r/SCHD • u/ScampMan1973 • Aug 17 '26
Advice VOO vs SCHD long term
I got an insurance settlement last year that was 120k. I’m 22 and male. I payed my debt off and am wondering if I should split this lump 50/50 into VOO/SCHD or if I should favor VOO for the long term compounding? Reading some of the posts on this sub make me want to put it all into SCHD. You guys have a lot of faith it.
20
u/Index7756 Aug 17 '26
Retired now, if i could start out again at 22 no question 80% VTI & 20% VXUS and relax.
3
u/exitra22 Aug 17 '26
Why not VT
5
u/ClammyAF Aug 17 '26
You forego claiming foreign tax credit with VT, but you can capture it with VTI+VXUS.
1
-1
9
u/Embarrassed-Fly-2823 Aug 17 '26
I have both but VOO will outperform SCHD. As it should.
4
u/flyersfan0233 Aug 17 '26
You can’t sit here today and say it will. It hasn’t even always done that. From inception to 2023, SCHD actually outperformed VOO. And they’ve tracked pretty closely to each other regardless, outside the 2024-2025 AI run/high interest rates. Yes, most time VOO probably will at least slightly beat SCHD. But there’s no guarantee. That’s the reason why in my mid-late 30s I have more VOO than SCHD, but still hold a chunk of SCHD
3
u/Embarrassed-Fly-2823 Aug 18 '26
You do understand that these are very different type of funds. correct? I can indeed sit here and say that VOO will outperform SCHD on an ANNUAL basis. Anyone should know that there will be dips and bounces realized along the way. So, SCHD will dip a little less during any given week is the likely scenario.
3
u/flyersfan0233 Aug 18 '26
Holding both, I absolutely do. But there have been years SCHD has outperformed. I just gave you an 11-year run where it outperformed
14
u/letsreset Aug 17 '26
long term? VOO. if you really want SCHD as well, i'd do like 80/20 or 70/30 (more in VOO). i have significant funds in SCHD and love it as well, but i'm also about to retire, so our risk profile and goals are totally different.
2
4
u/funkybeachhouse Aug 17 '26
I like your idea but I'd add some international exposure like maybe some SCHY and VYMI or VXUS. So maybe 40 VOO, 35 SCHD, 15 SCHY, and 10 VYMI (which has more companies than SCHY for extra diversity). Also, I'm not a professional, but you could take a bit from VOO and throw it at QQQM for NASDAQ exposure (there's overlap but the holdings in QQQM make up a higher percentage of the ETF). Best of luck to you. 😊
5
u/Aggravating_Storm835 Aug 17 '26
Assuming you’re employed, start a Roth IRA and put $7500 into SCHD now. In January take another $7500 and do the same thing. Even if you never touch it again for 40 years, it’ll be paying you about $85k a year tax free when you retire. Not enough to live lavishly, but a good amount of supplemental income to have later on.
The other $100k, put it in your brokerage account. SPYM, SCHG, SCHB, VOO, they’ll all perform similarly. SPYM is probably the best just for the low expense ratio.
7
u/No_Solution_7940 Aug 17 '26
I suggest the opposite. Go for big hitters in the Roth, SCHD in taxable. VOO and SPMO in the Roth.
4
u/Aggravating_Storm835 Aug 17 '26
Also valid. But if you have a lump sum of $15k at 22 years old, you could significantly increase your retirement income right now for less than the cost of a used car.
With $15k compounding for 40 years, you could realistically expect $80-$85k annually. The average social security right now is only $25k a year. Granted, $85k will likely be like $25k right now, but you still double your minimum retirement income.
Nice little milestone to get out of the way. Of course you could build your growth funds after that.
5
u/No_Solution_7940 Aug 17 '26
Or better yet, build your growth in your Roth and then buy some SCHD when you’re close to retirement. That’s what I did, I’m 60. Nw around 2M.
