401(k) Transition From Target Date Funds To Dividend Stocks: First 10 Buys
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In late 2021, I moved a significant portion of my 401(k) to cash and began to transition my 401(k) into a portfolio that compounds.
I began this transition by purchasing 10 dividend stocks with a focus on quality and sustainability of the dividend.
Previously my 401(k) produced $0 in passive income and charged fees for me to invest in the funds. Today, my portfolio produces $1,748 in income and there are no fees.
Marvin Samuel Tolentino Pineda/iStock via Getty Images In late 2021, my employer announced they would soon expand the investment options in our 401(k) beyond target-date funds to include ETFs, stocks, bonds and everything in between. As someone who enjoys dividend growth investing, I was ecstatic.
Up until this time, I hadn’t paid much attention to my 401(k) as I never could get too excited about target-date funds. While I appreciated the company match, I wasn’t wild about a portion of my contributions going to fees and I felt uneasy buying shares of a highly overvalued market. Soon after this announcement I moved a significant portion of my 401(k) to cash.
Admittedly, once the market began to drop I struggled with analysis paralysis for several weeks. Despite having a 30-year investing horizon, I couldn’t seem to overcome the non-stop headlines about bear markets, recessions and building up cash.
I finally decided to set a goal for my 401(k) and establish some guardrails (reminders) for investing in a down market. Goal: The goal for my 401(k) is to build a portfolio that produces a consistent stream of income that rises each year regardless of fluctuations in market values. Guidelines: Here are some simple guidelines I put in place for putting cash to work in this market: > Buy high quality, credit worthy companies that have a history of […]
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