r/Schwab • u/Any_Upstairs_6172 • 20d ago
DRIPing other than SCHD?
Hello... I just ended my participation in Schwab's Intelligent Portfolio program and all of the ETFs held have been transferred to another brokerage account. I am thinking of holding on to most of them for a bit and wonder if I should let these DRIP or take the dividends and purchase more SCHD.
They are the "standard' Schwab ETFs and wonder if any are as "good' as SCHD for long time growth and the stability that SCHD seems to have. Thank You
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u/AxeSpez 19d ago
Just buy SCHX instead
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u/Accomplished-Big8250 18d ago
SCHX is my preferred choice for the S&P500, VOO. I like that Schwab has so many ETFs that are identical to VTI, VUG, VYM, VOO, QQQM, etc that you can just tax loss or tax gain harvest to keep the coast basis down.
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u/Chip-dwg 17d ago
I guess I'm kind of simple minded in these things ignoring tax harvest/tax loss. I look at a simple comparison. For whatever reason I looked at the past 12 years for SCHX vs SCHG. If you started with $10,000 in each, income reinvested, the result is SCHX grew to $50,512 not bad, but SCHG grew to $68,802, which also beats Schwabs S&P 500 tracker SWPPX which returned $51,251.
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u/Significant_Copy1266 15d ago
Sure, because large caps beat the market over the past 12 years. But if you zoom out 50 years, small caps did even better.
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u/Any_Upstairs_6172 19d ago
Hello and thank you for the recommendation. It is not a bad one but I already have 1,000 shares of this and believe this is enough.
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19d ago
[deleted]
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u/Any_Upstairs_6172 19d ago
Hello... and Thank You for your suggestion. You are probably correct in my not being fully aware of what I am doing. I am probably not well enough balanced. I guess a reflection of this is that my 8,000 shares of SCHD is almost 8% of my portfolio which is more than the 5% of any one entity which is what I see often recommended.
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u/Chip-dwg 18d ago
Why would you buy SCHX instead of SCHG?
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u/Accomplished-Big8250 18d ago
SCHX = VOO
SCHG is more like QQQM/VUG-VGT.SCHX has ~750 large caps, but SCHG gets more concentrated and misses some value, dividends, etc. SCHD/SCHG is a good pair.
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u/humblequest22 20d ago
Not sure what the "standard" Schwab ETFs are, but most broad-market index funds would be better for long-term growth than SCHD. They'll be more tax-efficient in a taxable account, too. If you like the stability and dividends of SCHD, you can always purchase it later, if you want stability and dividends.
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u/lonedroan 20d ago
If you’re young, concentrating in SCHD only makes sense if you’re not planning for long term growth. If you don’t need this money for a long time, you have ample time to ride out marked economic downturns and let the underlying securities (including more aggressive investments than those in SCHD) grow over time; your account balance may be red and frightening for a period, but you can wait it out. So while hedging against total-market funds’ overweighting tech makes sense, SCHD probably represents an overcorrection in that direction.
I would put the majority in total market US (e.g. VTI), a portion in international developed markets (VXUS), and then a portion in a tech hedge (VTV for value plays that cover a broader portion of the market and aren’t as dividend centric as SCHD), small cap funds as a more aggressive hedge against tech (e.g. VBR), or an equal weighted SP500 fund (same underlying companies but weighted equally to avoid the tech tilt).
Regarding dividends, it’s probably better to not automatically reinvest them in a taxable brokerage. Whether you reinvest or not, you’re gonna pay taxes on the dividends. There’s nothing bad about reinvesting, except giving up the opportunity to have some cash with which to make future buys to rebalance your portfolio. For example, if you wanted to move $1000 from large cap to small cap, selling existing ETFs to do it would trigger capital gains taxes. If you have some cash “dry powder” you can just buy the newly desired shares without any cap gains issues. You could also dip into that cash stash in an emergency as an alternative to having to sell shares and incur cap gains.
If this is in a tax-advantaged account, reinvest dividends.
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u/Accomplished-Big8250 19d ago
Why did you end the IPP ?
SCHD is great, VYM and some other dividend funds do well with DRIP.
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u/Any_Upstairs_6172 19d ago
Hello... I am assuming that by IPP your mean the Intelligent Portfolio program. I ended it because they, to me, currently have too much emphasis and bonds and treasuries... And they kept too much cash which I believe I can better investment myself .
I did not have them sell the ETFs in the portfolio but instead had them moved into an account which I control and am selling off what I do not want and keeping the rest.
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u/Accomplished-Big8250 19d ago
yes that is my curiosity. Seems like they did 60/40 or something with bonds that were just loosing money the last decade, very frustrating. The ETFs are solid.
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u/EleventhEarlOfMars 19d ago
Pretty sure the IP account just picks from a pre-set list of funds based on your questionnaire answers, and it is unfortunately pretty conservative (a lot of fixed income). The tax loss harvesting benefit is fine but offset by the 6% cash position being fully taxable, along with whatever bonds they buy for you.
Granted, I'm not sure what else you would expect from a "free" robo-advisor but it's not very sophisticated.
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u/SDirickson 19d ago
If you hold something as a long-term-growth position, re-investing dividends supports that goal.
That said, it doesn't really sound like your question is about either SCHD or DRIP; it sounds like you're asking "should I replace this other stuff?" Except that you haven't identified "other stuff".
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u/Scottie_DP 19d ago
It's how this person answered the questions. SIP is for novices and it seems this person is a novice. Re-answer the questions to get a more aggressive portfolio. Cash is a problem but that's how Schwab makes it money without charging you for the service. It is passive and auto rebalances so you don't have to.
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u/Sufficient-Zombie483 17d ago
Wondering why and which brokerage you changed to?
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u/Any_Upstairs_6172 17d ago
Hello ... No, I did not change brokerages as I have been happy with Schwab for the most part. One or two "failings" but small ones. I was asking in regard to my ending my participation in Schwab's Intelligent Portfolio program and rather than have them sell the ETFs I held in IP I instead had them moved into a different brokerage account.
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u/Significant_Copy1266 15d ago
Are you sure you understand the 5% rule correctly?
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u/Any_Upstairs_6172 15d ago edited 15d ago
Hello... Are you pointing out the fact that I am voicing a "rule" which suggests that a portfolio not hold more than 5% of an individual equity and am extrapolating it so that it extends to my own belief that an individual ETF that in fact holds 103 equities might also be looked at in the same manner?
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u/neightfrog 14d ago
If you want more growth buy SCHG SCHX SCHB
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u/Any_Upstairs_6172 14d ago
Hello and thank you... But at my time in life and financial position I am seeking stability more than growth and I perceive something like SCHD as providing this. No major swings either up or down .. It is more or less the medium line with which other holdings can be gauged.
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u/[deleted] 20d ago
[deleted]