Why I chose dividend investing vs 4% rule to retire early

[@DividendGrowthInvesting]

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[@enonknives5449]

Money can't buy happiness, but poverty can buy unhappiness.

[@DividendGrowthInvesting]

Very well said

[@TorpedoEight]

People who say money can’t buy happiness don’t know where to shop.

[@retireby40_lalala]

@@TorpedoEight This. One of the stupidest phrases. Money CAN buy happiness. if it doesnt, its ur fault, not the money.

[@charleedell92]

Totally agree! Just look at the difference in life expectancy between income/wealth deciles. Money gives you choice and freedom in life and a lot less stress and worry. If you are one of those people who is miserable with lots of money, look around and see how many other lives you could bless with it!

[@richardthorne2804]

I took early retirement from the Fed Reserve Bank and I will NEVER rely on selling shares (4%) to live my lifestyle. I am predominantly a long term passive growth dividend investor (MCD, PEP, PG etc) and I sell covered calls strategically to generate income. Last year I made $63K selling options and my dividend portfolio brings in $70K. Lost decades do happen like 2000-2013 and my mom tried selling shares and ran into sequence of return risk. So i have transitioned her to a income strategy that also has a total return perspective.

[@DividendGrowthInvesting]

That can be a great strategy!! Like with everything pros and cons, but if you know what you’re doing, I see more pros with your strategy.

[@richardthorne2804]

@@DividendGrowthInvesting Yes. I’ve been doing this strategy for years in many kinds of market conditions and it works. Highly recommend a book written by Kevin Simpson called Walk Toward Wealth, he is the fund manager of DIVO and President of Capital Wealth Planning.

[@mikesurel5040]

Great book!

[@mikowagstaff2588]

We have a very similar if not exact journey. We considered both strategies when we early retired in 2020 and decided on dividend. Everything pro and con and point you made is right on track. I loved seeing you growth chart, the last few years look like mine. It was complete confirmation for me, the growth is not there but the dividends keep rolling in 🤑 Hindsight being 20/20, we would choose dividend investing again. BTW, I’m a long time follower your videos really helped in the initial years, thanks 😊

[@DividendGrowthInvesting]

Thank you so much for taking the time to comment this! What a small world… I guess great minds do think alike! Thank you for being you!

[@GuyIsFly2489]

I really like the blended approach; my wife and I have our dividend growth investing portfolio (blend of SCHD/DGRO (the dividend simple path to wealth) and stocks) and a growth portfolio (blend of XLK, QQQM, and SCHG). Using hypothetical calculators, I have found this will let us reach our FIRE goal faster and give us options! We want options in our future life!

[@DividendGrowthInvesting]

That’s exactly what my wife and I do! You get the best of both worlds! Great to see you comment again. Hope you and your wife are doing well!

[@GuyIsFly2489]

@@DividendGrowthInvesting Same to you!

[@samuelwilliams7331]

I am half and half. I like keeping the growth for future conversions to dividends. May go more dividend as I get closer to retirement.

[@DividendGrowthInvesting]

Best of both worlds!

[@Madchris8828]

Apparently according to some of the financial gurus im a moron for dividend investing. "I'm too young to care about dividnends, my return will be bad" yadi yada. Its all noise to me. I do dividend and growth investing and their opinions of me are irrelevant. Alot of these guys online didn't even make most of their money from investing, but rather their business or real estate they own anyways. Finally share price only matters when you sell to begin with when it comes to super low dividend producing assets. They won't pay your bills until you have a crazy amount of money in them anyways

[@DividendGrowthInvesting]

I always have to think of the Michael Phelps & Chad le Clos picture where one person is focused on winning and the other person is focused on what the other person is doing. Kudos to you for knowing and understanding the difference between divdiend investing and dividend growth investing. Focus on your own path and find joy in the journey!

[@michaelswami]

@@DividendGrowthInvesting interesting analogy, Jake, as I am a national swimming referee for USA swimming, the governing body for the sport in America.

[@DividendGrowthInvesting]

@@michaelswamiwow... that is really interesting! I've been swimming since I was a newborn. My mom made sure we knew how to swim. My favorite was always the scissor kick, breaststroke and butterfly.

[@fyrecrypts2]

Personal investment. Personal. If what you do is working for your goals, great!

[@user-st7sz6xg2c]

A word to this young investor, I'm currently under contract to sell a commercial property to a very well known youtuber. He has already missed his first closing date. He has no funds of his own and purely plays with other peoples money which he swindles from suckered in his "mastermind" summits. These people are total bull$#it. Block out the noise my friend!

[@dnah02]

I don't like the 4 percent since you have to sell your assets. My work retirement is set up for that sell style. But my dividend strategy is buy and hold.

[@DividendGrowthInvesting]

Different approaches that come with both pros and cons. What matters is you pick what works for you.

[@zachv3]

Thank you for this honest picture of the pros and cons of dividend investing!

[@badass6656]

I have not heard of anyone actually using the 4% rule. It will actually take a lot of skill and discipline to use 4% rule. Most people do not realise the S&P 500 has become more expensive over the last 20 years we simply do not know if this trend will continue or indeed be reversed in the next 20 years. Good video highlighting some of the risks of dividend vs growth investing.

[@DividendGrowthInvesting]

Thanks for watching. Studies have been done that 4% is pretty conservative. I think the timing aka sequence of returns risks that gets people scared.

[@badass6656]

@@DividendGrowthInvesting Yes but they never mention markets have been getting more expensive.

[@winnetou9706]

@@badass6656 Agree. Will the productivity growth continue and are historical returns representative for the future? Hard to tell. But if you believe returns may be lower in the future, I agree with the point that with dividend growth strategy one appears to have more control over returns. Either way it's a "bet" that one makes.

[@jarc02]

About 36% of my total portfolio is in the TSP and 100% in the C Fund (S&P 500). Through Feb I have a 11.35% avg annual return over 13 years. I now contribute 5% to get the full match. My contribution is 100% to the Roth portion. The match is traditional. I hope to retire in 7-8 years (I will be 65-66 when I retire). I plan on rolling over the TSP and investing in dividend stocks. I don't want to rely on taking any percentage of my retirement to live. I can role the Roth TSP to a Roth and the traditional to a regular IRA. I hope to eventually do a back door Roth conversion of the traditional. I don't want to have to pay taxes on the dividends from my IRA which currently produces roughly 62% of all my dividends.

