Why Some People Delay Their Investing
People have many reasons to avoid investing – some Islamic sects prohibit speculation or interest-bearing investments, which severely limits their choices.
The age at which people decide to commence investing varies widely. Factors that can influence this decision may include cultural, communal, and individual circumstances. Some of the reasons that some have recounted may sound familiar:
- Horror stories from colleagues or relatives about getting burned in the past from the dotcom boom and bust or the 2008 subprime mortgage banking meltdown have spooked many into staying on the investing sidelines.
- Some families living hand-to-mouth have neither the means nor the inclination to look at investments, since their immediate focus is to keep food on the table and to stay healthy.
- People raised in certain religions, such as Islam, have a litany of prohibitions against investments that charge interest or involve in some way such various areas as: alcohol, tobacco, gaming, weaponry, pork, and certain types of banking and insurance. Some Islamic sects consider speculation to be haram (forbidden), so that would include investments in stocks or stock related funds.
- Certain individuals who amassed significant college loan and/or credit card debt focused on eliminating debt as their greatest priority, eschewing investments until they were debt-free.
Better Late Than Never
Digital tools make investing from an online account a very easy and convenient platform for both experts and neophytes.
Regardless of the reasons for one to start investing later in the game, benefits can still be derived, depending on the neophyte investor’s risk tolerance, goals, and timeframe horizon. Obviously, aspiring to double one’s money in a year with zero risk is not based on anything available in the real world. However, an outlook grounded in research and practical, achievable expectations is the foundation for a successful strategy, and one can assemble a portfolio on that basis.
A middle-aged first-time investor apparently did some preliminary research and posted on Reddit for advice on ETF suggestions. With a base of $100,000, his goal was long-term growth and asked about whether a dividend ETF should be part of the equation. Given that he is starting in his mid-40s, a combination of aggressive and moderate growth ETFs, along with a dividend growth ETF with all dividends on a DRIP arrangement might help him to make up for some lost time and subsequently reach a tangible wealth building goal. Some of these ETFs might include (all quotes based on market price at the time of this writing):
Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (NYSE: VOO | VOO Price Prediction) is one of the most popular and widely held S&P 500 Index ETFs in the industry. A passively managed ETF that tracks the S&P 500 Index, VOO has been a linchpin of countless portfolios, including Warren Buffett’s personal one for his wife. It has a 10-year cumulative return of 258.5%.
| Yield | 1.19% | Beta | 1.00 |
| Total Net Assets | $1.53 trillion | 1-yr return | 16.29% |
| Expense Ratio | 0.03% | 3-yr return | 17.06% |
| Average Daily Volume | 6.4 million shares | 5-yr return | 15.84% |
| Inception Date | 9-7-2010 | 10-yr return | 13.62% |
Top 5 Sector Weightings:
- Technology – 34.40%
- Financial Services – 13.58%
- Consumer Cyclical – 10.55%
- Communication Services – 9.81%
- Healthcare – 9.35%
Top 5 Largest Holdings:
- Nvidia – 7.33%
- Microsoft – 7.04%
- Apple – 5.83%
- Amazon – 3.94%
- Meta Platforms (Facebook) – 3.05%
For an extra growth boost, one can utilize a Dividend Reinvestment Plan (DRIP) arrangement to take advantage of dividend compounding and dollar cost averaging by buying more VOO shares every quarter. VOO has a number of advantages towards this strategy to accelerate its efficacy:
- The S&P 500 contains the vast bulk of Dividend King (50 or more years of consecutive annual dividend increases) and Dividend Aristocrat (25 or more years of consecutive annual dividend increases) stocks, so prorated holdings of these stocks in VOO will deliver commensurate cumulative dividend payout increases each year.
- Although dividend growth is not guaranteed, the overall history of VOO demonstrates regular positive growth each year except for 2020, which was due to Covid-19 pandemic lockdowns.
- VOO’s matching price appreciation growth with the S&P 500 Index easily outstrips dividend growth, so a mathematically smaller yield can be misleading, since the actual dividend amount is still increasing, albeit at a slower pace.
| Year | Payout Amount | Year End Yield | YoY Payout Growth |
| 2024 | $6.7035 | 1.25% | 5.45% |
| 2023 | $6.3572 | 1.48% | 6.90% |
| 2022 | $5.9467 | 1.75% | 9.38% |
| 2021 | $5.4367 | 1.31% | 2.53% |
| 2020 | $5.3027 | 1.64% | -4.81% |
| 2019 | $5.5709 | 2.04% | 17.61% |
| 2018 | $4.7367 | 2.28% | 8.44% |
| 2017 | $4.3769 | 2.01% | 5.56% |
| 2016 | $4.1380 | 2.32% | 5.27% |
| 2015 | $3.9310 | 2.47% | 12.64% |
| 2014 | $3.4900 | 2.22% | 12.29% |
| 2013 | $3.1080 | 2.25% | 9.59% |
| 2012 | $2.8360 | 2.71% | 19.56% |
| 2011 | $2.3720 | 2.63% | 118.82% |
| 2010 | $1.0840 | 1.23% | n.a. |
Invesco QQQ Trust
The Invesco QQQ Trust (NASDAQ: QQQ) has been a strong Exchange Traded Fund (ETF) growth winner for many investors. It has a 5-7 year annualized return of 20.51%, a cumulative 10 year rate of return of 442%, and has benefited from heavy weighting in the “Magnificent 7” tech stocks. Managed by Invesco Capital Management, QQQ tracks the Nasdaq-100 Index as its benchmark. Geared for more aggressive growth from tech stocks, QQQ is more volatile than VOO but has notched even more impressive growth in the same time span.