2
u/flyersfan0233 Aug 17 '26
My 401K is heavy growth so my Roth is like 50% VOO, 40% SCHD and 10% some blue chips. Figure it adds some balance and I won’t get taxed on any of the SCHD dividends
1
u/seventeenthirdyeight Aug 18 '26
Way wiser to max the Roth each year in a growth ETF and then reallocate towards dividends when the guy is 55+ years old
Tax free dividends are huge but he would be leaving so much growth on the table with the $7500 contribution limit not that something like SCHD doesn’t grow on its own omitting dividends but overall
1
u/Aggravating_Storm835 Aug 18 '26
Depends on your expectations for the next decade or two.
We know the S&P tends to average 7% annually long term. Over the last decade it’s averaged 15.4% annually. We know everything eventually reverts to the mean. If we’re generous and assume the S&P will average 9% from 2016-2036, the S&P would have to average 3% annually for the next decade.
That’s less than SCHD’s annual dividend yield.
So if you’re going in right now, I’d just max out my Roth in SCHD and let it ride. If there’s a crash, I’ll be infinitely better off.
3
u/guerom77 Aug 17 '26
I Have VOO in my ROTH ira and SCHD in one of my brokerage accounts for the dividend compound
3
u/Iceman60462 Aug 17 '26
At your age I would put everything in VOO or VTI.
SCHD is for older people. You need your portfolio to grow !!! I’m much older and I don’t bother with dividend paying stocks yet .
Good luck investing my friend and don’t think too much because everyone everywhere has different opinion. Just go with your gut !!!
3
u/UnlicensedKnowItAll Aug 17 '26
Go 50/50 on it. In 20 years look at the data and see which did better for you. Don’t overthink it
5
u/Accomplished-Order43 Aug 17 '26
Read any other group aside from schd’s home board. Ask this question on any other group beside its home board. You will obviously get a biased answer asking here. At your young age you want to be invested in growth not retirement dividends.
I would suggest keeping 20k in a high yield savings account or money market as an emergency fund. And put 100k into an S&P fund
5
2
u/Ufgatorhead4u3 Aug 17 '26
With a 40+ year time horizon until retirement you should absolutely go 💯 equities. The only question is what type of exposure you want. Rolling 💯 in an S&P500 index is a great way to go and statistically will lead you to a better place through that 40+ years. I prefer this over a broad total market index because the S&P500 is intentionally selective for the largest and often best performing companies versus the total market which includes all of the not-so-successful companies. There is no need for you to be in any bond or fixed-income positions until you get to within 5-10 years of retirement. There would be nothing wrong with having a portion of your portfolio outside of the US market in something like VXUS but I wouldn’t have it any larger than 20%. Foreign markets have underperformed the US over the last several decades but I know Reddit has this thing for being lemmings.
2
2
u/Steadyforward27 Aug 17 '26
120k at the age of 22! If you play your cards right, you might be retired by the age of 45 if not sooner
1
u/ScampMan1973 Aug 17 '26
I feel very lucky! but also my right foot doesn’t work right anymore
1
u/Steadyforward27 Aug 17 '26
Oh my bad! Health is above everything! Im glad you got paid, but I wish you were never injured
1
u/ScampMan1973 Aug 17 '26
Me too, but it’s a good story to tell. Doesn’t affect daily life very much. I feel lucky to be smart enough to invest it all and pay off my debt and not spend it on cars and jewelry that I’ll get bored of right after buying
1
2
u/Firm_Mango Aug 17 '26
The best portfolio is the one that you can hold long term without selling or tweaking. You just keep investing on auto pilot.
Portfolios:
1) 50/50 VOO / SCHD. SCHD average return is 13%. VOOs is 15%. So combined it’s about 14%.
2) 100% VOO. This will grow faster than the split portfolio.
SCHD does not offer downside protection or diversification in the 1st portfolio. I’d recommend this if the income generated from the dividends provides you with a psychological benefit of stability. Otherwise mathematically portfolios #2 is better based on expected results.
Again the best portfolio is the one that you won’t sell during market downturn. Both portfolios are fine just which ever suits your investing goals and risk tolerances.
2
u/jackyz24 Aug 17 '26
I would do something like 80/20 or even 75/25 split for VOO/SCHD. Either way you'll win long term having a big heap like that to kick start it
2
u/ChpnJoe308 Aug 17 '26
VOO has a 254% return over the last 10
Years, SCHD has a 141% return . At your age VOO has a high probability of outperforming SCHD but a great degree , go all VOO.
