I've been writing a lot about the FIRE method here for the last week and wanted to expand on it a bit more. After doing a bunch of research for the last few days I figured I would share my findings, allow others to chime in and also throw out some of their own suggestions. Granted this is a VERY small review considering there are over 4,000 ETFs and over 6,000 stocks to trade.
Most of this will cover ETFs as they are an easy way to get diversification but also have strong backing for the plan you want. The ETFs also weekly, monthly or yearly rebuild what makes up their ETFs. While you could of course do this all yourself outside of a ETF and just buy the stocks you want I wanted to highlight ETFs here to simplify things.
There's a bunch of types of ETFs but for this example I'm going to be highlighting and grouping them as follows.
Those groups being...
Growth
Growth + Dividend
High Risk Dividend
There's also a few things I would like to highlight first. You might see something like CEF which stands for Close-End Funds which I would put in the high risk dividend earners. The key things you need to look for on these is to figure out how much real dividend they are paying you over the ROC (Return on Capital). While the percent of 20% might look high in reality the ETF could be gutting the NAV and have a under performing dividend or worse actually a negative dividend. But with that risk can come great wealth or great loss which is why I still wanted to cover them a bit here.
For myself I'm only going to be messing with one at the moment QQQI but I will highlight a few other options as well.
*This article is not investment advice and is for entertainment purposes only. I do own or will soon own some of these stocks, ETFs etc talked about in here. Do your own research before investing and understand the risks.
Depending on your own investing and time frame your investment is going to look much different. There's never a one size fits all.
There's also one more thing I want to highlight and that's with ETFs. Some have general automated rulesets while other are actively managed. You'll want to look at the Expense Ratio. This shows much more money the fund will be taking. In general you want this to be as low as possible. I won't touch anything above 0.5% a half a percent but really I target lower at 0.1% or lower.
In this article I'm going to cover one of these "buckets" the Growth bucket and then continue the series over the next few days.
Growth
Growth stocks are stocks that normally pay no dividend or the dividend is often low at around 1% and in lucky cases 3%. However you often kill growth with the higher the dividend yield is. This is why at least for me I'm putting a decent amount towards growth stocks first to build up that solid base of capital first before expanding into the higher dividend rates to pay off bills etc.
One of my goals is to continue the work and business I current do but to use either or both the revenue from hive and the revenue from dividends to pay for a land plot so there would not really be any risk at all and the compounding would continue as I work on the land. Of course if this is something you'd like to help support me in then a vote on my articles goes a long way. Thank you!
The primary function of these stocks or ETFs is to grow your stock value over time.
ETFs such as...
DGRO - 5 year growth 68.59% with a dividend YOC (Yield on cost) 3 years 2.91% 5 year 3.57% Expense Ratio 0.08%
SCHD - 5 year growth 46.82% with a dividend YOC 3 years 5.15% 5 year 5.59% Expense Ratio 0.06%
VTI - 5 year growth 91.76% with a dividend YOC 3 years 2.15% 5 year 2.33% Expense Ratio 0.03%
SPYG - 5 year growth 108.33% with a dividend YOC 3 years 1% 5 year 1.22% Expense Ratio 0.04%
These ETFs hold a bucket of stocks and change based on their rules.
Notice how each of these has a low expense ratio and that's mainly because they are all based on rulesets and automated where ever once in a while the ETF will review it's assets and any that are not hitting the marks will be removed and replaced with another asset that does.
You'll also notice that while the dividend rate is not great you're often crushing it much more on the growth side of things. In general what this means is if you had $100,000 invested into DGRO 5 years ago and then sold it today you would roughly have $168,590 now I know you wont be buying all $100,000 on day one so you need to factor that in as well but for simplicity it gives you an overall view of the increase in value over time.
What growth stocks or ETFs do you like?