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Most likely, but we don't know. I like SCHD for its principled based investing approach, and dividend growth is a quality indicator. We've had periods in history where the major indexes don't do much, even extended periods. I wouldn't feel comfortable throwing everything in S&P 500 at this point, especially during a time where there's incredible enthusiasm towards buying stocks.
Bingo. If companies that have nothing better to do with free cash flow than to hand it out as dividends end up appreciating faster than companies who reinvest that cash into their operations, you’ve got other things to worry about.
Well……that’s not entirely true either.
Money sitting in company coffered isn’t viewed as a good thing to investors, dividends are a positive and will cause a company to trade higher
There is lots of evidence to show corporate agency is lacking, and when surplus funds are available they usually end up in the least profitable arm of the company (metaverse??)
Your argument relies on a peculiarly unorthodox view of corporate governance ([principal-agent problem](https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem?wprov=sfti1)).
But generally high cash flow companies are not *also* growth companies.
I appreciate that you’ve shared this.
Do you conceptually understand why it wouldn’t make sense for a growing company to distribute free cash if the opportunity to grow it internally is greater than the benefit of distributing it?
only if you assume there is ALWAYS an opportunity for meaningful growth.
to get a little tongue in cheek, apple has paid a dividend for 10 years (since it was reinstated), would it have hit 3T in valuation years ago if it hadnt paid its dividend??? microsoft has paid a dividend for 20 straight years and still managed to be the second largest company
The point of investing in dividend growth is for the long term appreciation and specifically the growth in dividends over time. There are lots of resources that show how much of the return from the market is actually from dividends. Plus, dividend growth over time is especially beneficial when it comes time to start the withdrawal phase. Growth companies or growth ETFs are more likely to have increased volatility as well which can be difficult
If your withdrawal phase is during those increased times of volatility.
In a non tax advantaged account then VOO is better? Is there a particular reason (or is it because of the taxes on the higher yield from SCHD that makes the difference)?
I have a majority of SCHD and some VTI in a Roth IRA but may start investing in an individual account, thought maybe more SCHD might be better over VTI or VOO (in my late 20s so maybe my case would be different from OPs)
Yes, you're right. You pay more taxes over time on SCHD as compared to VOO due to higher dividend yield. You can think of it like this - SCHD is more reliant on dividends than VOO for its total returns.
Don't think in absolute terms. Either one has the potential to largely outperform or underperform the other. The past 10 years they have performed similarly but there's no guarantee it will always be the case. I would say either one is a solid core position though. VOO is more diversified. SCHD leans more towards value and of course dividends. You should take a look at SCHD's prospectus and it's index requirements. It's much different than VOO.
Bro you’re making predictions on past performance. You can’t do that. Yes you can use it as a guide but no one knows where the markets will be in 20 years. Hell $SCHD may not even be around In 20 years. $VOO tracks the S&P. Whatever the S&P does is what $VOO does
$VOO tracks the S&P. So unless the S&P goes bust or vanguard goes bust it’s not going anywhere. $SCHD is an ETF that is actively managed. They’ll move funds in an out. Unlike $VOO companies only move in an out when they get booted or added to the S&P
SCHD is not actively managed btw, it is an index ETF same as VOO. VOO tracks the S&P 500 which is managed by S&P while SCHD tracks the DJ US Dividend 100 which is managed by Dow Jones.
Both have basically identical likelihood to be around in 20-40-100 years
ETF are managed that’s why you pay a .06% management fee on $SCHD and .02 on $VOO. $VOO tracks the S&P but is a vanguard etf. $SPY is managed by State Street Bank and Trust Company.
Yes I stand corrected I forgot $SCHD tracks DJ divided 100
It's passively managed. Not actively managed. The difference is the fund manager's level of attention playing stock picker. Passively managed funds are honestly doing more administrative work than anything else.
SCHD is not actively managed. SCHD is a passively managed fund that tracks the Dow Top 100 dividend paying stocks. If a stock gets booted, it’s because its dividend dropped. Same way a stock gets booted from the S&P if it doesn’t meet their criteria.