[@DividendGrowthInvesting]

sounds like a solid plan! It makes it easier in my opinion to focus on income vs selling shares in retirement.

[@JPDuval-xy4yy]

I think a blended strategy is a great idea

[@DividendGrowthInvesting]

I think so as well! In this video I talk about how I invest in growth in my retirement accounts like a 401k, Roth IRA, HSA: kzbin.info/www/bejne/np_Uoniqoa-ohsk

[@Dividendflywheel]

Yes. I agree. Especially for those of us that nerd-out on the intricate details😊. The vast majority of the population are chronic under savers. Nevertheless it’s a great thoughtful video

[@projectndv]

Great Video!!! Thank You. You explained the dividend philosophy unbelievable well. Better than what I have been able to come up with, to explain to people. I will be sharing this video with all my folks. If they don't understand it after watching your video, I don't know what else I can tell them. Its a "slow and steady wins the race" approach. Thank You Again!!!

[@DividendGrowthInvesting]

Thank you for saying this and thanks for watching!

[@njkl3445]

On the pro of dividend being generational wealth: since long term total growth rate is lower for dividend focused approach, long term expected generational wealth should be lower, assuming equivalent staring investment and planned outflows. On con of 4% being boom or bust: the 4% rule was based on looking at worst case scenarios for a 30 year retirement over the past 100 years, assuming you retired right before Great Depression, or right before the extended high inflation of late 60's to early 80's. You should only start to fear 4% is too much if recent market trends are worse and longer lasting than those cases and/or you plan to have the money last longer than 30 years.

[@DividendGrowthInvesting]

Both great points. The trinity study provides a lot of great data to help all those using the 4% rule to sleep well at night. On your first point, a few other things to consider like what the ending balance of the dividend portfolio vs the ending balance of the 4% rule portfolio at the person’s passing.

[@Dividendflywheel]

😂😂Are you a finance professor? Your thoughts are right on the money.

[@Dividendflywheel]

Interesting content. I have friends that are using both strategies. One has saved up 30x his annual expenses and is comfortable using the 4% rule. Another uses dividend income as the source for all his retirement income. Ultimately personal finance is personal.

[@DividendGrowthInvesting]

Exactly!!!! Dang 30x is S tier!! Kudos to both of them! Sounds like you have great friends!

[@Dividendflywheel]

@@DividendGrowthInvesting Single guy, supersaver and frugal. I keep telling him to adopt me 😊

[@evilzzzability]

I'm pursuing a similar strategy as I approach the latter stages of pot building. 40% high yield strategy, 40% all-weather strategy, 20% in mutual funds that fit with my world view. You don't need to be all-in on any strategy - think of it as diversification amongst strategies. The S&P is a great growth vehicle, but not the best for distributing it in retirement. Why should it be? They goal in each scenario is fundamentally different.

[@johnwilson8482]

I go back and forth between the two strategies. The 4% Rule is simpler, easier - but I don't like the idea of selling things off over time. Although a company might cut or eliminate dividends, as a whole they can offer some stability. Especially if you live off 75-90% of them, and always reinvest a portion to create diversification and increasing income.

[@robevans2114]

I alwsys thought of investing in dividend stocks like owning both stocks and bonds in one package.

[@joe62845]

Would it be a good idea invest in a high yielding ETF while you're young. Then switch over to a high dividend stock?

[@DividendGrowthInvesting]

Ideally invest in a high growth or dividend growth then switch to high yield if you are young

[@givrally7634]

One thing I don't understand about dividends vs growth is, what's the difference ? I mean, if you own 1 share each in stocks A and B both valued at $100, and A gives a $10 per share dividend while B's stock price grows to $110 per share, don't you end up with the same amount of money ? How do those differences pop up in the first place ?

[@Robischek]

Additionally, you have to pay tax from the dividend when distributed. The accumulated is not taxed and compounds fully. 4% team all day long

[@HDB1974]

The problem I have with growth v dividend stock is that most (not all) growth stock return very little. It makes the portfolio look like it's going great guns but it gets more expensive to buy in over time and the yield reduces over time. Growth stock only returns real value once it is sold and is reinvested into something with a decent, solid return. My opinion is to invest as cheaply as possible. Decent dividend paying stock (4%ish) plus a growth etf (s&p 500 etc) of your choice. I can't justify paying through the nose for stocks that return very little. Dividend aristo & kings are great but there's also winners and losers there too.

[@DividendGrowthInvesting]

Really interesting perspective. It puts into perspective that there are many paths that can lead to success when investing. Thank you for commenting this.

[@HDB1974]

@@DividendGrowthInvesting It's not really that complicated or that sophisticated really, maybe even a bit simplistic. I just take a nominal amount (say $100) divide that by the share price to give number of shares bought and multiply that by the dividend to give an absolute number. Repeat for the kings and aristos then rank in bang per buck order then invest. I suppose I'm at risk of value trapping but I've tried to reduce that by sticking to kings and aristos. My etf has all my exposure to growth and the portfolio is roughly 60\40 stocks to etfs

[@RS-lw9cd]

I look for growth stocks that pay annually increasing dividends. IMHO, this is the best of both worlds. For example, let's say 10 years ago an investor purchased Home Depot. At the end of 2013, the share price was $82.34 and the dividend per share was $1.56. So, at that time, the dividend yield (on cost) was 1.89%. I know people that scoff at this "small" dividend yield. Fast forward to ten years later and the stock price at the end of 2023 was $346.55 and the annual dividend was $8.36. If an investor bought $10,000 of HD at the end of 2013, it would be worth $42,087.69 at the end of 2023. The dividend paid in 2023 would have been $1,015.30. The dividend yield on cost (DYOC) at the end of 2023 would have been 10.15%. The 10 year CAGR on the stock price for that time period is 15.46% and the CAGR on its dividend is 18.28%. That is best of both worlds, very good capital appreciation AND very good annually increasing dividends. Also, HD recently raised its dividend to $9.00 per share. What most people fail to realize that buying a stock that has a higher capital appreciation rate and a higher percentage annually growing dividend trumps stocks that have slower, but initially higher percentage dividend yield and a slower capital appreciation rate. Stocks like HD are wealth builders over time. Investors tend to chase high yields, which usually results in poor performance over time. That is short term thinking.

