Distribution of Stocks With Passive Income

[BC_89]

As a small background:

Career changer expected to graduate in 2022 (pharmacy) with strong anticipation of no debt upon graduation. When I say no debt, I mean no loans of any type such as student, auto, personal loans along with no credit card debt. Now I'm also medically retired from the military with a tax exempt pension to the tune of 3500 a month.

My question is concerning my current stock strategy. I am a bit of a risk taker when it comes to stocks as I only invest in the 500 and small cap index funds at a 60/40 split for the past years. Part of my reason is due to security of passive income (not including a change in my salary upon graduation) coupled with no debt other than potential mortgage when the time comes. Should I diversify my long-term investment cycle out from the two stocks or maintain my aggressive strategy? A side of me still thinks distribution in the stocks while in my 30's still has long-term potential despite possible frequent dips and rises.

Just curious what others think or what they would do.

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[Investing Resident]

I think it depends on your timeline. Being in your 30s, I assume you still have many years left in your investment career. A longer horizon will allow you to be more aggressive in your asset allocation. There are many people who allocate their entire portfolio in equities. If this is your strategy, make sure you are diversifying your portfolio throughout the sectors. If you continue to invest in the S&P500 you will more than likely be just fine. You can decrease your risk later on when you are getting ready to retire. Though, if you would like to mitigate some of your risk now, maybe think about throwing in a bond index to make up a 90/10 equities/bonds allocation.

 

[Trogghunter]

60/40 as in 60 equities/40 bonds or 60 500/40 small caps? I personally moved out of bonds in March, prior to that I was traditional 60/40 and now I am 60 growth stocks/30 blue chips /10 YOLO trading. It's been working out well, also in my 30s. It also depends on how much time you have to research and keep up with what you own AND your risk tolerance and timeline. It's a stock pickers market though, indexes are under performing, even in the tech world and subniches like FAANG, they're not all outpacing the NASDAQ.

 

[The PA Investor]

Although indexes are under performing at the moment, in the long run their low cost greatly outperforms picking individual stocks. Nobody knows what the future will hold with a single company. Even if a single stock does well, the short term capital gains can mitigate any benefits it provides. Stick with low cost index funds. If you're in your 30's and have a long career ahead of you, you can add small value stocks instead of small cap. In the last 10 years small value has under performed the S&P 500 but if you look longer like 30 years, small value comes out ahead.

I'm in the same general category and plan to be pretty aggressive with my portfolio because I have decades before I fully retire.

 

[BC_89]

60/40 as in 60 equities/40 bonds or 60 500/40 small caps? I personally moved out of bonds in March, prior to that I was traditional 60/40 and now I am 60 growth stocks/30 blue chips /10 YOLO trading. It's been working out well, also in my 30s. It also depends on how much time you have to research and keep up with what you own AND your risk tolerance and timeline. It's a stock pickers market though, indexes are under performing, even in the tech world and subniches like FAANG, they're not all outpacing the NASDAQ.

the split is the S&P 500 and small cap index. I agree its a stock-pickers market, the only worry I have at this moment is trying out the interesting day - trading which I don't imagine I'll be doing anytime soon (well 30's at least).

 

[TraderDoc]

I'm 31, recently graduated residency within last 3 years. Definitely a stock picker's market at the current time. But i still make exactly $1000 every month split between 2 index funds. $VTSAX/$VTI.

I started day trading heavily in 2020. But honestly the returns from just buying and holding stocks have annihilated the profits I've gotten day trading. Pretty much dumped every ounce of capital I had in LVGO/FSLY/SQ in April and never really looked back and most of investors I know tend to agree that investing more and trading less tend to work out better in the long run. I still day trade on my days off because I still find it very fascinating and overall a good use of my money and time. Good luck to all investing physicians!

 

[Splenda88]

I think index funds (VOO, VTSAX, VTI ect...) is the way to go regardless of age... You can't beat an average of ~10% yearly ROI in the last 10 yrs.