Dividend vs Growth Stocks: How Much Risk Should You Take?

Should your portfolio be 100% Growth Stocks? 50% Growth Stocks? 0%? How about Dividend Stocks and Index Funds/ETFs? We discuss asset allocation today for younger, and older! WATCH NEXT: ► My $69,000 Dividend Portfolio REVEALED: https://youtu.be/Tyi–DTMo3Q

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0:00 – Begin Here
0:30 – If You Had Invested in Tesla at the IPO…
1:32 – Dividend vs Growth Stocks
4:52 – How Much of Each Should You Have?
6:34 – If I were 18 Today
7:48 – My Ideal Holdings
8:30 – Three Things You Should Keep In Mind

Dividend and Growth stocks are just “stocks”, or companies, that you can invest in. However, they’re called “Dividend” stocks or “Growth” stocks because of their characteristics.

A company that pays dividends is typically more stable, has enough cashflow and cash on their balance sheet to pay out a certain percentage of their profits back to the shareholders (you for owning their stocks).

That’s great and all, but dividend paying stocks are usually not known best for their appreciation of their underlying stock price.

You’re mostly relying on the dividend as a source of passive income – and for that reason they’re actually really great.

Some companies have been reliably paying a dividend for 50+ years now and when it comes to dependable income that you don’t have to do anything for – that’s perfect.

So now that we know the difference, well how much should we have allocated in our portfolio to each of these types of stocks?

There’s no right answer when it comes to this, if you want to take on more risk, you’re going to have more growth stocks, and if you want to be less risky, you’ll want more investments like dividend stocks, ETFs, and Index Funds.

But let’s actually talk about risk because, knowing your risk tolerance will better guide your own investment decisions.

First, the younger you are, generally – the more risk you can take. When you’re younger, you want to be taking on more risk, that’s because the younger you are – the more time you have ahead of you, which means the more opportunities you have ahead of you to make and earn income.

You also have more time to allow your investments to compound, so you can take positions in your portfolio that you know will compound and grow over time, and pick certain spots with the rest of your portfolio in order to grow it faster.

In general, now, this is very general, younger people should have a higher percentage of growth stocks in their portfolio compared to people closer to retirement.

So let’s flip that, pretend you’re 55 years old, and you want to retire in the next 10 years. Your portfolio could be comprised of mostly passive investments like safer index funds/etfs/dividend paying stocks, and a small % can be allocated to more growth stock or speculative plays.

So, what should you do, as an investor?

First, understand your risk profile – if you’re riskier for your age, you can take on more risk and choose to select a higher percentage of growth stocks in your portfolio.

Second, make a hypothesis about where the market is going. Right now we’re in a bull market that’s lasted quite a long time, so dividend stocks tend to perform worse than growth stocks, but if we were in a bear market – growth stocks lose their value quickly versus dividend stocks are more stable.

Third, always diversify. This is your best protection against market forces and particular investments that do poorly.

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Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!

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