For many people the buried entry to investing is one that is hard to
overcome perhaps they don't have the money to start investing or they do have
the money but have absolutely no knowledge of which assets they should
buy after getting over these initial hurdles one question that typically pops
into the mind of an investor is what investing strategy should i pursue they
ask do i want to start building a dividend portfolio or a growth portfolio
this is an essential question to get right if you want to see incredible
financial results so let me guide you towards the right decision and if you're
new to the channel then hit the subscribe button below for more
life-changing content you've got your money right and are ready to take on the
world of stock investing congratulations whether you realize it or not this one
simple decision sets you apart from millions of other people hard to believe
right anyone with even an ounce of financial education will know that the
stock market is one of the primary drivers of wealth especially when used
correctly however as of 2021 only 56 of americans said they own stock which
means that literally over a hundred million people are giving up this golden
opportunity but not you you are ready to take the stock market by storm the only
question is which types of stocks should you buy for most people the answer to
this question is buying what their uncle frank tells them to buy and as you can
imagine this isn't an ideal investing strategy however you probably already
knew that you see most educated investors understand there is a division
in stock investing you either invest for growth or invest in typically slower
growing companies that offer regular payouts to its shareholders let me first
define what both a growth stock and a dividend stock is so i know we're on the
same page and then it will outline why you would want to invest in either one
and finally what i believe is the best way to maximize your use of the two
first off what is a growth stock a growth stock is any stock that is
anticipated to grow at a rate significantly above the average growth
of the market examples include facebook shopify and tesla now you may be
wondering how a company can grow at such a rapid pace and part of the reason is
because they typically don't offer dividends you see companies that want to
grow as quickly as possible usually invest all their profits back into a
further expanding the business this means that as a stock owner you're
literally banking on the fact that the company will appreciate enough from when
you bought it to be able to see a nice return on your investment diving into
the pros and cons of this first investing approach there is definitely a
ton of potential to be realized when we look at growth stocks in fact these
types of stocks can have the most substantial impact on your overall
wealth because one good investment into a high growth company can make you
abundantly wealthy for instance if you bought amazon or tesla early in the game
you would have realized astronomical returns by now therefore if getting rich
as quickly as possible is your goal then you're probably better off investing in
gross stocks than dividend stocks now with all good comps and bad and gross
stocks definitely have their own set of challenges first if you want to buy into
gross stocks you often have to pay a hefty premium to do so because the
company is trading based on anticipated growth you're basically paying today
what you believe the company will be worth tomorrow one good example of this
is tesla stock many people believe that there'll be front runners and electrical
vehicles in the future and as such have to pay for the privilege of owning that
stock in an arguably overpriced amount now the second downside of growth stocks
are the expectations that exist around them because people expect big things
out of these companies if they don't perform that growth you wanted to obtain
may not come to fruition you see prices typically move with expectations and if
a growth company doesn't meet business targets and the like that investors tend
to panic sell which drives down the price therefore with growth stocks you
have to understand that using these assets as a wealth building tool will be
a rocky ride but if you get behind the right companies then great levels of
financial success can be yours now let's talk a bit about dividend
stocks if you ask me i believe there has been a major increase in popularity and
dividend stocks over the last couple of years due to what i like to call the
dream of dividend freedom you see i don't think i'm surprising anyone when i
said that there are a ton of people absolutely cannot stand the jobs they
are in to them going into work every day literally eats away at their soul and as
such they can't wait to put together a financial escape plan and leave the
working world all together for many a sufficient dividend stream will be their
savior and as such we see a ton of people striving to build up their
dividend portfolios more and more by the day if you'd love to live off dividends
instead of working a job go ahead and drop this video like below now this
whole strategy will probably sound foreign to you if you don't know what a
dividend is so let me briefly explain that right now a dividend is a
distribution of a company's earnings it's kind of like a thank you offer to
shareholders for having given the company their money you see when people
invest in dividend producing companies both the investors and the company win
the company wins because they gain access to more capital and more
investments generally leading to higher stock prices too for investors having
access to a quality dividend producing company means having the ability to
collect a regular cash stream that many people hope will be their ticket to
financial freedom so with this being said dividend stocks must be the holy
grail of investing right not quite besides the challenges of probably