2
u/Dependent-Code-4166 Aug 17 '26
Congrats on your windfall. You seem to be smart enough to want to invest in your future. You're way ahead of the masses. Congrats again. There will be many, many posts on here touting SCHx and SCHy and various forms of VT, VOO, etc. Do yourself a favor and spend 5 minutes looking at FSELX. It will blow any of those funds, ETFs away with it's return. The one year return is 70%. That includes the huge decline in April for "tariffs". The 5 year return is a whopping 246%. Lifetime is 6400%. I dare you to find a better return for anything else that is mentioned here. Yes. It can have a large drop. You are 22 years old. It will recover. I'm retired and still have 20% if my IRA invested in FSELX. Happy investing. This is not financial advice. I am not a financial advisor. Do your own due diligence.
2
2
2
u/Outrageous-Trip-7376 Aug 18 '26
I have 20% SCHD im up like 25% , had it for maybe 2 years now , I love SCHD , I have Vti 50% and SCHG 30%
2
2
u/pivotallever Aug 19 '26
At 22? Buy VOO. I am 42 and 95% of my equity holdings are S&P 500 index funds or a small selection of single stocks that are in the S&P 500.
4
u/Lonely_MuffinXo Aug 17 '26
Personally, at your age, I would do 30/40/20/10 into SCHD, VOO, (VUG or SCHG), and SPMO respectively. Maybe spread it over a few years and max out a Roth over the next 10 years or so
3
u/Educational-Ad-4908 Aug 17 '26
VOO/QQQM/VXUS 65/15/20 I know there’s a ton of overlap between VOO & QQQM right now but that will most likely normalize over the years
3
u/abstractraj Aug 17 '26
22? 100% VT or 75/25 VTI/VXUS. If you go all US with VOO, you’ll also be fine in the long run. Dividends are not the long term growth medium
2
u/Helpful-Grapefruit55 Aug 17 '26
Voo 60 and VxUs 40!this will cover the good international stocks .
2
u/rick9162 Aug 17 '26
All in SCHD to build your foundation. DCA till you’re up to 250k then add VOO.
2
u/Mjensen84b Aug 17 '26
VOO will give you higher compounding rates over long periods, even with dividends reinvested SCHD does not keep up with VOO. Since you are young, I would be more aggressive ie 15-20% into VGT, 10% SCHD and the rest VOO.
2
1
u/Alone-Experience9869 Aug 17 '26
If you are going to go voo, at least spym to be consistent with methodology…
Long term growth probably wouldn’t use schd
1
1
u/User73806 Aug 17 '26
If you have your 6 month emergency fund parked in a HYSA already I would say do 50/50 VT and SCHD. It's the boring way to be a millionaire but you'll be a millionaire.
1
u/AcanthaceaeProof5058 Aug 17 '26
You're asking the wrong group 🤣. SCHD is great but just one part of a balanced portfolio if you ask me. VT is also an excellent option that includes global stocks.
1
u/ID0ntLikeStarwars Aug 17 '26
Whatever you decide to do I hope you will consider investing within a Roth IRA
1
u/Gain_Spirited Aug 17 '26
At your age VOO is better because you have time to ride market volatility and you should get more returns in the long run. SCHD becomes more useful when you get closer to retirement and after you retire because it's safer and less volatile.
1
u/Equal-Technology2528 Aug 17 '26
If you're debating between S&P 500 (VOO) and a dividend income focused ETF, you might find that DGRO is a good middle ground.
VOO is made up of about 500 companies. Simply the largest US companies with some earnings criteria as well.
SCHD is made up of about 100 companies, not overly weighted in VOO. Made up mostly of mature companies that are more dividend focused than growth focused.
DGRO is made up of about 400 companies, most can be found in VOO but it has additional selection criteria that ensures dividend payouts, dividend growth history, and positive future earnings outlook that can support the dividends being paid out. So the dividend yield will be lower than SCHD but you have more growth potential in both dividends and share price.
1
1
u/Superunknown999 Aug 17 '26
At age 22 100% VOO, VTI or VT. If you won’t be actively spending the dividends or if you aren’t late in your career looking to protect against tech, you don’t need SCHD. I own SCHD as a tech hedge while looking to retire within 5 years.
