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A journey with many decisions that can tremendously impact an individual future, investing can be daunting for some. One of the most challenging decisions some investors face is determining the right time to shift from growth-focused stocks to income-generating dividend stocks.
Some investors struggle with this decision, fearing that a wrong move can put their entire portfolio at risk. One Reddit poster, a 49-year-old with a $1.2 million portfolio is pondering this exact transition.
The investor's main concern is whether it's too early to start reallocating portions of his portfolio to income-generating investments.
He is considering moving some of his VOO holdings to Schwab U.S. Dividend Equity ETF (NYSE:SCHD), some QQQ to JPMorgan Equity Premium Income ETF (NYSE:JEPI), and possibly adding iShares Core Dividend Growth ETF (NYSE:DGRO) or iShares Core High Dividend ETF (NYSE:HDV).
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"Been in tech for 20+ years and starting to think about stepping away in the next 5-7 years. Currently maxing out all retirement accounts but wondering if I should shift focus from pure growth to more income-generating investments," the investor said.
His goal is to build up $6,000 in dividend income per month while maintaining some growth exposure, so he took to Reddit to ask investors in the r/Dividends community if his approach is the right move.
Let's see what Reddit investors suggested the poster do based on his portfolio and goals.
Is This the Right Time for the Investor to Shift to Dividend-Paying Stocks? Reddit Debates
Time the Transition
Several comments pointed out the fact that timing the reallocation is crucial, and some suggested the investor should ideally do this only when approaching retirement age.