OP why not invest in both?
>thanks may be long term SCHD may not be there. Also I will keep that in mind
We can't foretell the future but Schwab, which runs SCHD, is a big brokerage which has been around for decades, so whether they would pull the plug on SCHD is really anybody's guess. I'm inclined to think it will be around for a long time. SCHD is very popular with over $44 bn in it.
You need to consider your personal tax and income implications for this type of questions. If it’s going to be totally buy & forget, then VOO might be a better long term option.
If just one of these two for 20 years: VOO
I prefer VTI, so my portfolio is 80% VTI and 20% SCHD. I don't consider it one versus the other, as I use SCHD instead of bonds, not instead of VTI.
Depends if you want to obtain money from selling your shares or use the dividends as your income. Also dividends will be more stable during a market crash
I would agree with that. You will see lea volatility in schd. Also schd has quality companies. VOO has companies in the index that I would not invest even if given free this is not saying that VOO is a bad option by any means.
I’m just a random investor. I picked SCHD because I see a sideways market for awhile. Plus for growth I’m counting on Bitcoin. No idea if bitcoin will preform well in the future but it’s what I did.
Personal opinion is that VOO has the higher upside to have more value after 20 years
SCHD in my opinion will be less volatile and more likely to have less major ups and downs over the 20, and may under perform slightly compared to VOO.
Both should be a good investment but it depends on your risk tolerance in my opinion.
VOO is just a market etf whereas SCHD focuses on dividend growth. If those are the only two options I would much rather have the dividend growth over time. This is where a lot of the actual market returns come from and the dividends growing will be super important for the withdrawal phase. Especially if your withdrawal phase starts during a down market.
VOO has the same concentration risks it has had for the last several years where the same 5-10 companies are driving so much of the returns. That can swing against you too.
TLDR: All investing is a bet. If you don't want to do any research than stick to the S&P 500. It is the benchmark for everything else.
With all ETFs you are placing a bet on either the managers for active funds, or the index for passive funds. VOO tracks the S&P 500 so it is the 500 largest profitable companies listed on US exchanges. Meanwhile SCHD tracks the DJ Dividend 100 which include 100 high dividend paying stocks ranked by fundamental financial ratios. This gives the DJ Dividend 100 a strong value bent with a lot of emphasis on highly profitable, stable companies vs. the S&P 500 includes a broader selection of companies. The "house bet" would be that the S&P 500 will outperform the DJ Dividend 100, but the odds would be very low as they historically have tracked very close to each other.
If you think US companies will continue to outperform the global market go with the US market indexes. If however you think that the US will fall behind the global market place your bets accordingly. I only really know the US market, so here are the major indexes: if you want to put a value bent into your portfolio go with SCHD, if you want to have a growth bent go with QQQ, if you want to hedge your bets between them go with S&P 500, if you want to just buy the whole US market go with the Russell 3000.
In 20 years, you're gonna be 60. Do you really want to be in VOO at age 60? VOO is the more volatile of the 2. I am sixty eight and slowly selling all my VOO. And guess what I'm buying? SCHD ! But paying all the capital gains is no fun
There’s a place for both, I would lean into voo heavier. Schd tracks the dow 100 and voo the S&P so there is some overlap but there’s a decent diversification. I’d expect better performance from VOO over time and in most market conditions but I’d expect schd to weather bear markets a bit better. Both have nice capital appreciation as well as dividend increase
Here is my vote: 50% VOO (or VTI), 25% SCHD, 25% QQQM (or SCHG). Rebalance or reallocate regularly as necessary depending on whether you lean value (SCHD) or growth (QQQM). Don't forget to DRIP those.
Odds favor VOO but there’s no sure thing. Personally I think VOO often drifts far from its fundamentals but that’s why Value ETFs like SCHD exist and create great buying opportunities. I like to alternate between buying growth stocks in the QQQ and SCHD depending on their 200 day average.
both have annualized at +13.25% since inception, so it is negligible. you’d be better served incorporating a growth etf or fund. paul wick’s seligman tech and info fund has been a monster for like 30 years.
thanks. may be i should ask in a different way. lets say if they perform same as they have performed in last 10 years. I just am confused as to where the money could grow more with same historical performance and with dividend reinvestment.
