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For many investors, build one portfolio is the key to achieving financial stability in the long term, whether it is about generating passive incomePension or simply grow their wealth over time.
Yet some people find it difficult to come up with the right balance between stability, growth and income, especially with so many options that are available today.
This care is central to a recent heated discussion that was fueled by a 31-year-old investor with $ 250,000 to bet on whom its dilemma and allocation plan shared in the R/Dividend community of Reddit.
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The 31-year-old is relatively new in stock investment, but has already looked dividend supplies And index ETFs as its favorite choices for building wealth over time. Her portfolio includes Ares Capital (Nasdaq:ARCC), JPMorgan Nasdaq Equity Premium Income ETF (Nasdaq:Jepq), Main Street Capital (Nasdaq:Main), Vanguard Total Stock Market Index Fund ETF shares (Nasdaq:VTI) and Vanguard Total International Stock Index Fund ETF shares (Nasdaq:VX), with an earlier SPDR portfolio S&P 500 ETF (NYSE:Splg) Keeping that she sold but is considering investing again.
She has drawn up a allocation plan that includes $ 75,000 in VTI, $ 50,000 in SPLG, $ 50,000 in JEPQ, $ 25,000 in VXUS, $ 25,000 in ARCC and finally $ 25,000 in Main. However, she hesitates to place the $ 50,000 in ARCC and Main because of their recent profit, so instead she is considering splitting the money and for the time being to invest in VTI and JEPQ.
“My thinking process not to go all the way to VTI is that I wanted a little diversification. I am interested in JEPQ due to the monthly dividend of 10% back. Same with ARCC, which I know is three -monthly and head. Eventually I will do a VTI, SPLG and VXUS, but I wanted to build enough in JEPQ, ARCC and Main, so that I could also use it as an income for myself until I retire. In my head there is no guarantee that I will retire, so I now wanted to enjoy part of my money at least, ‘she wrote.
Here are the recommendations of Reddit for the 31-year-old investor.
Focus on broad-market ETFs for diversification and growth
The poster said she wants to diversify her portfolio, but various redditors emphasized that VTI already offers a broad market barking, with access to more than 3,600 companies.
“You said you want diversification, but do you know that VTI is already extremely diversified? It literally contains 3,609 companies in it. You would (if you want) only want VTI and in fact be invested in almost every listed American company, ”is a comment.
This redditor prefers, but his comment is in line with the general sentiment of the thread, namely focusing on Bread-Market ETFs.
“(Vanguard S&P 500 ETF (NYSE Arca: VOO)) would be my core,” he wrote.
One commentator took the time to recommend the young investor different investors who think that diversification and growth add to a portfolio.
“I would go for the long term for the long term, (Schwab US Dividend Equity ETF (NYSE ARCA: SCHD) for a high dividend yield ETF with a low cost ratio (and add diversification to my portfolio), (Vanguard Real Estate Index fund Fund Fund Fund Fund Fund Fund Fund (NYSE ARCA: VNQ)) as a good Reit ETF and (Realty Income (NYSE: O)) Since it offers monthly dividends. (Vanguard Information Technology Index Fund ETF shares (NYSE ARCA: VGT)) is another choice because it has all top technology companies and the cost ratio is high plus; The (compound annual growth rate) has grown properly in recent and in recent years, ”says the comment.
Avoid overlapping ETFs and give priority to cost efficiency
Various Reddit members pointed out that keeping multiple ETFs with similar shares, such as VTI and SPLG, can lead to higher costs and overlapping.
“VTI and SPLG are basically the same, so just choose one. I vote for SPLG because of the lower costs per share and cost ratio, “said a redditor.
“Growth shares such as SPLG, VOO or something like that do much better for longer periods, and you still have a way to retire,” reads another comment.
Head: Advantages and disadvantages
The poster has shown interest in Main, but hesitates to invest in it because of the recent important growth. Different commentators expressed both pro and statements about the money.
“You are doing, there is nothing wrong with Main, I have been owned for years. Those special dividends are such a sweet cherry on the cake, “is a pro comment.
“The most important thing is okay if you enter Dollar Cost on average (DCA). Maybe you put every week or two weeks or month in x amount of dollars. That way you don’t throw it all at the same time and you regret when the market crashes or something, “recommends another Redditor.
One commentator agreed that Main has grown considerably and the investor introduced two other companies.
“Main is now quite expensive. Look at others such as (Blackstone Secured Lending Fund (NYSE: BXSL) or (Putnam BDC Income ETF (NYSE ARCA: PBDC)), “is his remark.
Another member of Reddit implied that Main could be overvalued, so he advised the 31-year-old to invest, but in a smaller percentage.
“The most important thing is good, but I would limit my % in it,” he recommended.
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