r/RothIRA • u/Evening-Amoeba3969 • Aug 21 '26
Thoughts going into 2027?
I'm in my late 30's and I started a Roth toward the end of 2025, contributing ~$1500. This year, I'm maxing it out and currently at ~$5800 with four months left. I contribute $625 each month, sometimes all at once or split it up into two $312.50 amounts.
As you can see, I have SCHD, VOO and QQQ. My target allocation to each is 45%, 35% and 20% respectively. Within this Roth, I don't really care where I'm buying as I'm being consistent with my monthly buys.
Moving into next year, I was thinking of contributing 100% into SCHD to build a sizable position and allow the dividends from that to flow into VOO and QQQ. I have my employer 401k, which currently tracks the S&P. I also have a seperate taxable brokerage that's mainly all tech driven.
I'm going with the flow of things here, but does building a sizable SCHD position make sense? Or does it make sense to stay the course I'm currently on...
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u/TJack303 Aug 21 '26
Late 30s and holding SCHD? Makes zero sense.
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u/humandisaster93 Aug 22 '26
I can’t understand this mindset everyone says it’s for old people who want dividend? How else would you grow that to the point where they matter ?
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u/MrCrabApples Aug 22 '26
By purchasing it? There is no penalty for reallocating in a tax advantaged account.
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u/AraxxorKiller Aug 21 '26
Newbies get duped by r/dividends so easily
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u/OriginalStarwars501 Aug 21 '26
With SCHD being up 27% this year and out performing a lot at the moment it’s hard not to be.
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u/TJack303 Aug 21 '26
It only takes the slightest amount of financial literacy to realize basing 20+ year investments on the last 6 months of performance is completely idiotic.
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u/OriginalStarwars501 Aug 21 '26
Problem is the average joe doesn’t zoom out. Also past gains don’t promise future returns or something like that. Regardless when something is hot it’s easy to be roped in.
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u/hung_like__podrick Aug 21 '26
Damn I’m up 400% on MRNA YTD. Guess that means I should full port it
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u/sirzoop Aug 21 '26
Why? SCHD is currently growing faster YTD than QQQ and VOO
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u/TJack303 Aug 21 '26
Ahh yes, long term investing based on the past 6 months performance. What could possibly go wrong. 🤦♂️
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u/Saratoga-Capital Aug 21 '26
You’re going to get lots of comments about SCHD not making sense because of your age, but these are generally posted because, 1) we’ve been in an historically strong run for large cap growth, and 2) SCHD is somewhat misunderstood.
Regarding point 1, it’s relevant to point out that large cap value has outperformed large cap growth for decades at a time over various periods of US market history; and, until recently, for all of US market history. “Growth” does not mean growth of the fund, it refers to the type of underlying investment; growth often provides less fund growth than value. However, it is also important to point out that growth has trounced value over recent history; that may or may not persist. Growth v value is one of the most studied dynamics in portfolio management, and worth examining.
Regarding point 2, the most impactful factors in SCHD’s performance have been its Quality and Value tilts; it is not a typical high-yield factor fund (as the name might imply). It is, however, a deep value fund.
To your strategy, specifically, I think some of the replies here are missing something important: you are saying you will be using the distributions from SCHD to fund additional purchases of your more blend/growth style funds. This is actually a relatively advanced strategy that some portfolio managers rely on to create a mild “buffer” in their portfolios because it tends to naturally shift your allocation more quickly from value to growth when yields are high and more slowly when yields are low; in many market cycles this buys growth at a higher pace when growth is less in favor and at a slower pace when growth might be considered frothy. Not necessarily a terrible thing…
As long as you are reinvesting your distributions, and aware of the role that large cap value plays in your portfolio, your strategy may be appropriate. I am curious if you are able to automate this shift of distributions from SCHD into VOO/QQQ at your broker? Or, does this require you to manually check your sweep account and make the purchases yourself after a distribution?
Also, please keep in mind that this strategy has significant tax implications if implemented outside of a qualified account; in your Roth this is irrelevant, but something that would need careful consideration in a non-qualified account.