[@ei513563854]

Contributed to my 401k last 40 years ...At 59 1/2 I plan to invest 1/3 into divi ETFs for another 4 years.

[@DividendGrowthInvesting]

If you stayed consistent and if you got an employer match some or most of those 40 years, I bet you are feeling pretty good right now going into retirement!

[@natespnwadventures]

Im rocking a 3 fund portfolio for SCHD, DGRO AND JEPQ. I already contribute to my 401k through my employer as well. The dividend portfolio is fun and i plan on watch it grow over the years and reap the benefits of the extra income in retirement 😎

[@DividendGrowthInvesting]

My favorites as well!! If you have more than 5 years before you plan to retire/live off the dividend income, you may want to consider lowering or holding off on JEPQ. You could always add to it later. For example, you could consider holding QQQ out right in your 401k or Roth and then once you reach the point where you want to live off the income, you could rebalance into JEPQ. Food for thought :)

[@natespnwadventures]

@@DividendGrowthInvesting great idea! I currently have SCHD and DGRO at 40% each and JEPQ at 20% as far as the portfolio breakdown.

[@hamwallet7069]

@@DividendGrowthInvestingif you had to pick stocks for a Roth IRA what would they be? I’m 95% SCHD and 5% cost right now. Going to start buying up cost on way down here as we do all our shopping there. I do almost 1k/mo into my trad 401k that goes 100% into vinix.

[@DividendGrowthInvesting]

@@hamwallet7069 depends on your time horizon and goals. I like growth ETFs in my Roth IRA like VGT to then rebalance into SCHD etc when I retire. No one size fits all question/answer. Just understand your time horizon if you don’t, watch my videos on how to invest based on your time horizon.

[@vitaliygoldin5423]

I find your videos very educational. I’m also glad I’m one of the few adults that find all of this great information interesting. Quick question I’m 36 years old with a dividend portfolio consisting of SCHD, DGRO, VTV, and VGT all equally weighted. Please let me know your thoughts. Thanks!

[@DividendGrowthInvesting]

All great ETFs but look at them as their own vehicle. How can each serve a purpose to help you reach your goals. Understand growth rates and watch my videos on how to invest based on your time horizon. This will help you intentionally allocate them so they meet your goals.

[@vitaliygoldin5423]

@@DividendGrowthInvesting after watching I got rid of VGT and added more to the rest. The 20 year time horizon impacts this decision. I’m already heavy on VGT in my Roth IRA account so that should take care of my wants for growth.

[@ethanshy280]

Without watching the video first, I think div investing is way better because it retains the principle. No chance of sequence of returns risk. It’s harder to accomplish though if you want to do it with a lower yield(under 4%) though.

[@DividendGrowthInvesting]

Hey Ethan! lol you are right on! Look at you go!

[@Dividendflywheel]

Please take a look at dividend growth stocks in the accumulation phase. It’s easy to sacrifice the exponential growth achieved by low yielding stocks that have a high dividend growth rate (especially if your time horizon is more than 2 decades). Best wishes in your journey.

[@ethanshy280]

@@Dividendflywheelmy time horizon is around 3 years. Most of my stuff is in growth mutual funds, which pay dividends. Depending on how I am feeling in the future, I will switch to higher yielding ETF such as PEY or just put in all into VOO/VTI. I will always be 100% equities, no bonds, preferred stocks etc. I don’t agree with doing covered call ETFs and stuff at any time horizon. I want my lifestyle to continue to improve throughout my entire life. Thanks for looking out though!

[@freedomring3022]

Yeah I am trying to get to the dividend value so that when I retire I can live off the dividends. Not that I want to retire because I love what I do, but with everything you eventually can't do it anymore. So I am preparing for that day.

[@DividendGrowthInvesting]

Best of both worlds. Enjoying what you do but also being financially independent.

[@123lowp]

My strategy: 1) YOLO with hundreds of thousands on undervalued stocks that, in my view, have likely found a bottom or have upward momentum. 2) Buy VOO with 40% of gains. 3) Repeat step 1. YOLO to gain. Diversify to maintain. Do not do what I do unless you have practiced in a paper money account for 1 year.

[@dubas1974]

um, do growth investing your whole life then convert to dividend investing at retirement.

[@julieg.5718]

That is exactly what I’m doing in this 2-year period leading up to my January 2026 retirement! Have started my dividend positions in JEPI and DVN

[@NetGhost420]

100% agree Jake! I want to leave my portfolio for the wife and kids.

[@DividendGrowthInvesting]

Your kids and grand kids and great grand kids will not understand the sacrifice you are making today, but will benefit from it many generations to come.

[@NetGhost420]

@@DividendGrowthInvesting yessir

[@Dividendflywheel]

I opened a joint brokerage with my wife, to get her interested. So far she picked META, SJM and HSY.

[@Antandthegrasshopper]

30% down in a 35 year retirement equates to 10.5 years. That means that may years you'll be dreading to take out 4% from your portfolio....

[@DividendGrowthInvesting]

30% doesn't sound bad when the market is at all time highs.. but rewind back to October 2022... people were freaking out. Its hard to put a price tag on peace of mind and less volatility when it comes to comparing the two approaches.

[@Antandthegrasshopper]

Absolutely.. slow and steady eddy!

[@LibaaxTopG]

@@Antandthegrasshopper😂😂😂

[@aaronhall5715]

I chose to go the dividend route because I needed immediate income and didn't want to stress about the ups and downs of the market. My only worry is the longevity of the dividends...which I try not to think about too much.

[@DividendGrowthInvesting]

Focus on dividend ETFs/Stocks that are growing their dividend and have a healthy payout ratio and you will be on the right track as you learn more.

[@AlejandroRodriguez-pn2ci]

Just curious if you thought that achieving a 4% return in dividends is “not that hard” which equals to the 4% rule… therefore making dividend investment much better…food for thought?

[@DividendGrowthInvesting]

interesting way of thinking about it.Effectively that is what I am doing right now. My portfolio has around 5%. If you ask "true" FIRE enthusiasts, they wouldn't consider that the 4% because the 4% doesn't over index into dividends.

