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Accumulating etf perform better but dividends etf provide a steady and predictable income stream.
It really depends on the personal goal 🤷♂️
tax-wise there is little difference if you run the numbers… but taxes may increase in the long term (who knows) and that may impact more an accumulating etf if you sell most of it after the surge.
I’m personally focusing 60% on core/growth etfs and 40% on a mix of high yield dividends etfs (TDIV, ISPA, FGQI) - I’m 38
It really depends on the personal goal 🤷♂️
tax-wise there is little difference if you run the numbers… but taxes may increase in the long term (who knows) and that may impact more an accumulating etf if you sell most of it after the surge.
I’m personally focusing 60% on core/growth etfs and 40% on a mix of high yield dividends etfs (TDIV, ISPA, FGQI) - I’m 38
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@Madhatter5566 nah it does make sense.
Selling during a market downturn could mean locking in losses, especially if you’re withdrawing regularly.
So, unlike dividends, which provide predictable cash flow, selling shares means your income depends on market performance… If prices drop significantly, you may need to sell more shares to meet your income needs… and high growth etf perform better but they also are more volatile.
We should not ignore the psychological impact as well… watching your portfolio balance fluctuate and selling shares in a downturn can be emotionally difficult for many.
But again, there isn’t something such as a “perfect answer” it depends on a series of personal factors and goals
Selling during a market downturn could mean locking in losses, especially if you’re withdrawing regularly.
So, unlike dividends, which provide predictable cash flow, selling shares means your income depends on market performance… If prices drop significantly, you may need to sell more shares to meet your income needs… and high growth etf perform better but they also are more volatile.
We should not ignore the psychological impact as well… watching your portfolio balance fluctuate and selling shares in a downturn can be emotionally difficult for many.
But again, there isn’t something such as a “perfect answer” it depends on a series of personal factors and goals
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@Madhatter5566 I think you are a tad confused.
The key difference between collecting dividends and selling shares for income is that during market downturns, selling shares can lead to a *permanent* loss of value because you must sell more shares to generate the same dollar amount.
In contrast, if you rely on dividends, you retain ownership of the *same number of shares* allowing you to fully benefit when prices recover.
Of course, the reality is more nuanced… broad index funds tend to grow faster than dividend stocks over time, and in *some* cases, selling shares in an overvalued market can be advantageous.
The problem is that you are blindly polarised on this aspect… but relying on share sales exposes you to sequence of returns risk, where selling during market declines can significantly impact your portfolio’s long-term sustainability, potentially shortening its lifespan in retirement if market conditions are unfavorable.
You are just hoping for this to never happen to you, which is not a sensible / solid strategy.
Best of luck 🍀
The key difference between collecting dividends and selling shares for income is that during market downturns, selling shares can lead to a *permanent* loss of value because you must sell more shares to generate the same dollar amount.
In contrast, if you rely on dividends, you retain ownership of the *same number of shares* allowing you to fully benefit when prices recover.
Of course, the reality is more nuanced… broad index funds tend to grow faster than dividend stocks over time, and in *some* cases, selling shares in an overvalued market can be advantageous.
The problem is that you are blindly polarised on this aspect… but relying on share sales exposes you to sequence of returns risk, where selling during market declines can significantly impact your portfolio’s long-term sustainability, potentially shortening its lifespan in retirement if market conditions are unfavorable.
You are just hoping for this to never happen to you, which is not a sensible / solid strategy.
Best of luck 🍀
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@Madhatter5566 Selling shares is done at market price while dividends come off the companies books. The total value doesn’t change… but only in a perfect market, which is not. That said:
Selling shares need active management.
Selling shares may cause paying extra fees.
Selling shares expose to the sequence of return risk: your portfolio might not last as long because you depleted too many shares during downturns.
Getting dividends give gratification which is psychologically important for many.
You can’t just assume that dividends are always bad… otherwise div etfs wouldn’t exist at all.
The choice depends on personal preferences and goals… it’s not a black or white situation!
Selling shares need active management.
Selling shares may cause paying extra fees.
Selling shares expose to the sequence of return risk: your portfolio might not last as long because you depleted too many shares during downturns.
Getting dividends give gratification which is psychologically important for many.
You can’t just assume that dividends are always bad… otherwise div etfs wouldn’t exist at all.
The choice depends on personal preferences and goals… it’s not a black or white situation!
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