| Yield | 0.50% | Beta | 1.12 |
| Total Net Assets | $360.6 billion | 1-yr return | 20.57% |
| Expense Ratio | 0.20 | 3-yr return | 22.24% |
| Average Daily Volume | 46.22 million shares | 5-yr return | 17.00% |
| Inception Date | 3-10-1999 | 10-yr return | 18.49% |
Top 5 Sector Weightings:
- Technology: 53.87%
- Communication Services: 15.71%
- Consumer Cyclical: 13.23%
- Consumer Defensive: 4.94%
- Healthcare: 4.64%
The top 5 largest holdings include:
- Nvidia – 10.03%
- Microsoft – 9.17%
- Apple – 7.17%
- Amazon – 5.74%
- Broadcom – 5.28%
Vanguard High Dividend Yield Index Fund ETF
For a solid high dividend yield ETF, one worth serious consideration is the Vanguard High Dividend Yield Index Fund ETF (NYSE: VYM). Created 19 years ago in 2006, The Vanguard High Dividend Yield Index Fund ETF is Vanguard’s ETF for investors seeking to track the FTSE High Dividend Yield Index. VYM emphasizes yield size over yield growth. Excluding REITs, this ETF weights the stock rankings by market cap to mitigate the risk of including stocks with high yields due to deteriorating financials.
| Yield | 2.63% | Beta | 0.81 |
| Total Net Assets | $76.27 billion | 1-yr return | 10.96% |
| Expense Ratio | 0.06% | 3-yr return | 11.37% |
| Average Daily Volume | 967,672 shares | 5-yr return | 13.98% |
| Inception Date | 11-10-2006 | 10-yr return | 10.42% |
Top 5 holdings:
- Broadcom: 6.45%
- JP Morgan Chase: 4.08%
- Exxon Mobil: 2.37%
- Walmart: 2.16%
- Procter & Gamble: 1.90%
Top 5 sectors:
- Financial Svc.: 21.65%
- Technology: 15.96%
- Healthcare: 12.49%
- Consumer Defensive: 12.15%
- Industrials: 11.23%
JP Morgan Nasdaq Equity Premium Income ETF
While the poster could choose from any number of bond or high-yield dividend payout ETFs for income, the late start and long-term growth goal might warrant consideration of a covered call ETF with a growth component. The JP Morgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) is a slightly better risk mitigated covered call ETF that tracks the Nasdaq-100 for growth while delivering an 11.22% yield, which could easily be deployed in a DRIP scenario for additional compounding growth.
Instead of direct covered call writing against its portfolio, JEPQ uses Equity Linked Notes (ELN), which are synthetic financial products created by financial institutions. Usually linked to a particular index or stock, ELNs often have a call option attached to a principal protection component, and usually resemble a zero-coupon bond. In most cases, the ELN is a short term instrument that has a maturity of no longer than a few months. The returns on the ELN are linked to the underlying index or stock. Additionally, most, if not all ELNs are purchased directly from the issuer and held to maturity. There is no secondary market for ELNs.
JEPQ uses slightly out-of-the-money calls on the NASDAQ 100 Index, leaving moderate room to capture the index’s upside potential. JEPQ manager Hamilton Reiner staggers one-month calls into multiple weekly buckets, then diversifies the expiration dates and strike prices. However, he doesn’t directly write covered calls for the fund. Instead, Reiner purchases ELNs that give the fund exposure to the profits on those call options, without the risk of any of the top tech stock holdings being subject to calls if the market takes off and the calls go in-the-money. This simplifies the fund’s tax treatment but precludes it from taking advantage of lower long-term capital gains tax rates.
| Yield | 11.22% | Beta | 0.82 |
| Total Net Assets | $28.88 billion | 1-yr return | 15% |
| Expense Ratio | 0.35% | 3-yr return | 16.45% |
| Average Daily Volume | 6.145 million shares | 5-yr return | n/a |
| Inception Date | 5-3-2022 | 10-yr return | n/a |
Top 5 Sector Weightings:
- Technology: 53.45%
- Communication Services: 15.97%
- Consumer Cyclical: 14.21%
- Healthcare: 4.71%
- Consumer Defensive: 4.56%
The top 5 largest holdings include:
- Nvidia – 8.82%
- Microsoft – 7.91%
- Apple – 6.10%
- Amazon – 5.12%
- Broadcom – 4.27%
One interesting aspect of JEPQ is that dividends will likely increase in months with greater stock market volatility, especially in the tech sector. This is due to the higher premium values that an option seller can command in more turbulent markets.
The Menu Is Huge – Navigation Tips
Risk tolerance, timeframe, and target growth goals are all subjective criteria, so one should do their own research to find the most suitable investments that will allow them to sleep at night without worries.
Each of the sample ETFs presented here has several comparable rival offerings from other issuers, so the range of choices is enormous. For a neophyte investor the three main factors – target goal, time frame and risk tolerance – are the main determinants for one’s final selections. With that in mind, some tips to bear in mind when conducting due diligence:
- It’s good to get different ideas, but not to blindly put money into an investment without doing one’s own personal research.
- Comparing expense ratios can make a significant difference between ETFs that may track the same index, since higher expense ratios means less upside for shareholders.
- Monitoring one’s portfolio on at least a monthly basis is a prudent practice, since news events such as the announcement of President Trump’s reciprocal tariff policy in April led to extraordinary volatility, with markets losing thousands of points, only to gain them all back and then some in subsequent weeks.
- As one approaches retirement, a portfolio rebalancing towards less volatility and higher income might be worth consideration, especially if ancillary income from other sources will be limited.
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