[@AlejandroRodriguez-pn2ci]

Great video!

[@Dividendflywheel]

Great question. Assuming you split a $2 million portfolio at retirement in to two. • $1 million is in a Total stock market index (from which you withdraw 4% each year) • Another $1 million is invested in 40 or 50 dividend paying stocks with a portfolio yield of 4%. You’d be able to generate $40k from each million. Total will be $80k. The tax implications would be nice to consider 😊😊

[@AlejandroRodriguez-pn2ci]

@@Dividendflywheel Your “qualified” dividends may be taxed at 0% if your taxable income falls below $44,625 (if single or Married Filing Separately), $59,750 (if Head of Household), or $89,250 (if (Married Filing Jointly or qualifying widow/widower) (tax year 2023) so that’s a big wining for me.

[@jdeang3531]

@@AlejandroRodriguez-pn2ciand that is after standard deduction

[@bryanfreeland]

How is this strategy being treated when money markets are paying >5%? Does the dividend investor ignore that and get a lower yield with more risk or do they jump to money markets / short term treasuries while interest rates are higher?

[@DividendGrowthInvesting]

Money markets are great for holding cash. They are not great for growth over a long period of time.

[@nehpets216]

So in my strategy, Money markets are great for bills. Every 6 months you pay car insurance, so the amount earned from Dividends is taken out for the car insurance and are then put into the Money Market. Then when you need to pay the insurance you pull it out of the Money Market. Every once or twice a year bill that happens, you plan out how much it would be per month, and you won't have to worry about it being a large bill in a single month. Do the same with the amount you need to pay in Taxes or any other planned bill and the 5% from the MM is just a bonus that you can use on whatever you want. Also the MM is great for hold cash for emergencies. To be fair my dividends only pay 1/5th of my bills atm so it might be different for someone whose done this long term or who has studied finances.

[@michaelpeebles4089]

Most dividends are taxed much lower than regular bank Interest too

[@tomhenry9485]

What did you do with your 401k? Just let it mature till u reach the MRA? Is 401k invested in the sp500?

[@DividendGrowthInvesting]

@@tomhenry9485 I invested in the sp500 while working then converted it to my Roth IRA when I retired

[@Jayvazquez15]

Great video and I have the same mindset of dividend investing and passing it down to my kids😊

[@DividendGrowthInvesting]

Thank you, Jay! Your kids and grand kids will not fully understand the sacrifice you made today, but will benefit from it for generations to come!

[@HaydenWoods]

For the 4% rule, I have an advised IRA account to work on growth. On the dividend side, I use a brokerage account where I can decide what goes in

[@Level87-19]

Until the age of 50 I personally keep collecting %70 VOO %30 QQQ then after age of 50 split them into SCHD , DGRO , DGRW , JEPI , JEPQ

[@DividendGrowthInvesting]

Great strategy! It’s like your own target date fund

[@organic3132]

I don’t agree. For me the most valuable thing of dividend investing (if u have enough money to invest) is opportunity to retire early, 20s, 30s or whatever. With 4% rule you can’t retire until you are old.

[@DividendGrowthInvesting]

That can vastly differ person to person.

[@crystaltiki]

You don’t understand the 4% rule. It states that you’ll “never” run out of money if you withdraw 4% a year because the market grows more than 4%

[@ruudmeatsixify]

Hey Jake! Just wanted to say hearing you mention Egypt twice in your last two videos brought a huge smile to my face as an Egyptian! Loved the bit about Hurghada and the Red Sea - it's my favorite spot too, especially Dahab in Sinai. Maybe we can go snorkeling together there someday! Also, thanks for all your help in my dividend investing journey - you've been a real inspiration!

[@DividendGrowthInvesting]

omg that is amazing! What a small world... I really enjoyed visiting Egypt. It was one of the most memorable experiences of my life. That would be a really cool experience visiting you there! إِنْ شَاءَ ٱللَّٰهُ

[@ruudmeatsixify]

@@DividendGrowthInvesting "Wow, I'm truly impressed by your Arabic typing skills! It's so heartwarming to hear that you enjoyed your visit to Egypt. It's indeed a small world! Even though I live in the USA, I'd be more than happy to be your guide and provide recommendations for your next visit. Let's make it happen إِنْ شَاءَ ٱللَّٰهُ!"

[@Bodybuilding_Historian2003]

Love these vids man keep it up!

[@DividendGrowthInvesting]

Thank you!! 🙌🙌

[@Siddhartha-le8vz]

Wonderfully, Succinctly you have summarized the sensible reasons to nudge folks towards Dividend Investing, with clear comparison to traditional method, again Thanks Jake, think about what I said, you still can get a Radio Channel for yourself.

[@DividendGrowthInvesting]

Glad it was helpful!

[@jamesleonard4713]

I find it much harder to plan for the 4% rule and that's directly related to item 1 of the cons - "sequence of returns". It's like you're constantly adjusting to what the market has done for the past year and what it may do for the next year. 4% in January, could be quite different than 4% in July. What you take out this year, directly affects what will be there next year. So where you have planning as a pro, I actually have it as a con. So, your reasoning for dividend investing is similar to mine, I like the control and consistency of dividends. My investments pay so much a month and its more than I need, so I reinvest the rest. I spend some time going over the funds I own and comparing them to other funds, but its pretty simple and straight forward. I very rarely sell any investments.

[@julioerodriguez6097]

Thank you for the video! I always enjoy your insights about dividend investing. I also lived a few years in Europe when I was serving in the US military (Retired USAF). I remember driving in the Autobahn with my 2005 Dodge Grand Caravan at 115 MPH and a Porsche 911 GTS flashing his lights so "that stupid American in a minivan get the hell out of the left lane!" I thought I was "going fast momma". LOL 😄 Take care bud! I always enjoy your videos!

[@DividendGrowthInvesting]

Lolol I know that all to well. The worst was when they throw their drink out the window at you while they pass. Haha….

[@stevenschrift2761]

Dividends suck the payout is to low your better off in in an ETF like QQQ which is heavvy large cap tech and biotech the dividend is low so to get more money you need to sell some shares to get money every month this is a much better stratagy. Always sell the same amount of shares every month even if the share price drops but when the share price is high than don't spend all the money and save what you dont need for a down market. So basically with this ETF you get diversification a small dividend and lot's of growth potential.

