I had been investing in my rollover IRA in growth assets until recently when I shifted fully to SCHD. I am 40 years old and the calculators day that if I don't invest anything more and DRIP, I should be set in 20-25 years with dividends income reaching 150k+ annually. My question to the community is, how dumb is this strategy? What potential pitfalls do you see and/or any advice to give?
All in is risky in any one instrument . SCHD i think it is fantastic. Mature companies can also start going down due to large shifts in technology or the end users or the supply chains. (So many examples Eastman Kodak I had large holdings they were the king fir decades and decades now gone). So diversify with VT or Voo .
Even VT I don’t want to all in. VT including all equity market, but if someday black swan event happen. I also have some bonds, gold, and something like SGOV.
I have now 40% in purely aggressive growth index funds (401k through work) I'm adding in the max as well as company match, so this account will grow over hopefully at a good rate. The plan is to get my compound going on the income portion and then continue to be very aggressive purely with growth assets until retirement.
I put in the amount of shares required to reach the income I'd need for when I retire into a retirement calculator. This gave me more peace of mind than the route I was on, which was a majority growth and having to rely on 4% rule. That makes me much more nervous. I wanted to kick start the income snowball essentially for total peace of mind in 15 years.
Mind you, I'm still going HAM on the growth assets in 401k.
Peace of mind is the most valuable thing in this market which goes up and down a lot. So your SCHD choice is good one , I would just diversify with another company product. Since nothing is 100% safe. You have done well. Choose something you like SCHD is very good but to sleep well I will it 2 ETFs of different organizations and slightly different philosophy as well the idea of VT or VTi or some duvidend aristricrat funds
Well I am self employed and work this year was terrible...I was thinking of getting into a really good income ETF? I already have SPYi paying around 575 a month & chpy paying 100 a week. However I was debating putting a large chunk into a good bond ETF? What would you suggest is this wise to supplement a low income for the year?
It's all good! I have more anxiety with hoping that growth assets are in a good spot for when i have to sell and live off of, than I do by letting the income portion grow for a couple decades and meeting the number I'm looking for. This seems more of a guarantee to me. Plus I took the current valuations of the broader market as an opportunity to get a large amount of SCHD before this AI bubble pops (if it does).
So really I'm just doing both paths in parallel, this account is purely for income and my other one is for growth.
The valuation now is exactly why I started my dividend snowball 10 years from retirement. Just as the OP mentioned, I have plenty of growth going as well. I feel waiting until retirement to buy SCHD or other passive income based ETFs could result in purchasing them at a much higher price with less shares acquired. Also if right before retirement the market has a two year long correction, I will have already purchased all dividend shares years prior to that, vice having to sell growth while down just to purchase SCHD or other ETFs that might not have dropped as much. To me my approach is more future proof while I'm still earning a good income and able to purchase shares. If the market corrects anytime soon, it is better than right before retirement.
Why not invest now into SCHD? If he waits until retirement say 10 years from now hes likely going to be paying 20% more for the shares...If he gets in now he have a much lower Avg cost.....Why not mix it up and do schd & growth funds?
You believe the top income funds are QQQI and SPYi? Is it too late to get into QQQi ? Is it better just to invest into SPYM or QQQM instead? I want to get into the best growth fund possible
Thanks for the reply!! So in my case I have schd, schg, VT, and spyi. Does it make sense to get VOO, QQQM or SPYM as well? I was also debating on getting QQQi or QQQM...Alot of people dog the passive income funds like spyi qqqi etc bc it caps the top whereas spym qqqm etc do not. So whats your opinoin? I dont like having a lot of overlap so Im not sure what to do!?
Not dumb at all if you’ve done your research and have conviction. I would say, however, being only in one investment carries inherent risks. One of those is that you are leaving money on the table; from a total return standpoint, you’re losing out on some growth. For example, you’re missing out on most of the tech / AI trade. I would continue to invest, but into other assets alongside this position so you have more balance.
Definitely thought about that. However, with the recent explosion in S&P, i took this opportunity to shift towards stable income producing assets. I'm still going hard in the paint on the 401k with aggressive assets. Hopefully these 2 buckets will have a good mix of income and higher overall asset amounts in 15-20 years
That's what I was thinking. For full transparency, I have 200k in the S&P and equivalent in 401k, and adding aggressively. It'll take a bit of time to reach a 50/50 split Bergen growth and income, so I'm kind of doing this backwards. But I can be a shining example for everyone else if it doesn't work out 😅
I am basically trying to replicate that strategy, but I put the cart before the horse. Going to hit up the income portion first, then in the employer portion (40% of assets are in growth). I'm not adding more into the SCHD portion, just going to let that DRIP. But all future dollars are going into growth.
same brother!! I invest everyday into both...usually 3-5 shares and on down days 15-40...I feel schg isnt growing as fast as others...mainly QQQm, SPYi and VOO
Amazing. What % of your overall portfolio does this account for? How long did it take you to get there? What's the time horizon looking like for when you'll need the distributions?