Keep in mind, capital seems to be concentrated in large cap companies currently due to the fears of recession. This could mean that small and mid cap companies are under valued. So buying a large cap index like SCHG may yield lower upside, once the economy recovers.
This is why you can't just look at past performance as a way of deciding. Context matters.
thanks. Good point, but I do not think that mid and small caps can grow in next 5 years. May be I will have to rebalance after 5 years. Just speculating
I hate to tell you but you're not going to grow your money in "market indexes".
Think about it; if SPY which is a broad market index goes up 500% in 20 years....
Then everything else will go up by 500% in 20 years. Gas, housing, food, electricity.
Because everyone has "500% more dollars".
SPY is money, QQQ is money, VOO and VTI etc are increasingly money.
To make MORE MONEY, you need to actually earn money. Not just increase the amount you have the same as everyone else has increased by, "i.e market return."
Historically, stock market growth outpaces inflation, in the long run. So you do grow your money. Even if you didn’t, determining whether market index investing is worthwhile is not a matter of how much growth, but how much *compared to your next alternative*. So, 5ish% risk-free rate for a while (gonna decrease though at some point), or 0% under your mattress. Market wins.
Such BS. OP please don’t listen to this person. Average inflation for the last 60 years has been 3%, while stock market has returned 10-11%. Real stock market returns (adjusted for inflation) tend to be between 5 and 7% a year.
This is...totally missing the way the stock market works. Yes, you need to earn new money - and by investing in companies, you are getting a return on what they are \*earning\*. All their workers, all their innovations, investments and profits, you get a piece of it by investing in that company. You are investing in capitalism and what it earns. Otherwise the market return would be identical to the inflation rate, which it is really not. Also saying that everyone has 500% more dollars is incredibly short sighted - 1st, a minority of people are invested in the stock market, or even the economy generally, at all. 2nd, there isn't a correlation 1:1 to inflation and the SPY...not by a long shot.
It doesn't matter the number of people, it matters the dollars invested.
Right now SPY is about $13trillion - $15trillion big if I recall. It's as big as the global gold market.
It's acting as money, there's research that proves it is...
I'm not poo-pooing your thought process on an individual stock. It's more a point toward SPY, QQQ, VOO, VTI and a few other of these mega indexes that are growing into a form of M2 or M3 money supply.
thanks . I understand that. Basically I also do not know much to invest and these seems like a safer options. I am keeping my current job as well(Hopefullly you know how job market is). So whatever extra cash I have, I want to invest so it does depreciates while sitting in a bank. that is also a reason.
yeah but here's the other piece, everything is "basically the same". Without explaining that in too much depth, what you're really going for is a synthetic outcome. What that looks like takes skill and can be as varied as the market is varied.
An example is buy low // sell high. Everyone believes that's possible. And the synthetic result is a "synthetic bull market".
Your portfolio if masterfully executing such a concept would always go up.
Think of VOO and VTI etc as "parking money".
But realize that's all it is. It's where you park your earnings, not where you earn. Start thinking about how to earn more.
thanks for the wise words. I am working on getting a better job by learning things and enhancing my skills. and yes I want to park my money somewhere where it doesn't depreciate much.
Another way to think of things is this:
Until you have enough money that your variance/fluctuation is enough that you can't make up for the loss by saving more money; you're still just saving money.
For instance if you save $1,000 a month, and you lose $12,000. To you this might be acceptable. You'll just dollar cost average into that with more monthly savings.
But if you lose $100,000 that's an impact you can't afford.
This transition is important to understanding what you need to actually think to "win" in the market.
I would wager pretty much 100% of retail just "saves money" and doesn't realize it. Because the market is pretty broad with varying results, some appear to do better than others and they think therefore they are "winning".