[@DividendGrowthInvesting]

Sounds stressful but to each their own.

[@AfterDeath1986]

Good video dude 👍 i am researched dividend etf's i want to use covered call or not coupled with RSP and MDY in a 373k portfolio and retire overseas.

[@DividendGrowthInvesting]

Thanks for watching!

[@sergiogomezr]

Great analisis. I would like to see the same analisis in a shorter time frame 10 to 20 years. Some of us start planning our retirement later in life...

[@DividendGrowthInvesting]

Great suggestion!

[@Matthew_Alfelor]

are you doing dividend investing into your taxable brokerage account or Roth IRA or both?

[@DividendGrowthInvesting]

Taxable because I’m living off the income now in my 30s

[@loganlancaster4809]

I may be misunderstanding but I don't see how dividends are free from sequence of returns risk. If you own a $100 stock that pays a $4 dividend, if the market drops 50% and the company does not alter the dividend, they automatically convert 8% of your shares to cash. How is this different from selling 8% of your portfolio? It seems like dividends almost guarantee some sequence of returns risk but give some psychological advantages, potentially preventing catastrophic decisions. I am about the furthest thing from an expert, though, so let me know

[@DividendGrowthInvesting]

There are connections between share price and the dividend, but I don't believe in the way you are saying above. Look at the dividend payout of KO over time compared to its share price. How did the share price impact the dividend negatively during down markets? Perhaps they couldn't grow it as much, but they did not decrease it, so there is no sequence of returns risk here.

[@springhillfitness6837]

When the company pays the dividend, you still own all of your shares... very different than selling 8% of your shares. If the stock price recovers fully the next year, the dividend investor is right back where he started but the stock seller is down 8%.

[@jamesleonard4713]

Great Video. I do disagree a little bit on the Cons for the dividend investing. Tax planning is easy and about the same as the 4% rule, since the majority of the money is invested in retirement accounts. The taxes are based on what I pull out of those accounts, regardless of which type of investment style they come from. Also, as for the dividends being cut, this can be easily mitigated by owning funds, instead of individual stocks, which is what I do. Item 3, of a limited upside, is the real Con for dividend investing. Although, I just don't worry about it that much, because I'm making enough to pay me and reinvest to cover inflation.

[@MikesHackYT]

i like the generational weath specially if youre family man. you inspired me. thanks a lot

[@DividendGrowthInvesting]

Happy to hear that!

[@Jakkaribik1]

Growth Stock will help you faster out of bad times because all what is in there will be with interest so more room for errors also Dividends are Maby 150$ a month Per 100K while you get that way faster with Growth Stocks Have them Long Term and there is not much in the Way of Errors. Dividends can pay you good but once the Stock goes down it can only go up if you buy more or hope the money in there stays paying do you want Suggar now or Later with Interest haha

[@codewithsudip]

I think you have to consider tax implications for dividend investing if you have a taxable account.

[@MrRacworth44]

Thoughts on FEPI?

[@DividendGrowthInvesting]

Seems like a knock off of JEPQ with higher fees. I like JEPQ more. If you wanted extra income, but not the worst choice though.

[@KyithNg]

Hi there, your videos on income strategies were pushed to me and so I take time to view 2 to 3 of your videos. I like the way you present the pros and cons of dividend strategy. You managed to flesh out various aspect that i feel others don't say. That said, I felt that some of the reasons that you gave about why you choose the dividend strategy over the 4% may stem from your misunderstanding of the 4% safe withdrawal rate. In your video you cite that the 4% doesn't do so well due to the negative sequence of return. I think firstly, the sequence of return includes inflation. I think we have to be respectful that the safe withdrawal studies brought to light that the most challenging sequences are the high inflation sequences. i know... dividend growth tend to do well in those scenarios, but it is good to remember that sequence of return includes that. based on the way you describe the safe withdrawal rate, i think there is a misunderstanding. we decide a safe withdrawal rate at the start, say 3%, and then every year we adjust for prevailing inflation. what this means is that we preserve our real purchasing power. so it is not like someone choose to spend 3% one year and 4% in another year. Whether we have a legacy or bequest really depends on how safe your plan is. Let me give you an extreme example. I can spend 0.5% of my capital under the safe withdrawal rate. you can guess if my heir can have a bequest or not. What made it work is that the SWR is very conservative. this means that both dividend investing and SWR can achieve the same outcome. I think it is a bit pushing it to say that dividend investing will have no sequence of returns risk. Sequence of returns risk is unique in that there are many sequences you and i will find it challenging to fathom and its a bit too much to be so confident dividend investing wont suffer from that.

[@DividendGrowthInvesting]

Very fair. Thank you so much for taking the time to write this comment and share your thoughts and opinions!

[@KyithNg]

@@DividendGrowthInvesting no issue. Thank you for being open minded enough! I think one potential question you could explore in the future was how do you have the peace of mind that you can barista fire and your plan would work out. My friend who tried barista fire but struggled would be interested to know. What made the safe withdrawal feel safe for those who understand it is that they know that is the highest income they could spend out of the worse of historical sequences but since dividend strategy doesn't do such a quantitative test, does income margin of safety play a role? Like if I need $5000 in income, and my dividends this year exactly have $5000 does it mean I am ready?(Assune some financial planning stuff is well taken care of)

[@DividendGrowthInvesting]

@@KyithNg Well I think the main thing here when retiring off of dividends (vs the 4% rule) is understanding how your weighted average dividend yield will grow over time. It is important to have a conservative growth rate so you don't over estimate in case we run into a down market/ slower growth. The next big thing is to have a very healthy emergency fund that you can use for big unexpected expenses like buying a new car, home or car repairs, medical expenses. This is the most important thing that helps me sleep at night is keeping a very healthy emergency fund. I also have 1-2 years of taxes set aside in a high yield savings account that I use to pay my quarterly taxes. Because I am still working on the side, some months are better than others. In months where I make more, I set that money aside in an emergency fund or my tax fund. So it comes down to those two main things. Having a very healthy and conservative emergency fund for taxes and unexpected expenses, and understanding how your weighted average dividend yield should grow over time. These two pieces help me sleep at night. Hope that helps!

