I've been playing with some money in the self managed fund of my 401K for a while but I'm backing off stocks and going more with broader market ETFs now.


Is there an advantage to starting to accumulate dividend stocks and ETFs like SCHD and DGRO in my 401K self managed fund. Is there any reason not to do that?

I was thinking it may grow enough to pay the electric bill with dividends in a few decades or something along those lines.

jamey said:

---

I've been playing with some money in the self managed fund of my 401K for a while but I'm backing off stocks and going more with broader market ETFs now.


Is there an advantage to starting to accumulate dividend stocks and ETFs like SCHD and DGRO in my 401K self managed fund. Is there any reason not to do that?

I was thinking it may grow enough to pay the electric bill with dividends in a few decades or something along those lines.

---

If you live in Texas we have a real estate deal we are raising capital for that should do 10% year one and only get better. We are buying it all cash 25k minimum. Email Braxton at gbtpm dot com for ppm.

I don't think I can use my 401K self manged fund on that

jamey said:

---

I don't think I can use my 401K self manged fund on that

---

Not in a 401k, but it's likely possible to use IRA funds for this

Kenneth_2003 said:

---

jamey said:

---

I don't think I can use my 401K self manged fund on that

---

Not in a 401k, but it's likely possible to use IRA funds for this

---

The OP is about using 401K self managed funds for dividend stocks and ETFs.

The short answer is no.

All future money you will be withdrawing from your 401k will be taxed at your then-current tax rate. Dividends will be taxed as regular income. Select your investments without tax-friendliness as a consideration.

That is not to say that the ETFs you're evaluating are a bad idea, at all. As you get closer to retirement, these lower-risk, higher income investments might be more prudent, to produce a more steady stream of income.

I bleed maroon said:

---

The short answer is no.

All future money you will be withdrawing from your 401k will be taxed at your then-current tax rate. Dividends will be taxed as regular income. Select your investments without tax-friendliness as a consideration.

That is not to say that the ETFs you're evaluating are a bad idea, at all. As you get closer to retirement, these lower-risk, higher income investments might be more prudent, to produce a more steady stream of income.

---

But isn't tax friendliness part of how it all grows, with taxes deferred and reinvested dividends?

jamey said:

---

I bleed maroon said:

---

The short answer is no.

All future money you will be withdrawing from your 401k will be taxed at your then-current tax rate. Dividends will be taxed as regular income. Select your investments without tax-friendliness as a consideration.

That is not to say that the ETFs you're evaluating are a bad idea, at all. As you get closer to retirement, these lower-risk, higher income investments might be more prudent, to produce a more steady stream of income.

---

But isn't tax friendliness part of how it all grows, with taxes deferred and reinvested dividends?

---

For pre-tax funds in an IRA, all you care about is risk-adjusted total return. Whether your growth in value is by dividends, capital gains, or interest, it all counts the same (and is all taxable on withdrawal).

Therefore, a high-dividend stock or ETF might be a very good choice, but a high-growth technology fund might also be a very good choice.

I bleed maroon said:

---

jamey said:

---

I bleed maroon said:

---

The short answer is no.

All future money you will be withdrawing from your 401k will be taxed at your then-current tax rate. Dividends will be taxed as regular income. Select your investments without tax-friendliness as a consideration.

That is not to say that the ETFs you're evaluating are a bad idea, at all. As you get closer to retirement, these lower-risk, higher income investments might be more prudent, to produce a more steady stream of income.

---

But isn't tax friendliness part of how it all grows, with taxes deferred and reinvested dividends?

---

For pre-tax funds in an IRA, all you care about is risk-adjusted total return. Whether your growth in value is by dividends, capital gains, or interest, it all counts the same (and is all taxable on withdrawal).

Therefore, a high-dividend stock or ETF might be a very good choice, but a high-growth technology fund might also be a very good choice.

---

What this guy is trying to tell you is that everything you pull out of your 401-K, which if you do it right will be an IRA when you start, is taxed as income. So if you start with $100 and 30 years later you have a $1000 IRA and you take it out it will be fully taxed as income. It makes no difference how you got that $100 to grow to $1000 in terms of tax to you. I Bleed Maroon is also trying to tell you a high growth technology fund might be a better choice. Just remember the year 2000.
FWIW I'm 76, have taken about $70-80K/year in RMD's for 4 straight years and have yet to touch principal. I'm 100% equity, maybe 10% of that equity dividend.