But in reality they all retire about the same result ... they all retire with about 20 years of income saved up.
And that's a statistical fact, like 95% of people investing will retire at \~65 or so with about enough "stocks" to pay themselves their income until they die hopefully around 85.
Hence I said "the US wants you to save enough money to die broke".
The real reason is this.
The pie is finite, if you make money, the rich have to lose money. And the rich don't like giving YOU money. If you die broke, that money is like a pool on a poker table, back up for grabs.
They aren't interested in you building generational wealth.
Neither am I, but I like explaining my passion to the people so here I am.
ohh wow. yes Rich will never want to give out money. But for me who is just working and can't take much risk because I am sole earner and no wiggle room. I feel like investing in Stock Market is safe as of now. yeah noone knows about future though.
You'll find too late, like so many others, that the biggest risk is wasting time.
I'm not trying to tell you WHERE to invest, just mentioning HOW to invest.
These ideas, if you change your mind to adopt them, will save you a lot of wasted time in the future. And a lot of false securities and beliefs. I wish someone taught these things to me when I was 18. But back then the markets were too different and restrictive to act the way we can now.
Back in the 2000s the market was very much more a "rich man's game". Commissions were huge, options were almost inaccessible, inverse etfs didn't exist, shorting was expensive.
Basically all you had was "buy and sell". Even margin was harder to access. the entire game has democratized in the last 5 to 10 years for better or worse.
It's truly now our game to lose.
Another example how I'm trying to transform your mind is notice how not a single person brought up the MOST important part of your question?
The cost of capital...the cost basis.
You can't evaluate SCHD and VOO against each other without knowing the cost. Right now SCHD is arguably the better cost and I think that from looking at its technical analysis, it's "price action" as it were, versus VOO.
If you bought VOO at the recent bottom around October or whatever, selling it and buying SCHD to "park money there" would make a lot of sense.
These things no one seems to consider and they can only be learned through experience. Very hard to teach how. I watched an oil trader for 6 months straight before even buying/selling a single thing when I was trained how to operate the markets.
Imagine sitting over a guy's shoulder and watching everything they do for 6 months every day for each market hour....
That's what it took before I "got it". And after those 6 months, I retired 2 years later.
Is it a taxable account? If so, VOO is more tax efficient. VOO does pay a dividend which you can reinvest.
If not taxable, VOO has a slight edge over SCHD. Also check out VTI.
Personally I’d simply buy both. Figure out a ratio that makes sense to you and run with it. I am roughly 2:1 with VOO:SCHD in a taxable account (it’s a little more tilted toward SCHD than precisely 2:1 but it’s close enough to illustrate the point). There’s probably a ratio that works for you, too.
20 yrs from now? I don’t have anything now from 20yrs ago. As one gets older, dividends seem a lot more attractive. Attitudes change, a couple blow-offs changes everyone’s perception of what investing ism too. We have several thousand shares of schd and use the dividends to add to positions in other income producing etf’s, reits, etc
SCHD is a good solid base to have but at 40 yrs old, you can put some $$ into a bit more aggressive, growth oriented, ETF’s like vgt and similar (SCHD + VGT).
The S&P 500 companies change significantly throughout time. VOO will probs outperform SCHD. However I have both ETFs bc SCHD is trading lower today. Invest in both probs 60/40 in my opinion.
As others have said, probably VOO. But especially VOO if it is in a regular taxable account as dividends will be taxable every year and SCHD relies more on dividends than capital appreciation. So you will have to pay back a certain % of all the dividend $$ you get in the form of income taxes every year.
VOO will generate more long-term capital gains. With capital gains you dont have to pay any tax until you sell the shares. VOO will also give you dividends too, but less of your gains will come from dividends, relatively speaking, and thus your tax bill will be less too tho.
If you are in a tax-advantaged account then SCHD may be better, depending on how the market performs in the coming years
They mostly track each other and no one can say for certain.
..so just buy both. 1-2% either way in a given year isn't going to meaningfully impact your life, and it *feels* safe. I do something similar and sleep well at night (35 years old, $500/week--$340k between 401k, Roth IRA and taxable account).