[@KyithNg]

@@DividendGrowthInvesting thank you for sharing (and being so fast!). I read you on the growth rate part and how important the emergency fund is. Do you do some sort of cash buffer kind of strategy in your income system like some others? I always look at how we think about spending income as an Income Wrapper that wee need to surround our investments so that we don't run out of money. I am more of a safe withdrawal rate person because I feel it is more well tested against the "width" of what can happen (against depression and high inflation situation), but i really look at whether to include some cash, do we replenish cash, what if the income really falls short as a more well planned income wrapper. Aside from that, I have 12% of my portfolio in the WisdomTree Global Quality Dividend Growth Fund because I see it as a factor fund around quality and future profitability. (its global because I wish to be more humble that international may do well in some time, although we know recently it has not been doing as well). You correctly highlighted that instead of backward looking it is forwards looking and there is a difference. Kudos to that.

[@michaelswami]

Thanks for this Jake! I am a long time watcher and subscriber. Love following your journey.

[@DividendGrowthInvesting]

Hey Michael! Thank you!! Like clock work, I love seeing your comments every single week. Thank you so much for the support all these years!

[@thomasfrank1227]

Thank you

[@betz6507]

I am late to investing in my life. I am self-employed and have started a solo 401K. I plan to max it out - 76,500 this year. I plan to work 7 more years. I have a great concern about a big market correction in the next few years and to me most S&P500 companies are overpriced on a P/E ratio bases. I don't have a long time to save and want to be as efficient as possible. My plan is to invest in high dividend stocks with good dividend track records with a P/E 12% or less. These stocks have low share prices. If the market corrects by 30-50% in the next 7 years, I won't lose as much dollar wise of my initial investment. I pick companies in a core-type businesses -- things people need no matter what.

[@DividendGrowthInvesting]

Great plan! Now track your progress and enjoy the journey!!

[@rajmk3747]

I like your plan but you will get very few stocks right. if possible can you share with us that what are your findings. Really appreciated . Thank you ..!

[@manueldelgado5336]

If you don’t care about the generational wealth, then a higher percentage of Growth would be better right?

[@DividendGrowthInvesting]

Well then it just comes down to your withdraw strategy

[@manueldelgado5336]

@@DividendGrowthInvesting Thanks!

[@rossjojos]

Most people who talk about the 4% rule mention that the objective is to last a given number of years until they run out of money (usually i hear 30 years). But shouldn't the objevtive be to reach an initial capital that will allow you to never run out of money? For example you start with a capital of $1M and put it in the sp500. Assuming a 6% annual return rate and 2% annual inflation and 4% yearly withdrawal rate. By year 30 you would have grown your capital to $1.8M! And by year 100 your grand kids would have $7M ! Am i missing something? I feel like i always hear about the version where money is depleted but never about this version where you can withdraw 4% indefinitely

[@givrally7634]

The reason the objective is to last a given number of years is because of the sequence of returns risk. The average return is the geometric average of all returns, but it's only an average, depending on how those returns are distributed it may be very different, and the fact that you're taking out some amount of money every year means that downturns are even more disastrous, as you're increasing the rate of decrease of your portfolio even more, so you can't assume it's a constant 6% return, or 12% if you're Dave Ramsey. Here's a very extreme example : Let's say you have $1M, so $40k a year according to the 4% rule, and the S&P 500 does 2600% and -96% in the next two years. The average return is 8%, and indeed if you didn't take any money out you'd end up with $1.08M, you'd be scared for your savings but it would be just fine in the end. If you took money out, however, it depends on the order of that sequence : 1. 2600% then -96% : 1st year : $1M becomes $27M, you take out $40k and have $26.96M left. 2nd year : $26.96M becomes $1.0784M, you take out $40k and have $1.0384M left. 2. -96% then 2600% : 1st year : $1M becomes $40k, you take out $40k and have $0 left. 2nd year : $0 stays at $0, you ran out of money. That's very extreme, but it shows that the moment you retire is very important : If you do it at the start of a bull market and the first few years are prosperous, you're gonna be just fine, but if you do it at the start of a bear market and the next few years have negative growth, you'll either enter a vicious cycle that destroys your portfolio (If you take out a constant amount, which will become a bigger and bigger fraction of your portfolio), or have to live on ridiculously low amounts of money (if you take out a fixed fraction, which will then become a smaller and smaller amount). The 4% rule basically says that 4% is small enough that your money should last your whole retirement, but it's not infinite and it's certainly not guaranteed. If you retired with $1M in 2000, for example, by taking 40k (4%) it wouldn't climb back to $1M until 2020, with 50k (5%) you'd be barely hanging on, and with 55k (5.5%) you'd have run out of money in 2022. However, if you started in 2009, you'd have been just fine, and after just 5 years that 40k would just represent 2% of your portfolio, meaning you can take out a lot more. If you take out a fixed 4%, you'd be a bit better during the economic downturns, but you'd have to live on 26k in 2002 and 24k in 2008. If you can do that, then in 2022 you'd be cashing in 75k, and 93k in 2023, but due to lifestyle creep I'd be surprised if anyone could survive on 24k, especially during an economic crisis.

[@CP-qg4ks]

Few understand this! Benjamin Graham wrote, "The true investor... will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of their companies “

[@DividendGrowthInvesting]

Great quote! Thanks for sharing that!

[@Dusan698]

Hi guys, in the US are you paying taxes after recevieng dividend or are you some way free on taxes? In europe always 15%, that's the reason why I choose betwen Acc and Dist .

[@thetapheonix]

I think the best way to live off of dividends is growth stocks/ETFs. When ready to retire cash out the growth ones for dividend ones. There is still a bit of a sequence of events risk but you can plan to stay in longer and you get the bull market growth until retirement.

[@DividendGrowthInvesting]

Well said. Good to acknowledge the sequence of returns risk, but generally yes that works well.

[@shahriazshaon4300]

When you cash out growth stock for dividend stock, tax event triggers. Plus the time you are buying dividend stocks, those stocks will not be cheaper like today as well. Those dividend stocks will appreciate over time as well. So, it is better to build a dividend portfolio earlier than later doing dca over time.

