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If you don’t have a 401k start there to get the match, then HSA, then max 401K, next backdoor Roth IRA. Once you are able to max all these accounts and if you still have money left take risks with stocks/real estate/crypto/ what have you. All of the above is to be done only after you have an emergency fund saved.
Thank you. I really appreciate the information you have provided.
First, do you have a 401k that matches your contributions? If so I would use that before an IRA. I would make sure you have money safe for emergencies before you invest. Once you get to that point, why do you want dividends?
Yes I am taking advantage of the full company match for the 401k currently. I will try the Roth IRA next.
Dividends vs non-dividends is a bit misleading for rationale. At a glance, having passive income from dividends seems like an easy choice. However, getting a dividend is little different than selling a stock for principal+growth. You can have performance either way.
Benefit goes to dividend on LT gains calculation - you don’t have to hold as long for a dividend to be considered long term. But growth stocks could easily outperform dividend stocks on an average market over years. Don’t sacrifice gains for dividends and definitely never hold a dividend stock in a non tax advantaged account or you’ll pay a bunch in the interim when you could be paying no taxes until your income drops (likely) in retirement.
I mean, you can also reallocate within your 401k and IRAs without tax impact - that’s not a withdrawal. But the dividend advice is for non-tax advantaged accounts even more importantly.