32-Year-Old Investor With Massive NVDA Gains And $350K Cash Asks Reddit: 'What's Stopping Me From Putting

Investors are often driven by the pursuit of massive gains and few assets capture this ambition better than individual stocks–like Nvidia Corporation (NASDAQ:NVDA)–that have seen a meteoric climb.

For many, high returns from individual stocks and/or options trading are irresistible because such investments can turn a modest sum of money into life-changing wealth.

This is the case of a 32-year-old ex-military who made $700,000 in options trading but is unsure of what to do next. After hitting it big, the investor is wondering whether he should double down on high-risk strategies, or pivot to more stable, long-term investments, so he’s taken to Reddit to seek advice.

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With 4,200 shares of NVDA at a cost basis of $69 and $350,000 in cash, he is at a crossroads. His end goal is to preserve and grow his wealth while minimizing risk because he thinks his options trading run may be coming to an end. Still, he isn’t sure about what to do next.

“I was in the military but I started trading options and just did that for a few years. I think my run is at the end, though. Finishing school and getting a job now in the next year. I've been waiting for a pullback, unsure when to hop in. Kinda just wanna be done with it,” he wrote.

He asked whether he should put all his money in Schwab U.S. Dividend Equity ETF (NYSE:SCHD), which is known for its focus on high-quality dividend-oriented stocks. The community offered plenty of suggestions so let’s analyze the comments and distill the most relevant advice below.

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$350,000 in SCHD? Reddit Assesses His Plan and Gives Suggestions

Avoid Putting All Your Money in One Asset

One of the most prevalent advice in the comments was to avoid putting all the money into a single investment–SCHD in this case–and diversify the portfolio into several assets.

“At age 32, I think you should consider a mix of SCHD, [Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG)], and perhaps [Schwab International Equity ETF (NYSE: SCHF)]. Perhaps 45/45/10 or 50/45/5,” a Redditor advised.

A commenter suggested the investor a mix of growth and dividend-paying investments, as well as international exposure.

“Personally though, I’d put $50,000 to $100,000 into ex-U.S. markets. [Vanguard International High Dividend Yield ETF (NASDAQ: VYMI)], [Legg Mason International Low Volatility High Dividend ETF (NASDAQ: LVHI)], [Franklin International Core Dividend Tilt Index ETF (NYSE: DIVI)] are a few dividend-focused options,” he said.

Recommending a mix of individual stocks, ETFs, and dividend-paying assets, this Reddit user provided a detailed illustration of how diversification can be achieved in a portfolio.

“$50,000 [Vanguard S&P 500 ETF (NYSE: VOO)], $50,000 growth stocks like [Apple Inc. (NASDAQ: AAPL)], NVDA, and others, $50,000 SCHD, $50,000 [JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ)], $50,000 [JPMorgan Equity Premium Income ETF (NYSE: JEPI)], $50,000 [Simplify Volatility Premium ETF (NYSE: SVOL)], $50,000 ([Pfizer Inc. (NYSE: PFE)], and other dividend stocks),” his suggestion reads.

“At 30, SCHG 50% VOO 50%,” another comment says.

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Consider Tax Efficiency and Long-Term Growth

Another recurring theme in the thread was the importance of tax efficiency and the possible drawbacks of focusing only on dividend income, with many Redditors suggesting that dividend-paying ETFs might not be the best option when it comes to taxes.

“Dumping $350,000 in there is a monumentally terrible idea. SCHD underperforms the S&P 500 with dividends reinvested and not even counting the extra tax drag. You’d be creating more taxable income for yourself which is a terrible strategy. You want to minimize income and maximize net worth. Dumping all of your capital into something paying income is the opposite of what you should be doing,” a Reddit user wrote.

A Redditor suggested to the investor several other options that he says would yield more returns than SCHD.

“SCHD is a good fund, but is it best for you? With $350,000 invested, it will produce about $12,000 a year. Instead, $350,000 invested in [iShares Preferred and Income Securities ETF (NASDAQ: PFF)] with a 6% yield, would earn you about $21,000 a year. Or you could invest in [business development companies] using [Putnam BDC Income ETF (NYSE: PBDC)] and earn $31,000. Or [NEOS Nasdaq-100 High Income ETF (NASDAQ: QQQI)] with a 23% yield and earn $45,000,” the commenter said.

“SCHD 30%, VOO 20%, [Realty Income Corporation (NYSE: O)] 14%, [PepsiCo Inc. (NASDAQ: PEP)] 14%, [Enterprise Products Partners L.P. (NYSE: EPD)] 12%, [Ares Capital Corporation (NASDAQ: ARCC)] 10%,” a user recommended.

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