Index Investing or Dividend Investing…Which Camp Do You Belong To?
by | Posted 4.17.2013 | Post Comment (1 Comment)

Is it me or does it often seem like funding a retirement forces us to choose between one of those 2 sets of beliefs? On one hand you, have index investing which boasts solid arguments:

-the fact that a tiny portion of asset managers and investors are able to consistently beat indexes
unmatched diversification through ETF’s where one purchase can give you exposure to thousands of assets from around the world
the time saved by simply tracking a target asset allocation
index investing gives you exposure to other asset classes such as fixed income, real estate, etc.

On the other hand, dividend investors raise strong points:

less fees: even though ETF fees are much smaller than mutual funds, they do charge more than holding those stocks directly
more control: being able to select your type of portfolio, holding stocks that you  believe in and going for the stocks that you know and targeting the yield that matches you
more fun?: there’s no doubt that trying to make the best stock picks involves a lot more than simply buying that ETF and does become a challenge

Do We Really Have To Choose?

This might come as a surprise but I actually include both strategies in my retirement investment strategies and have been doing very well that way. I feel like I can enjoy both sets of benefits to some extent.

Do You Have Any Assets In Index Funds? If so, why?

  • I also use a combination of both. I have a 401K retirement plan through work that is invested in mutual funds because that is the only option. Outside of retirement investing I go for the dividend growth stocks!