10-22-2015, 10:40 AM
I like to make it balanced. Obviously high growth has it's own appeal since you are so young but I also love the high yield ones simply because the compounding effect is much greater in the beginning and in general there is not so much pressure to be pushing up earnings 10% yoy for decades because lets face it: very few companies can sustain such growth for long.
One thing to also think about is that while your ultimate goal is to be financially independend at 45, you don't know if you will get there. You might need cash a lot sooner if one of a million possible bad things happen, then it helps to have yield since the dividend income might help you through without having to sell your portfolio. Also, you definitely will need SOME level of growth since you are planning on living with your dividends for roughly 40 years or so... there is inflation and once again ANYTHING can happen during those years. So while financial independence at 45 is the goal, life doesn't stop there.
Guess it's up to you to find a good balance but make sure that you have at least some stocks from both types, that is also a form of diversification.
One thing to also think about is that while your ultimate goal is to be financially independend at 45, you don't know if you will get there. You might need cash a lot sooner if one of a million possible bad things happen, then it helps to have yield since the dividend income might help you through without having to sell your portfolio. Also, you definitely will need SOME level of growth since you are planning on living with your dividends for roughly 40 years or so... there is inflation and once again ANYTHING can happen during those years. So while financial independence at 45 is the goal, life doesn't stop there.
Guess it's up to you to find a good balance but make sure that you have at least some stocks from both types, that is also a form of diversification.