Excellent contribution! There's a dividend 🚀 for that!
What many who use the growth strategy (and this strategy is also good) need to consider is that with your strategy you are primarily focusing on building an income, not on price increases. The price increases are 2nd and come after your income stream to be built up.
In short, you could also call it: "Build your income!". I will share your strategy here and on X and Threads because I identify with it. I'm in the same camp as you, even though I have few assets that pay out nothing and are geared towards growth.
As a stock picker, I don't mind picking individual stocks, of course, but you're absolutely right. For those who don't feel like it and just want to build up another income stream in a pareto-optimal way to become less dependent on active earned income, savings plans on dividend ETFs are just the thing. At some point, the stream will hopefully be large enough to cover the cost of living or even replace the net salary.
With dividend-paying securities, you can replace your income in the long term or at least cover all or part of your living expenses. If you save properly and put as much as possible into the stock market, you will plug your pension gap. Well, in other words, you've said that yourself.
I really enjoy looking at my portfolio and, as you write, directing the dividends to the weaker stocks. The strong ones run themselves, like horses in a race. For me, some savings plans are simply no longer fed from my net salary, but through reinvestment.
The difference to accumulation: I can decide for myself what I use the dividends for, what I invest them in or whether I put them into other tangible assets. I don't have this control option, without changing the savings plans from my net salary, with accumulating securities.
And now there's something extra: I receive cashback when I go shopping, both online and offline through Payback/DeutschlandCard for normal grocery shopping. I then put the cashback into the deposits, as a kind of "cashback pension". This gives me an additional pension on top of my equity pension. Of course, these aren't mega sums, but at least it's a bit more for the snowball rolling down the slope.
I agree with you on one point: the psychological aspect is extremely important for me to prevent rash selling in a crisis. This aspect is even more important to me than the advantage of the accumulator (exl. advance lump sum).
Another advantage: when we are old (or more likely) and want/need to live off the income, we receive dividends free of charge. Those who only have accumulating shares (who have followed the 4% rule) have to be constantly active, sell and pay order fees. Perhaps at this point there is a kind of compensation for the disadvantage that we have already paid capital gains tax regularly. We then only have to set up a standing order from the clearing account to the current account based on the month of the lowest distribution and can relax.
What many who use the growth strategy (and this strategy is also good) need to consider is that with your strategy you are primarily focusing on building an income, not on price increases. The price increases are 2nd and come after your income stream to be built up.
In short, you could also call it: "Build your income!". I will share your strategy here and on X and Threads because I identify with it. I'm in the same camp as you, even though I have few assets that pay out nothing and are geared towards growth.
As a stock picker, I don't mind picking individual stocks, of course, but you're absolutely right. For those who don't feel like it and just want to build up another income stream in a pareto-optimal way to become less dependent on active earned income, savings plans on dividend ETFs are just the thing. At some point, the stream will hopefully be large enough to cover the cost of living or even replace the net salary.
With dividend-paying securities, you can replace your income in the long term or at least cover all or part of your living expenses. If you save properly and put as much as possible into the stock market, you will plug your pension gap. Well, in other words, you've said that yourself.
I really enjoy looking at my portfolio and, as you write, directing the dividends to the weaker stocks. The strong ones run themselves, like horses in a race. For me, some savings plans are simply no longer fed from my net salary, but through reinvestment.
The difference to accumulation: I can decide for myself what I use the dividends for, what I invest them in or whether I put them into other tangible assets. I don't have this control option, without changing the savings plans from my net salary, with accumulating securities.
And now there's something extra: I receive cashback when I go shopping, both online and offline through Payback/DeutschlandCard for normal grocery shopping. I then put the cashback into the deposits, as a kind of "cashback pension". This gives me an additional pension on top of my equity pension. Of course, these aren't mega sums, but at least it's a bit more for the snowball rolling down the slope.
I agree with you on one point: the psychological aspect is extremely important for me to prevent rash selling in a crisis. This aspect is even more important to me than the advantage of the accumulator (exl. advance lump sum).
Another advantage: when we are old (or more likely) and want/need to live off the income, we receive dividends free of charge. Those who only have accumulating shares (who have followed the 4% rule) have to be constantly active, sell and pay order fees. Perhaps at this point there is a kind of compensation for the disadvantage that we have already paid capital gains tax regularly. We then only have to set up a standing order from the clearing account to the current account based on the month of the lowest distribution and can relax.
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•As for distributing ETFs, I have a mix of dividend ETFs and broadly diversified global ETFs that pay out randomly. Historically grown to 3 portfolios... The original plan was a core ETF with distributions around it. This is still basically the case today, but accumulating cores have been replaced by distributing cores.
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•@frugalfreisein 👍 Which ETFs do you have in stock? lg
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