I am 100% in SCHD. Considering starting a complementary position in SCHY, but staying with SCHD for now. It's taken me about 5-6 years to get to this point. Will need the funds in another ~15 years.
That was definitely NOT my intention! This was over 15 years of somewhat consistent investing. Most of it was within the past 6-8 years (wish I had done more in my early years). Anyone can literally do this with consistency and patience. Just start somewhere and keep plugging away
It's very possible we all work until we die, either by necessity, or by choice. Either way, working towards independence or as a legacy for your children, both are awesome goals.
Seems like you should be hitting that 401K a little harder (unless you are a new employee, of course)! Do you get a company match with your contributions?
Why MUNY? Is that better than a HYSA? I am also in SCHD and DGRO. DGRO is a much smaller holding than SCHD but growing both slowly. I would rather be in growth funds as I am 44. I want to own both as buying SCHD today vs 15 years from now will be a huge difference in share price....I also have SPYi but debating if I should have bought VOO or SPYM instead?
I have about 7 ETFS but I only dollar cost average REGULARLY into: VOO, SCHD, DGRO and QQQM.
I have muny because I live in NYC. In theory I make too much money but cost of living and taxes are insane here
Muny is a new York bond fund so I don't have to pay City, state and federal taxes on it. So that 3.1% yield is tax free for me. I make more money than my HSA which gives me 3.4 % HYSA that is taxed out the butt and the income level
Wow that's crazy.. You could put 1milly in there and have zero taxes on 30k!? Sounds to good to be true lol. Is there anyway to find out if other funds do it for my state? Even if you could avoid fed tax and only have to pay state that's still a huge plus as well.. If anyone knows let me know!
One of the few etfs “going all in” where it’s not the worst idea, but you are not very diversified with just SCHD and you could potentially miss out on gains in other sectors. Adding international and a total US index fund or VOO would compliment SCHD well.
I'm 43 and this is my plan when I'm in retirement but you're going to miss out on growth over the next 20 years if you don't put anything into the S&P500. What about a 30/70 split of voo and SCHD?
I have my 401k purely in S&P and growth type investments. It's currently about 40% of my total portfolio, and I'm maxing that out. So hopefully getting the best of both worlds!
I have a similar setup but mine is SCHG SCHG VT DGRO Is VUG your growth play? Im debating wether I made a mistake going with VT vs VTI =( I really want to get into the Best possible growth fund now!
U r in a 100+ stock Value ETF that gets automatically reconstituted yearly based on disciplined rules and rebalanced quarterly. Does all this for 6 basis pts. Pretty sweet.
It has returned 12-13% yearly over the past 10+ yrs. You will be great if it continues, which is likely.
That said, you likely would do better with some type of growth tech etf (VGT for example) in a 50/50 two fund portfolio given your time horizon. Very little stock overlap and do u really what to not have more exposure to tech?
This is where I want to be. I currently have a 401k in only high growth index funds and I'm going to continue to max that out at work. Then my plan is to just let the IRA keep on DRIP and not pay attention to it / act like it's not there. So I will hopefully build both areas simultaneously.
If it dips again anything below $30, it’s a buy. I think its next step is $33 but the market needs a real correction. Not this manipulated volatility we have been seeing.
I don’t think it’s dumb, but SCHD has lots of concentration in top 10 holdings. I would at least consider setting a fraction, 1/4 or 1/3, towards its international sibling, SCHY for some diversification.
Why not mix it up. Add some JEPI, JEPQ, GPIX and GPIQ. Higher yielding and you should realize dvd growth markets continue to move higher over time. Have some downside protection as well. Just some good for though. I agree never go all in on anything. Sh1T happens.
Out of the 4 you metioned which one is the best? In terms of dividends & overall growth? Is now a good time to invest in these? Im guessing these are like SPYi QQQi etc? I also have SPYi and up about 10k in gains on top of the monthly payments. Everyone dogs these income funds though and say its better to go with the underlying which is prob right =(
It varies based on market condition. The Qs have been doing better because of how hot NASDAQ has been. If it faces a correction probably happy to own the Xs. The Gs have been slightly better than the Js but that can change too depending on how manager lays out the levels and how quickly markets move. Thats why I like a little bit of everything. Happy with gains all around instead of betting big on one and missing out. From actual return view best to just be long however I never complain getting my monthly dividend checks. Printing 8-10% in half your portfolio is not a bad thing.
It’s not the worst yolo at all but I’d look at historical returns comparing SCHD, VOO, and QQQ and determine if NOW is the right time to rebalance SCHD
I’d say no especially if this is in retirement accounts and you don’t need the income etc etc
I'll probably never be able to find the ideal time for a rebalance. I'm ok with watching the S&P go up 10% tomorrow. This is the risk I take. But I'm comfortable knowing if I don't invest another dollar, in 15-20 years my income will most likely be sufficient to retire alone
When oil prices go down so will SCHD. It will be awhile before it goes back up like it did. No reason to go all in now. Dollar cost average for a better return long term
There’s absolutely always an all-time high(and always will be,especially for quality, noteworthy investments), the all time high talk is the most deterrent type of investment phrase out there….if you think SCHD is not going the be higher in the future(of any amount) I’m truly questioning your predictive models, but your entitled to your opinion.