diversifying in dividend stocks and doing the research to try and figure out
which stocks will continue to be regular distributors of dividends in the future
the main hangout i have with dividend stocks is the capital you require to see
any meaningful returns from them you see many of the most popular dividend stocks
like general mills verizon and at t have had very stagnant growth for long
periods of time now which means that the only way one benefits from holding said
stock is through the dividend itself this means that if you want to collect
enough income from these stocks then you'll have to have a ton of capital
invested for instance if you wanted to collect fifty thousand dollars a year
from let's say a t stock you'd have to have over six hundred thousand dollars
invested for most people getting to this level investment without proper growth
on their side is extremely difficult so as you're probably coming to see there
is no perfect investment with gross stocks you'll be tied to their earnings
calls and will probably lose all your hair worrying about their upcoming
corporate performance as for dividend stocks sure they offer the dream of
living off dividend income for life but for most people this concept is far more
of a mirage than a feasible reality with this being said the two should
definitely have their place in your investing portfolio however when and to
what degree are two questions we must answer as i already mentioned there are
a ton of people these days who dread the thought of work in their ideal world
they would have the ability to hand in their two weeks notice at work tell off
their boss and collect massive dividend checks for the rest of their lives
unfortunately a massive portfolio that will allow you to do this takes time and
unless you're contributing major amounts of money into said portfolio on a
regular basis then you will need the growth of high potential stocks on your
side this is why in my opinion younger investors are better off investing the
majority of their cash and gross stocks over dividend stocks now i know i
probably just stepped in the hearts of my fellow dividend investors out there
but the reality is that it's far too easy to fall into a low-growth situation
with dividends early in your investing career and leave a massive amount of
profits on the table honestly is collecting baby size dividend checks in
your 20s 30s and even 40s really gonna move the needle for you financially i
can tell you that i would much prefer to see my portfolio skyrocketing in value
through proper gross stock investing and becoming one step closer to amassing my
financial freedom than collecting a 500 dividend check every quarter plus if
you're young and in the workforce you should already have a steady source of
income making cash flow from your investments less important now than it
will be once you retire at this point it probably seems like i'm on team growth
stocks however dividend stocks definitely have their place and we'll
talk about when the slaughter group of stocks will come into play before we
continue on with the video i just want to share a quick reminder that right now
you can get up to 10 free stocks worth up to 2 000 each by signing up for
moomoo using the link i've left down below in this video's description it's
basically free money so sign up while you can boss you see as i just mentioned
as you get older your income needs will change this is primarily due to the fact
that you at some point want to put down your work tools and move on to the next
stage of your life unfortunately expenses don't cease to exist when you
retire so you will need enough income to keep you financially afloat hopefully if
you hit your car to the right growth stocks in your earlier years you should
now have a sizeable portfolio to your name however should you still be
focusing most of your investing efforts on growth stocks as you age probably not
we already discussed the downsides of gross stock investing and the risks that
come with it as such to ensure you don't overwork your pacemaker in your later
years you should ideally be moving some of your investments into more stable
dividend stock over time for most investors i think it's okay to be
predominantly invested in growth stocks in your 20s and 30s and with each
passing decade you should shift 10 of your holdings out of growth stocks and
into dividend stocks doing so provides you two main benefits first by deferring
those massive dividend checks you one day want to receive you actually sized
up some unnecessary tax burdens think about it like this if you're collecting
dividend income while working you're only further increasing your overall
income and as such will face a higher tax selling compared to if you had not
received any dividend income at all now whether you're in the gross stock or
dividend stock camp i think we can both agree that paying less taxes is a good
thing the second benefit of slowly moving out of gross stocks and into
dividend stocks is that you're able to lower your risk while still allowing
your portfolio to grow over time you see i nor anyone else wants to see you
having to rejoin the workforce at 90 years old because your overly aggressive
gross portfolio went belly up in your golden years as such you should be
predominantly invested in dividend stocks in your later years to access the
cash you'll need to live while you maintain a position in some growth
stocks that will allow your portfolio value to continue to rise over time
therefore as you're coming to see there truly is a time and a place for both of
these types of stocks in your portfolio when you're young investing in higher
gross stocks should have your portfolio gaining at a rapid pace which will set
you up for a nice transition to safer and more cash producing assets in the
future hey it looks like youtube thinks this next video is the one that will
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