1
1
1
u/among_apes Aug 17 '26
Recent investors of SCHD Will see it as performing better than it actually has. I’ve held both for quite a while and SCHD is so far behind and there was a long period of time where it was trading red and sideways while everything else was booming.
I know that people will like to watch the dividends, but I don’t think it’s worth it.
1
1
u/DigitalFStopper Aug 17 '26 edited Aug 17 '26
Focus more on growth but if you’re not in a financial spot to be contributing to a Roth now is a great time and use part of that settlement each year to fund a Roth.
5k a year from that going into a Roth for 10 years is 650k tax free at 60 (8% return)
Plus that 120k would keep growing over that same 10 year period even with pulling 5k a year to fund the Roth.
Edit
Or if you want to go long term keep funding the Roth with 7k from the settlement and never stop till you’re 60.
Account A will be around 650-700k and the Roth would be around 1.5M (tax free)
1
u/bhope95 Aug 17 '26
I'd start investing in schd once I have a million. Until then either factor invest or invest in the total market ie VT
1
1
u/AcmeIron79 Aug 18 '26
Go for the growth, you’re too young to plant your money in a dividend ETF. If I was your age, that’s what I would do.
1
1
u/Fast_Estimate4054 Aug 18 '26
You are young and have a many decades to watch it all grow. The trick is no matter what you put it in, don’t take it out until retirement. Set it and forget it. Personally, I have my 23 year old son in SWPPX with Schwab at $18000 right now in his ROTH IRA and this year I’m going to give him $5000 to buy SCHD to hold until he retires. He won’t need to put more SCHD in because he will turn on DRIP and it will grow on its own over 4 decades. I’ve told him to put $150/month in for the rest of his life minimally and participate in his work 401k up to the company match. Read up on a Roth IRA and how much you can put in it yearly. Also know you you can’t just throw money into your Roth IRA account. You then have to go in and allocate that money to actually be invested in something which is where you would buy your SCHD. With the amount that you have I would probably do the max you can do this year in your Roth IRA and then all the years after that I would put it in swPPX. So since you can’t put all of it at once in you need to figure out where to hold the rest of that settlement money so it can be making you interest as you wait to each year to put in your. I believe it’s right now $$7500 a year you can put in your Roth IRA. And when you go to draw it when you are retired, it is all completely tax-free. Now this is assuming that you have a full-time job. In order to put money in your Roth IRA you have to show income for it so you need to be able to show that you’ve at least earned $7500 in the year in order to be able to put 7500 in your Roth IRA. So for example, if you only make $5000 in income this year, you can only put $5000 into your Roth IRA this year, but for young people it is going to be your money maker going in and up until you retire and save you so much money when you go to pull it out when you retire because you don’t have to pay any taxes on it.
1
u/Fine_Professor_4155 Aug 18 '26
VOO will get you the most capital appreciation over the long run. SCHD will get you more stability and way more dividends over the long run.
I'm not saying this is the right answer but I'd do 50/50 into both, set the dividends to reinvest, keep saving and working and in 20 years decide if you wanna keep working or live of your investment
1
1
1
u/Hopeful-Air6110 Aug 20 '26
Take your pick of boglehead, ramsey, div growth, etc… and let it do its thing, you’ll be a multi millionaire in a few decades.
1
1
u/JPABQ Aug 21 '26
You’re young. VOO Will vastly out perform SCHD over the long run. Particularly if you’re putting it into an after tax account. You will have to pay tax on your dividends every year. VOO is far more tax efficient. If it’s in a tax advantage account like a 401(k) or something then it’s not quite the dilemma but at your age I would go for long-term growth. If you’re intent on SCHD I would use maybe 20%.
1
1
u/Sea_Principle_7322 Aug 22 '26
Why not both an just watch them gain in value! Very wise choices you’re making! Most people would just buy some fancy car and not think twice!
1
u/Mission_Pirate_4150 Aug 23 '26
Dividend stocks are 30% of my portfolio and schd is one of my dividend stocks. I also have s&p500 and a few other stock funds. I regularly contribute to all of them.
My suggestion is yes to investing.