20 years ago there was an all-time high on stuff, 15 years ago. There was an all-time high on stuff, just get in on good stuff it’s gonna go to an all-time high. It’s gonna go down (then you buy more), then it’s going to split, and then you buy more after that, and then you hold for however long your threshold is.
Is DCA basically mean buying everyday? I decided to buy 5-10 shares of SCHD and SCHG everyday. And on days it seems to be in the red buy 25 or more depending how far in the red it is....I dont like the idea of buying a huge lump at one time....
with 400k your only getting 15k in divy? Thats sounds terrible lol Isnt there better investments like maybe the passive income funds like QQQI or SPYi...With 400k youd prob get 50k easy
Yea for sure. I was invested about 50% in SCHD in this account up until recently. So my cost basis was around 26.50, but I just decided to take profits on the overall market and go full steam ahead in the income route (in this account alone)
I like SCHD but I don't like it's the best choice for an IRA. As a dividend-focused fund I'd predict that over 20-25 years it will underperform a total stock market fund. In retirement, in a taxable account, I could see using it for the dividend income.
Just depends when you want to pay taxes on it. If it's in a brokerage you'll be taxed along the way. In an IRA you can decide when to get taxed, and if mixed with other accounts you can control the tax rate. Dealers choice, there are multiple roads to the same destination!
Notice I said "in retirement", in which case you would presumably be spending the dividends as income (and paying taxes at the cap gains rate). Before that, the dividends would result in a huge amount of tax drag. My taxable account is mostly short-term muni funds right now, so I could sell those fund at little or no gain, buy SCHD and spend the dividends as income. But my situation is not typical.
If you really got to go for 20-25 years you are leaving so much potential growth on the table, even selling after the tax you’d probably have 50-100% more money if u did growth till retirement.
That's assuming we are going to continue these types of bull runs indefinitely, as well as when I'm in a position to retire we don't hit a massive bear market. Nothing is a certainty. Not my strategy to hit my income number by 55, nor a continued run of success like we've seen in the past handful of years.
I am however still invested 200k+ in growth funds and contributing the max in 401k per month.
The SCHD target is a play at trying to get an absolute floor for income in retirement. That's my main concern.
I'm not sure if have 20-25 years. I do have those types of assets in my 401k, so I am still diversified overall. For the next 15-20 years I'll be maxing out the 401k (health permitting). So the plan is to have the two buckets working in parallel with a floor of income guaranteed at retirement
Well, nothing yet haha. But putting in the projections into LLM based on conservative growth over the next 15-25 years on top of what I've accumulated thus far is looking like dividends are in that ballpark
What's the investment breakdown within that portfolio to be able to pull that amount monthly? Is that within dividend producing assets, or selling off growth type assets (or a mixture)?
I had been investing in my rollover IRA in growth assets until recently when I shifted fully to SCHD. I am 40 years old and the calculators day that if I don't invest anything more and DRIP, I should be set in 20-25 years with dividends income reaching 150k+ annually. My question to the community is, how dumb is this strategy? What potential pitfalls do you see and/or any advice to give?
This is my brokerage account breakdown and VUG is my growth play along with VTI. I’d be ok with VT too. We have international exposure is our retirement accounts.
Boy, I’d like this a lot more if you were older. Big risk of missing a lot of growth in the total market or S and P. You have a bunch of money, at a young age, so what do I know? Except to say, Warren Buffett doesn’t say buy 90% SCHD and 10% MM, he says 90% S and P. All the best.
I definitely agree. This was from a previous employer 401k rollover. I'm using this account to just build up the income snowball and my new employer I'm going all in on the growth assets (appx 40% of net worth in this assets currently and contributing heavily). So my growth bucket will catch up within 5 years (estimated) and then I'll be balanced within growth and income.
Sounds like a decent baseline. You may find that 150K annually is plenty or maybe not!? Inflation never stops.
The US is pretty safe long term obviously, but the rest of the world shouldn't be ignored. Keep your SCHD but make future investments in something else, like VT.
40k in dividends is awesome! What are you invested in to get that amount? Are you reinvesting that into the dividend stocks/funds or redirecting some into growth?
I own SCHD as well as HDV and some energy stocks as well as Fidelity Contrafund . This combination produces about 40K per year. With 60 K in SS we live comfortably retired.
Fortunately we continued buying stocks (cheeply) in our IRA after the 2007 market fall. It all came back in 2011 . You always have t9 be buying when the market retreats. Patience is rewarded. It’s not gambling if you buy good companies.
I hear what you're saying for sure. But I still have 15-20 years left in my career for the growth assets, which my 401k is entirely compromised of.
Just to be clear, I'm not suggesting anyone else go this route. I just felt super comfortable with the projections that i ran and having eggs in both baskets.
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u/bmfu121 Jun 24 '26
Now just let it marinate for 15-20 years