I QUIT Dividend Investing (When I Learned This)

Investors love dividend investing for passive income - and I used to, as well. But recently, I decided to quit dividend investing after realizing the truth about this strategy and how it applied to my financial goals.

00:00 - Intro
0:56 - Why I Quit Dividend Investing
1:46 - 1. I Don't Need Passive Dividend Income
3:31 - 2. Total Returns Beat Dividend Returns
5:13 - My Aggressive Growth Investing Strategy
5:34 - 1. SPACs
6:38 - 2. Call Options
9:07 - 3. Thematic Investing
10:03 - Reflecting on Dividend Investing

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Like many investors, I was infatuated by the #DividendInvesting strategy based on the allure of passive income and compound interest. For the first several months of my investing journey, I was pouring hours of research into dividend strategies, dividend ETFs and other high-yield investments. With this research, I built a pretty sound portfolio with a decent dividend yield. But when I took a minute to reassess my goals and my performance compared to the market, the dividend strategy didn't make sense.

Ultimately, I realized that I didn't need (or want) passive income from my investments right now. And this meant that dividend investing was actually slowing down my investment growth!

My goal with the dividend investing strategy was to build a passive income portfolio. In reality, I knew I wouldn't be withdrawing and spending those #dividends until I could live off of them. Because if I wasn't ready to live off of them, I might as well be pouring them back into my investment portfolio. Although I told myself I was investing for passive income, I didn't want the passive income at all - I just wanted to build enough wealth to live off of!

And with building wealth as my main goal, dividend investing makes a lot less sense. This is because dividends are taxed, reducing my annual returns. Furthermore, dividend investing overlooks many high growth stocks, meaning I'll be generating lower returns by focusing on the dividend investing strategy. For maximum growth, I need growth through unrealized capital gains, which would be much better achieved by investing in the total market or by investing in high growth strategies.

So, I changed my investing approach to a more aggressive growth strategy. Today, I focus on achieving the highest total returns, which includes things like:
• SPACs
• Call Options (using a variation of the LEAPS strategy)
• Thematic Investing

With these strategies, I am anticipating much faster growth than with a dividend investing approach. It's definitely a riskier strategy, but that's something I'm comfortable with since I still maintain a responsibly diversified investing strategy in my retirement accounts.

At the end of the day, dividend investing is still a valid strategy - but it doesn't make sense for me at this time. I still plan to return to the dividend investing strategy when I build enough wealth to live off of. Until then, though, I should be focusing on total returns to hit my wealth-building goals as soon as possible.

I also still use dividend investing in my Roth IRA. With the tax benefits available in IRAs, dividend investing is a much stronger strategy - especially for high-yield investments! Furthermore, my Roth IRA is my passive, set-it-and-forget it portfolio, which is mostly comprised of passive index funds and related investments. So, I'm happy to let my money compound over time in this account with the dividend investing strategy.

What're your thoughts on the dividend investing strategy? Let me know in the comments!

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DISCLAIMER: NOT FINANCIAL ADVICE.
The content in this video should not be used as the basis for any investment decision, as it is for entertainment purposes only. Additionally, some of the links contained in this description are affiliate links. I may earn a commission should you choose to purchase or sign up at the links provided.

Видео I QUIT Dividend Investing (When I Learned This) канала Tyler McMurray