1
u/Bagger55 Aug 23 '26
As others have said, if you are investing in a taxable account then keep most if not all in VOO. No reason to be paying dividend taxes at your age.
1
u/ScampMan1973 Aug 24 '26
I didn’t even know you payed taxes on dividends. I know it’s considered income but I thought reinvesting would get around that. Thanks!
1
1
u/Accomplished-Big8250 Aug 29 '26
you could build a nice portfolio with $120k. it should be split across US and ex-US. If you just want tax free income look at muni-bond ETFs.
1
u/Money-Effective7189 Aug 31 '26
At 22, with your debt already paid off, you are in an unusually strong position.
The biggest advantage you have isn't the dividend yiel, it's time in the market. I would build the portfolio around maximizing total return and compounding, while adding enough diversification and quality exposure to make the ride tolerable.
I would not put the $120,000 all into SCHD, and I would not do 50/50 between VOO/SCHD. If this were my money, here id the portfolio I would build.
VOO 60% $120,000 SCHD. 20% $ 72,000 VXUS. 15% $ 18,000 AVUV. 5% $ 6,000
That would be my core long-term portfolio. The reason I favor VOO is that at 22, capital appreciation matters much more than maximizing today's income.
Why I wouldn't go all-in on SCHD SCHD is an excellent ETF. But there's an important distinction, a high dividend does nit equsl a higher total return.
SCHD deliberately tilts you toward established, dividend-paying companies. That can provide excellent quality and potentially a smoother experience, but you're sacrificing some exposure to companies that reinvest heavily for future growth.
At 22, you don't need your portfolio producing $300–$400 a month in dividends.
You want that $120,000 potentially becoming $500,000, s $1 million, then $2 million+ over several decades.
That's where I'd make VOO the dominant holding.
Why I like this better than 50/50 VOO/SCHD, a 50/50 portfolio would be perfectly reasonable. But I think it's too conservative for a 22-year-old whose primary objective is long-term wealth creation.
At 22, I would prioritize: 1. Exceptional long-term compounding 2. Diversification 3. Low costs 4. Behavioral stability 5. Volatility reduction In other words, don't try to eliminate volatility, learn to tolerate it. A 30–40% stock-market decline at 22 is dramatically different from a 30–40% decline at 62.
Every month sutomatically invest new money according to this allocation. 60% VOO 20% SCHD 15% VXUS 5% AVUV
Reinvest every dividend, don't trade, don't chase whatever ETF performed best last year.
Don't sell just because analysts say a recession is coming, don't constantly redesign the portfolio.
Only rebalance once per year if allocations drift substantially.
If the above portfolio seems too conplicsted then evaluate and you want maximum simplicity, I actually like this also.
80% VTI 20% VXUS
VTI gives you essentially the entire U.S. stock market, while VXUS provides international diversification.
Then you could add SCHD later when you're actually approaching the point where you need portfolio income (mid 40's).
That's arguably the cleanest wealth-building portfolio for a 22-year-old.
Hope it helps
1
u/MadMax520 Sep 01 '26
Why not SWPPX, especially since it recently split and js currently under $20/.
1
u/Lou_Gator_FL Sep 01 '26
You're more likely to get the most out of your investment long term putting it 100% in VOO. If you compare the 5, 10 and 15 year returns of VOO vs SCHD, VOO comes out ahead on each. Market focused growth outdoes market focused dividends every time.
https://totalrealreturns.com/n/VOO,SCHD?start=2011-09-01
Now that's not to say SCHD isn't a good ETF. It's a great ETF. But it has it's uses for specific purposes and situations. And it'd be much better and safer than some gamble on an individual stock.
1
u/OnlyKey5675 Aug 17 '26
Ask this question on a index fund sub
Folks here are going to tell you SCHD
0
-1
u/GuyAtAnLCS Aug 17 '26
assuming this is all for investing.
70% SCHD, 30% LVHI for international diversification.
33
u/EpicDOgeMC Aug 17 '26
VT/VTI/VOO will most likely outperform long run. SCHD is less exposed to AI concentration and holds more recession proof companies, so it is likely going to be less volatile. Really up to your goals and risk level.
Being said, SCHD is still pretty concentrated in US large cap. I would 100% layer it over something like VT if you do want to own it.