There is this hype on YouTube about if you invest $50k in SCHD when you are 23 years old, do nothing thereafter, then 30 years later when you are 53, you are getting $51k dividend each year. You don't have to work if you move to low cost area. Well, 5 more years later, when you are 58, then it is $92.6k dividend per year. You probably can living in a medium or high cost area with that. But since 32 * 1.032 ** 35 96.3694, so $32k today maybe like $96k in the future with inflation considered... oh well. I guess if you don't put in $50k but put in $100k, then you have what is about the same as $64k... and if you put in $150k, then you have today's $96k per year. So to dig into that, I think it just means this: it has 9% stock growth per year, and plus 3% dividend, it is like 12% per year growth (dividend reinvested), better than QQQ in the last 30 years: about 10% per year. So to put it to the test, I compare it the same time period: August 2012 to August 2023: SCHD: > (73.38 / 28.61) ** (1/ 11.0) 1.0893997193530973 > 8.9 + 3.44 12.34 so, 12.34% per year growth, that means, doubling every 6 years Well, how about VOO, SPY? VOO: > (400/129.22) ** (1/11.0) 1.1081839127819328 10.8% > 10.8 + 1.48 12.280000000000001 12.28%, very close SPY: > (436.59/141.0) ** (1/11.0) 1.1082127743205075 > 10.8+1.43 12.23 12.23%, not much difference Now what about QQQ? QQQ: > (358/68.16) ** (1/11.0) 1.162750879836015 > 16.27 + 0.56 16.83 16.83%, better than those in that same period So I can really just buy VOO and SPY, because dividend can be taxable, depending whether you have it in a regular account or Roth IRA or 401k Roth. I'd imagine some people say QQQ is too dense in tech and not diversified enough. But self driving car, AI, VR headsets, I do see high tech not bad in the next 20 years. #retirement #FIRE #investments
People have a weird thing with dividends where they think they're free money or something. In fact, dividends are worse (in a taxable account), because the taxes on them can't be deferred
so try to put them in 401k Roth
SCHD makes more sense closer to retirement.
because you get the dividend and don't have to sell your asset?
Yea, source of income/cash without selling asset.
diversification is the game
All this research and doesn't know that VOO and SPY are literally the same? Infact spy is worse long term because it has higher fee....
well yeah, basically the same but Vanguard has lower fees... you know, just checking
Ok, glad that you aren't planning to buy same underlying assets in 2 funds. Having said that, it is one way to do tax loss harvesting. On the point of dividends: long term dividend focused funds don't really matter if your time horizon is truly long. Checkout the video relevance of dividends irrelevance by ben felix. Good summary about the research. QQQ is a decent hedge towards growth but it's usually sensible not to over index in your own industry. Tying your income/job and networth to same industry can be risky. Create a base of domestic total market, developed markets, and emerging markets. (Vti or VOO, vea, and vwo). Take a look at the risk of home bias to understand why international diversification is important too. Sorry for the long reply lol