[@michaelswami]

@@shahriazshaon4300 tax implications only apply if you aren’t making the change in a tax advantaged (Roth or Traditional IRA:401K) account.

[@thetapheonix]

@@shahriazshaon4300 I dont understand the tax problem. When you receive a dividend it triggers a tax event as well. Plus if it's in a Roth, as I have, it's tax free growth. I am aware that you cannot buy dividend stocks in the future at today's prices that is not the reason for using growth stocks. The reasons are two fold: 1. If you have a tax event it will be once as long term capital gains if you have one at all & 2. Growth stocks out perform dividend stocks so whatever the dividend is you get when converting. So for example if I had Tesla stocks I cash out now to buy KO, the dividend of KO as a percentage of the total return is what I get.

[@ericbullock6553]

That’s what I’m doing

[@Runeblade484]

Honestly, I am a bit disappointed in this video. It didnt cover 2 points I think are important. 1, you need to save much more money for dividends to cover your expenses. What kind of dividend return are you expecting? You should show the total portfolio needed for eacj strategy. Second, if you are in an account like a brokerage, you will need to pay taxes on dividends each year during accumilation. How much is that cutting into your investment vs. being in growth? Or are you converting from growth to dividend when you are ready to retire?

[@DividendGrowthInvesting]

All very fair points and they could have been included in this video. I've made a video talking more in detail about these topics in a different video that you may find interesting: kzbin.info/www/bejne/gHWQaIxpecqtjrc

[@noahcash]

What is the average dividend yield your account gets?

[@DividendGrowthInvesting]

My weighted average is I believe just over 5%

[@MartinAnderson-ds7fy]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[@JohnWayne-so6ct]

You had me with the cat video, hahaha!!!!!!!!!!!!!!!

[@DividendGrowthInvesting]

lolol

[@PedalToTheMetal61888]

...yeah you getting Silly like That Marko WhiteBoardFinance GUY

[@DividendGrowthInvesting]

Lol

[@hallpaintandbody7717]

I didn't realize how much premium on certain sell put options. Making $$$ you said find ways to make more money 😅

[@DividendGrowthInvesting]

CSP and covered calls are great ways to boost your income!!

[@henrybuonaparte]

Good video with some interesting points. Thanks 👍

[@DividendGrowthInvesting]

Glad it was helpful!

[@xris5697]

I have over $100k on JEPQ and reinvesting the dividends doing great.

[@DividendGrowthInvesting]

JEPQ is on fire!! It’s one of my best performers!

[@Madchris8828]

I have some hyper volatile individual growth stocks and the worry it can cause is not the most fun thing in the world lol. I have a lot of "oh crap maybe I should sell" moments frankly and it can drive me nuts. I get a bit obsessive. Dividend etfs make my sanity possible 😂

[@DividendGrowthInvesting]

This is where the Core & Satellite approach can help keep your sanity. If you follow the C&S, then you will be able to invest a portion of your portfolio in more speculative investments, while still being able to sleep at night. If you haven't watched this video I made on the C&S, I highly recommend watching it: kzbin.info/www/bejne/n3bacpymd7CDi9E

[@Dividendflywheel]

There is definitely risk associated with a portfolio of individual stocks. And according to the SPIVA report most investors come out ahead by investing in a broadly diversified index fund. Which you achieve via an ETF. Best wishes

[@kay203]

I think this is overrated... even SNP has 1.5% dividend rate + many bond funds have ~3% dividend rate. That will make dividend rate of a 4% withdrawal portfolio around ~2%. You need to sell only 2% of the portfolio

[@DividendGrowthInvesting]

Well that is a bit oversimplifying it.. but yeah kinda - that is if you have either very low expenses or a very high portfolio value.

[@bbarre4601]

Don't you need much more money to live off only dividends? If your answer is no, I would be suspicious of how diversified your portfolio is (since you can own the entire market with the 4% rule)

[@DividendGrowthInvesting]

Depends on how you allocate your dividend portfolio

[@CP-qg4ks]

“Dividends may not be the only path for an individual investor’s success, but if there’s a better one, I have yet to find it.” Josh Peters

[@DividendGrowthInvesting]

Great quote!

[@citizenoftheyearCC]

I don't even have kids but still thinking about something to be able to pass on to them one day....if they do exist!

[@DividendGrowthInvesting]

Its a great goal to have! The fact that you are thinking of someone else is a great thing in my opinion.

[@TT-oy2kw]

Thanks for the great video ❤❤❤!!

[@DividendGrowthInvesting]

Thanks for watching!

[@davidberg8770]

Dividend investing give me the 4% rule, then after some time the 4.5% rule,5% rule, 5.5% rule......

[@DividendGrowthInvesting]

Yield on cost is a powerful thing!!

[@Shambolicoholic]

This is wrong. If you believe the 4% rule, you never have to drop below 4% for a 60/40 30 year retirement.

[@DividendGrowthInvesting]

i wonder if people thought the same in 2009, 2020, and 2022.

[@noahcash]

@@DividendGrowthInvesting yes but this is long term, you are focused on one year. And also, those dividend stocks also drew down during this period. Show me the variance between the S&P drawdown and the Dividend ETF you use ?

[@Shambolicoholic]

@@DividendGrowthInvesting were they worse than the Great Depression or the massive inflation of 70s? Spoiler: No.

[@BigRed2]

4% rule is less stressful the Dividend way will have you having to follow multiple companies like a hawk, listen to every earnings call and follow their balance sheet.

[@DividendGrowthInvesting]

Check out my video on the simple path to wealth with dividend investing. It was inspired by JL Collins

[@MrDemetrius98]

3rd, but have to say, my favorite investment channel.

[@DividendGrowthInvesting]

Thank you so much for saying that! I wish you could see the smile on my face while reading this.

[@calvinamerson2089]

I wish you had dark blue hoodies

[@DividendGrowthInvesting]

Yeah they don't have that option. I have the dark gray and it looks and feels great. I also have the heavy metal color t shirt for the my dividends paid for this and it looks and feels great. I priced them so low that I only get like $1-3 if people buy them. They are basically at cost.

[@anishnaabehistorypodcast7215]

When I retire, I'm gonna watch more cat videos.

