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Started By
Message
Re-balancing my Roth IRA
Posted on 7/25/23 at 12:58 pm
Posted on 7/25/23 at 12:58 pm
Moved from a broker to fidelity as my broker worked through american funds and was pretty expensive comparably about 2 years ago. I'm in my late 20s so relatively still early in the game.
My Roth IRA had been in AGTHX (Growth fund of America Class A) while it was under the broker. Over the last 5 years it's grown at 12.69%. When I swapped to Fidelity the balance primarily went to VUG with 10% going to VXUS. VUG has grown at 88% over the last 5 years so obviously a lot better. When you go down to over the last year, the difference is only around 7-8%
My issue is that in reviewing the past few years of data, I have been getting tiny dividends from VUG and VXUS compared to what I got from AGTHX. My balance has of course grown as I contribute the maximum every month/year but dividends, even with a down market in 2022-early 2023 have stayed basically in the low double digits (~20$ per quarter). AGTHX paid out close to $1000 and I only held those shares for like 6 months of 2021 (a much better stock year) while also having a lower balance due to less total contributions made at the time.
When I swapped into VUG I was really just considering the overall growth and low expense ratio and not paying attention to Dividends. Am I costing myself a lot of money by making this change? Have dividends just been much poorer due to the down market from 2022-2023 compared to a booming market in 2021? Will the much larger growth of VUG outweigh the lower growth but higher dividends of AGTHX.
Obviously it' s a lot of data points but just want to make sure I'm on the right track and not obviously missing out on good long term growth/dividends.
ETA: Looking at the dividend history on SeekingAlpha AGTHX is obviously much higher. I probably did cost myself a few thousand bucks by switching in late 2021 and not 2022. The dividends in 2022 were almost double what I got in 2021. That hurts a little bit especially given the fact that VUG didn't really work for me that year as the market was so down
Long term though the question still stands, are those sweet dividends enough to justify looking at switching back?
My Roth IRA had been in AGTHX (Growth fund of America Class A) while it was under the broker. Over the last 5 years it's grown at 12.69%. When I swapped to Fidelity the balance primarily went to VUG with 10% going to VXUS. VUG has grown at 88% over the last 5 years so obviously a lot better. When you go down to over the last year, the difference is only around 7-8%
My issue is that in reviewing the past few years of data, I have been getting tiny dividends from VUG and VXUS compared to what I got from AGTHX. My balance has of course grown as I contribute the maximum every month/year but dividends, even with a down market in 2022-early 2023 have stayed basically in the low double digits (~20$ per quarter). AGTHX paid out close to $1000 and I only held those shares for like 6 months of 2021 (a much better stock year) while also having a lower balance due to less total contributions made at the time.
When I swapped into VUG I was really just considering the overall growth and low expense ratio and not paying attention to Dividends. Am I costing myself a lot of money by making this change? Have dividends just been much poorer due to the down market from 2022-2023 compared to a booming market in 2021? Will the much larger growth of VUG outweigh the lower growth but higher dividends of AGTHX.
Obviously it' s a lot of data points but just want to make sure I'm on the right track and not obviously missing out on good long term growth/dividends.
ETA: Looking at the dividend history on SeekingAlpha AGTHX is obviously much higher. I probably did cost myself a few thousand bucks by switching in late 2021 and not 2022. The dividends in 2022 were almost double what I got in 2021. That hurts a little bit especially given the fact that VUG didn't really work for me that year as the market was so down
Long term though the question still stands, are those sweet dividends enough to justify looking at switching back?This post was edited on 7/25/23 at 1:05 pm
2
Posted on 7/25/23 at 2:33 pm to jlovel7
I guess I was always told young people shouldn't shop for investments based on dividends. But I'm not so young anymore and things probably have changed.
Posted on 7/25/23 at 2:46 pm to notsince98
AGHTX and ANCFX here. Big year end payouts are hit and miss, but we've been reinvesting them and that part of our port has been doing well outside of the haircut over the last two years.
Posted on 7/25/23 at 4:42 pm to Wraytex
quote:
AGHTX and ANCFX here. Big year end payouts are hit and miss, but we've been reinvesting them and that part of our port has been doing well outside of the haircut over the last two years.
But would those dividends outweigh the year over year growth of more aggressive and less expensive funds?
Posted on 7/25/23 at 5:04 pm to jlovel7
Pick one and we'll run it through a comparison chart. Fundamental investors has been more consistent than American growth, but the good years of growth keep them close. Currently AGTHX is down more than Ancfx
Posted on 7/26/23 at 12:13 pm to jlovel7
quote:
When I swapped into VUG I was really just considering the overall growth and low expense ratio and not paying attention to Dividends. Am I costing myself a lot of money by making this change? Have dividends just been much poorer due to the down market from 2022-2023 compared to a booming market in 2021? Will the much larger growth of VUG outweigh the lower growth but higher dividends of AGTHX.
You have to look at the investment structure, VUG is an ETF with .04% ER and AGTHX is a mutual fund with .60% ER, you want an ongoing additional .56% cost drag going for years? The ETF doesn't generate capital gains unlike most mutual funds having significant cap gains at YE which if it was in a taxable account you definitely would not want. I would stick with VUG between those 2.
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