort of "pension" over the next 30 years or so until FIRE since the work world is moving away from them. Ideally buying stocks at lower prices today and hoping to have attractive yields and growth through reinvesting dividends later. Since this portion of my investing is outside my tax advantage accounts I figured getting the capital tax rate on the dividends was the best I could do.
Fast forward 2 years and now I'm retinking the strategy. I don't mind monitoring a dozen stocks or so but am now thinking how much easier getting into dividend funds would be. Not only would it help hedge some risk from individual stocks but I feel like it would allow for a much more... set it and forget it approach. I like investing but I also feel like once the bachelor life ends I'll have less free time to do financial research.
I guess the ultimate question here is how do you feel about Dividend funds, and how should someone with 25-30 years of working left approach them? I am personally interested in obtaining some sort of yearly income stream for retirement to help balance out my Roth IRA and 401k which are both focused on growth with the eventual shift towards bonds later. Since I am working now I don't need that income stream today, but I like having a plan to work towards to get that stream ready for a long time in the (hopefully) somewhat near future. Should I be putting my earmarked dividend money into growth funds and then moving that balance into dividend funds upon FIRE, or is the dividend funds worth investing now and sticking with that all the way? I'm really not sure how these dividend funds calculate their dividends each year and what makes the amount go up or down. At least with stock dividends they typically go up each year and that's easier to understand
Originally I had the idea to purchase stocks in a basket of industries to build myself a sort of "pension" over the next 30 years or so until FIRE since the work world is moving away from them. Ideally buying stocks at lower prices today and hoping to have attractive yields and growth through reinvesting dividends later. Since this portion of my investing is outside my tax advantage accounts I figured getting the capital tax rate on the dividends was the best I could do.
Fast forward 2 years and now I'm retinking the strategy. I don't mind monitoring a dozen stocks or so but am now thinking how much easier getting into dividend funds would be. Not only would it help hedge some risk from individual stocks but I feel like it would allow for a much more... set it and forget it approach. I like investing but I also feel like once the bachelor life ends I'll have less free time to do financial research.
I guess the ultimate question here is how do you feel about Dividend funds, and how should someone with 25-30 years of working left approach them? I am personally interested in obtaining some sort of yearly income stream for retirement to help balance out my Roth IRA and 401k which are both focused on growth with the eventual shift towards bonds later. Since I am working now I don't need that income stream today, but I like having a plan to work towards to get that stream ready for a long time in the (hopefully) somewhat near future. Should I be putting my earmarked dividend money into growth funds and then moving that balance into dividend funds upon FIRE, or is the dividend funds worth investing now and sticking with that all the way? I'm really not sure how these dividend funds calculate their dividends each year and what makes the amount go up or down. At least with stock dividends they typically go up each year and that's easier to understand