[@DividendGrowthInvesting]

Goals!

[@gioclinaz]

Hahahaha my algorithm is also showing my a bunch of cat videos 😂😂

[@DividendGrowthInvesting]

lol omg

[@ghant.]

Awesome as Always my friend

[@DividendGrowthInvesting]

Thank you!! 🙌

[@AussieZeKieL]

Australia has imputation/franking credits 😎

[@DividendGrowthInvesting]

I'm actually looking into visiting Australia in 2 years for a few months. Any tips?

[@AussieZeKieL]

@@DividendGrowthInvesting depends what you like. Sydney/Melbourne is excellent for food and entertainment. Tasmania is a natural paradise. Maybe do some searching online and pick somethings you’ll like. Australia is a big place, just like the USA. But our population is much smaller, so there can be a lot of traveling between places.

[@DividendGrowthInvesting]

@@AussieZeKieLI have to convince my wife that we won't die from spiders first.. lol thats all I hear from her when I say the word australia.

[@AussieZeKieL]

@@DividendGrowthInvesting lol. The only thing to be careful of is; certain states have crocodiles and bull sharks in their River-ways. So don’t swim in random places. Snakes and spiders and are non-issue… maybe snakes if you plan to go hiking?

[@chrisd8968]

Do you have any allocations to bitcoin?

[@DividendGrowthInvesting]

Nope. I only own stocks and my house.

[@ceerawlins3412]

At this point not having a 1% btc allocation is doing yourself a huge disservice

[@DividendGrowthInvesting]

@@ceerawlins3412 maybe. I’m on the sidelines and find peace in that

[@ceerawlins3412]

@@DividendGrowthInvesting fair enough...im now at 110% allocation...sold ALL my value stock/ dividend plays the day SVB crashed...ill buy value back once i have a few 100k in my ira

[@SemenRetentionKing-k8i]

🌈🌈🌈I just bought Agree Realty income stock today.🌈🌈🌈

[@DividendGrowthInvesting]

That’s awesome!!

[@aliciafaulkner416]

dividend is just auto selling and buying 0.x% every month.

[@DividendGrowthInvesting]

Kinda. The business is returning capital to shareholders in the form of a distribution to shareholders instead of reinvesting that capital in their business. As an income investor, I’d prefer the money in my pockets vs in the company’s pockets.

[@PrestigeWorldWide777]

I work construction making $153,000/yr + Per Diem, and an annuity + pension account that I don’t personally pay into. Should I just make cat videos on YT or sell a book on how to sell book? My back-breaking work provides the 20 year old YT stars a comfortable income so they can brag about on Instagram. Why work anymore?

[@ralphpal]

Growth when you. Young Dividends you get older But lots of stocks are growth and dividend also Those are the hanana montana stocks The best of both worlds

[@DividendGrowthInvesting]

lol well said

[@Reza_Audio]

exactly like PG

[@Mik_ed]

Lol I had to eat crow from my wife and dump jepi for schd dgro and dgrw she informed me of giving away the expense of %0.54 vs %0.11

[@DividendGrowthInvesting]

wow your wife is smart! Hold on to her for as long as you can.. sounds like shes an appreciating asset.

[@Bur6212]

@@DividendGrowthInvestinghopefully she’s still paying out those “dividends”

[@2023Red]

I hope you will respond to the following concept, and yes, I do subscribe to Seeking Alpha. I fully comprehend the 4% rule and also dividends for retirement. I am age 75 with an MBA. Here is my concept: Only SPY using covered strangles at 15 to 20 delta around a year to expiration. Then take the total profit above your initial portfolio balance as an annual draw. SPY appreciate 10% most of the time plus the theta decay most of the time adds another 10%. So you capture perhaps 20% most of the time as an annual deposit. In an off year, you take nothing. On a ten year nominal basis your net profit exceeds both the 4% rule and the dividend plan. Your eval?

[@EshaanSarkar-u3k]

You cannot save your way to prospertity. Inflation will wipe you out, and the BS 4% rule, will not be enough to get you retired. well it depends.

[@ItsEverythingElse]

Dividend vs 4% is way over simplifying it.

[@DividendGrowthInvesting]

I'm simply comparing the approach of using either strategy to retire early.

[@richsmart321]

So my take away from this video is that if you want significantly better returns over the long term, don't do dividend investing. Trust in the data that shows time and time again investing in the market will always outperform dividend growth in the long term

[@DividendGrowthInvesting]

If total returns are all you care about then ya that would probably make the most sense for most people. That’s not considering any other factors like risk tolerance, emotions, timing when you sell your shares vs living off the income etc.

[@noahcash]

great, your return will be so substantially lower on the dividend side, you won't be happy at the end of this journey.

[@DividendGrowthInvesting]

This is my response: instagram.com/p/CmFLmEjvMlL/?igsh=MzRlODBiNWFlZA==

[@noahcash]

@@DividendGrowthInvesting So you spend your dividends on a PS5? Im not saying dividends do not matter, what Im saying is when you are the early to mid point of your investing journey. Going dividend first is going to hold you back alot over the long run. Also you speak on feeling bad about seeing the S&P in the red. Some of the stocks in your portfolio are constantly in the red and will stay that way as they arent growing businesses.

[@noahcash]

Smuckers, Pepsi, Honeywell, BTI, etc. So you may have dividends but those dividends have been wiped away by the capital losses

[@DividendGrowthInvesting]

@@noahcashYou didn't say that in your first comment so I was a bit confused. Yeah, you are right if someone is in the early stages of their journey to build wealth, pure dividend investing will under perform - in most cases. It would be better for most people to focus on growth while they are young and then pivot into dividend investing, or find a balance of both with dividend growth investing etc.

[@joshuwa3953]

@@noahcashfor someone on the younger side, which investments are considered growth ?

[@pakhong8299]

I’m in SCHD and DGRO

[@DividendGrowthInvesting]

The simple path to wealth with dividend investing!

[@firstlast1732]

Thumbs down for cat video and I turned out

[@Eli390]

Hi second

[@DividendGrowthInvesting]

Hey there! :D

[@19Rinka86]

😻😻😻😻😻🐈🐈‍⬛

[@DividendGrowthInvesting]

lol omg!!!