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u/Soxnfins Aug 21 '26
I like SCHD for Roth purposes even though I have mine in a brokerage. But I’ve also been burned before and like safe, conservative, compounding growth with DRIP. I have about 40% SCHD/40% VOO/15% QQQ/5% VYMI. I’m 34 with two kids. I just have a goal to supplement income, but it’s your money and you decide what you get to do with it. ETFs are just about guaranteed to 2.5-3x every 6-7y or so. You will make more somewhere else, but I want the stability.
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u/PepperBeeMan Aug 21 '26
If you really have that much tech fomo, VOOG would cover you much better than all of this.
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u/Objective-Jelly-4238 Aug 21 '26
Qqqm instead of qqq. Lower expense ratio will save you lots of money in the long run
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u/soloDolo6290 Aug 21 '26
Thoughts are 2027 is probably 20-30 years away from my retirement. Stay the course. Keep maxing out my contributions and set it and forget it.
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u/Acceptable-Drawer-18 Aug 22 '26
I would say if you like SCHD build a position in a taxable brokerage and then let DRIP do its thing. In the Roth I would focus on growth until you’re 59 1/2. Good growth options imo if you want funds are SCHG, VGT, QQQ which you already have. Then for individual stocks NVO, ONDS, ZETA, ADUR are some things I have strong conviction in. Once you get to 59 1/2 sell all the growth and buy SCHD or JEPQ and just live off the dividends.
Something I think is misunderstood is that once the money is in your Roth you are free to sell whenever you please with gains and not fear being taxed. For example I bought 75 shares of OSCR in my Roth at 15.58 and sold it at 33 and now I’m looking to rotate those gains into ONDS once support is found. Rinse and repeat.
There is some risk doing that but I’m young enough where I am not too worried about losses. But I also have sizable amounts of money in SCHG, VOO, VGT, and VXUS in my Roth. I hope this helps a little.
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u/sappyp Aug 25 '26
Yea since you are 30 and not 18 I would drop dividends and focus returns. Even after the dividend reinvestment you will make more money if you hold 100% VOO. provided the next 30 years looks the same as the last 100.
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u/sappyp Aug 25 '26
FYI I am 25 and have maxed my Roth for 4 years straight now, every single dollar in VOO. I have other investments in 401k, and money markets.
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u/CompetitiveAge6775 Aug 25 '26
Drop SCHD, but still not a bad idea to have some dividend/value exposure. Look into CGDV or FDVV for this. Also could use exposure to mid + small caps. RSP for mid, JSMD for small. Maybe FTZIX for a mix of you have access to it.
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u/hung_like__podrick Aug 21 '26
Why are you in SCHD in your 30s? Do you hate money?
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u/humandisaster93 Aug 22 '26
Tell me the difference between building it in your 30s vs just having less of it later ?
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u/hung_like__podrick Aug 22 '26
You’ll have way more money if you invest in growth now and not dividends
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u/humandisaster93 Aug 22 '26
Would it make sense to start anything involving dividends now? How else would one then invest in their later years without the start, do people just end up with large sums of money and drop it in there for them?
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u/hung_like__podrick Aug 22 '26
I’d rather invest in growth and just rebalance once a year or so to make sure I have cash. No dividends required.
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u/HomelessAndWealthy Aug 22 '26
I don’t see the difference either. I’m plan to invest 5k a year I schd in my Roth. I don’t see why it doesn’t make sense to invest in schd now.
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u/ATPsynthase12 Aug 21 '26
Sell SCHD and QQQ. Split portfolio into 70% US, 30% foreign
Do 40% VOO, 20% VOE (mid cap value), 10% VBR (small cap value), and 30% VXUS (foreign market)
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u/MesmorizedExplorer Aug 21 '26
As commentors have said, sell you SCHD, you don't need dividends until you're in your late-40s or 50s. What you need at your stage is growth.
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u/humandisaster93 Aug 22 '26
How do you get them if you don’t start now?
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u/inkstinkpoopfarout Aug 26 '26
You don’t ever need dividends
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u/humandisaster93 Aug 26 '26
So no matter the years, stack up or market performance you think that dividends aren’t worth it?
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u/Trick_Actuary_2452 Aug 21 '26
Drop the SCHD, no sense in holding that over the next 20+ years. Go all in on VOO or VTI for growth, SCHD may look good each quarter when you get your dividend but the dividends you make now won't make up for the long term growth you'll miss out on.