Investing involves balancing risk, reward and personal goals and for many, index funds like SCHD, QQQM and VOO have become an important part of their portfolios.
Whether it’s SCHD’s focus on high-yield dividend-paying enterprises, VOO’s all-around coverage of the S&P 500 or QQQM’s focus on tech companies, these index funds provide investors with diversified exposure to the stock market.
Choosing which fund to invest in usually depends on the investor’s goals, but what happens when you’re at a crossroads and don’t know where to allocate a significant sum? That’s exactly the impasse one Reddit member found himself in.
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The poster, who’s been investing for several years, is selling a rental property he bought for $110,000. Now, with the rental evaluated at $245,000, he thinks he will remain with $200,000 to invest after accounting for all the expenses related to selling the house.
While the rental property generated $1,100 monthly, the management and maintenance issues made him want to give up renting the property. His goal? To transition to the stock market, focus on growth and dividend-paying investments.
“Just been seeing the popularity of SCHD, QQQM and VOO a lot and wondering if I could get a million in 10 years or less. I’m sure I can handle some risk but I was wondering if I should be dividend-heavy or growth-heavy for my goals,” he said.
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Besides the rental profits, the investor has $40K in a HYSA and has been maxing out his Roth IRA in the last three years. Now, he’s turned to Reddit’s r/dividends community to seek guidance on whether his strategy is a good one or whether he should consider a better one.
Let’s explore the strategies Reddit investors shared in the thread.
Is $1 Million in 10 Years Possible With The VOO, QQQM, SCHD Strategy? Reddit’s Advice
Balance Risk and Investment Objectives
Many commenters highlighted the imperative need to assess the investor’s willingness to take risk, especially when considering his five-to-ten-year time horizon.
“The shorter your time frame, the more I'd lean SCHD. The market is a long game. Growth happens over 30 years not 5,” a comment reads.
A Redditor mentioned dividend-focused ETFs as a good investment if the poster cannot handle that much risk.
“If the market hits a downturn right when you retire, can you handle that financially and not be forced to sell? If not, consider dividend-based ETFs so you can get that income and have a small portion in a high-yield savings account as you get closer,” the Reddit member wrote.
Because of the poster’s five-to-ten-year time horizon, one comment suggested he invest in the S&P 500 or some growth-focused stocks.
“If you have a 5-year-ish time horizon I would have some in S&P 500 or growth stocks but there is inherent volatility,” the comment says.
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Keep the Rental Property as a Tangible Asset
Some Reddit members advised the investor that instead of selling the property, he could still use it as a source of income or collateral while eliminating the management and maintenance hassle.
“OP, any particular reason you don’t hire a property management company to manage it for you? I have one I use without any issues and I don’t have to do any interaction with the renter. I pay 10% and they do mostly everything,” a Redditor says.
Another commenter suggested the poster keep his property and either invest the profit the rent brings him into stocks or index funds or open a line of credit to buy stocks.
“Wouldn’t it be better to keep the rental property and just open a line of credit or reinvest the cash flow from the rental into the tickers you want?”
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