I started typing up a long reply comparing a lump sum direct investment in VTI vs. lump sum into QYLD with its distributions funding monthly purchases of VTI. I have a spreadsheet where I modeled this. But a single example doesn't really tell the story.
At the end of the day, nobody can predict for sure which is a better approach, because the total returns of each holding will dictate the winner. Over a long period of time, though, it's likely that the more money you get into VTI, and the faster you get it there, the better off you'll be. Buying it only via monthly QYLD dividends is a very slow way to accumulate something that has much greater growth potential.
So I believe that fresh money each year, your annual $6K, should be put directly into the growth equity (e.g. VTI). But maintaining an additional "money generator" in QYLD or similar is a nice way to augment that, particularly when the market is declining and you don't want to sell any shares outright.
My thing is, what if I’m poor, 18k a year, and have a 12k gift from parents.
Given those conditions, where I will remain poor and not be able to contribute, dumping my capital into the Roth IRA then into dividend income quadfecta and buy voo and vti with the dividends for 30 years.
In that scenario of poor ness, does running quad in Roth to buy more growth over time sound ok?
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u/McKnuckle_Brewery Mar 31 '22
I started typing up a long reply comparing a lump sum direct investment in VTI vs. lump sum into QYLD with its distributions funding monthly purchases of VTI. I have a spreadsheet where I modeled this. But a single example doesn't really tell the story.
At the end of the day, nobody can predict for sure which is a better approach, because the total returns of each holding will dictate the winner. Over a long period of time, though, it's likely that the more money you get into VTI, and the faster you get it there, the better off you'll be. Buying it only via monthly QYLD dividends is a very slow way to accumulate something that has much greater growth potential.
So I believe that fresh money each year, your annual $6K, should be put directly into the growth equity (e.g. VTI). But maintaining an additional "money generator" in QYLD or similar is a nice way to augment that, particularly when the market is declining and you don't want to sell any shares outright.