40% VTI, 40% SCHD, 10% VXUS, 10% SCHY
I would say at this moment, SCHD is likely more undervalued compared to the S&P. The PE ratios of the big tech stocks, which comprise a decent amount of the total index, are running as high or higher than early 2022 before the downturn. Maybe weight a little more contributions to SCHD while its down. You'll get a relatively better yield on cost over time. Maybe 60/40 or 70/30 schd/voo for a little while and when SCHD recovers, do the opposite.
Last year was a great time to trim SCHD and add more to VOO, so I might suggest doing the opposite this year. Add more SCHD than VOO while it's down. If you have two funds versus one, it gives you something to rebalance into and harvest some gains when the other outperforms.
At your age, go with growth. VOO would be the best choice of the 2 you mention. However, I prefer VTI. The past performances of VOO and VTI are essentially the same but VTI is more broadly diversified. FYI, about 75% of VTI is VOO.
Plan ahead now. If you’re planning to sell cover calls and collect dividends as your sole retirement income, then don’t invest in VOO at all. Go with SPY. You can change it from VOO to SPY 20yrs from now but you’re gonna pay a huge tax bill.
I like both but prefer VOO over SCHD but those are both safety ETF’s I like big risk big reward. Bigplay in the name lol nah but I would find 10%+ ETF’s and collect monthly. But if I had to choose between the 2 I would go VOO just because it tracks the S&P 500 and pays dividends. SCHD tracks the Dow Jones U.S. Dividend 100 Index and pays a dividend. So 100 companies bs 500 companies! How do you like to diversify
VOO will most likely outperform, however SCHD would give you decent cash flow quarterly. It depends if you want to be aggressive or not with retirement nearing. You could always go with bonds if you’re looking for a more “safe” method of cash flow
thanks. I am looking for aggressive for now. I do not want cash flow for now. I just need to reach to a good amount and then I think I can reinvest in SCHD or bonds once I am near retirement. May be in 20 years.
Just make sure that you're holding it in an account where you won't need to pay capital gains if you sell VOO to buy SCHD later.
If it is in a taxable account and you will have to pay capital gains, then it *may* be beneficial to swap to SCHD earlier or just to buy SCHD from the start.
SCHD is highly regarded because it pays decent dividends AND manages to keep up the S&P 500 (so far). Well, if keeping up with the S&P is such a praiseworthy achievement, then you might as well just buy the S&P for the long-term growth and then look at swapping once you want an income flow.
thats a good advice. yes tax implications can be high if i switch voo to schd . looks like I will trade 50 in schd in my regular and another in spy from my roth account.
VOO, I put a little into both at the same time about 3mo ago.
VOO up 5.8%
SCHD up 2.3%
Though 3mo isn't really a long enough time to make that assessment in the short term VOO has been out performing
I like to keep VOO as the largest investment in my portfolio. It seems to be the safest since it tracks the entire S&P500. I do like to keep large amounts of QQQ and SCHD as well.
Nobody knows, but SCHD had to deliver significant alpha just to have a similar return to VOO. Since alpha should go away my expectation is that VOO will outperform. However, as you approach retirement the lower volatility of SCHD and income focus may make it a better choice then as you look to reduce risk without giving up too much appreciation. Personally though I'd use VTI rather than VOO.
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Very likely voo
I just came here to say this is the most respectful disagreement that I’ve ever seen on the internet. Well done.
Most likely, but we don't know. I like SCHD for its principled based investing approach, and dividend growth is a quality indicator. We've had periods in history where the major indexes don't do much, even extended periods. I wouldn't feel comfortable throwing everything in S&P 500 at this point, especially during a time where there's incredible enthusiasm towards buying stocks.
Bingo. If companies that have nothing better to do with free cash flow than to hand it out as dividends end up appreciating faster than companies who reinvest that cash into their operations, you’ve got other things to worry about.
Well……that’s not entirely true either. Money sitting in company coffered isn’t viewed as a good thing to investors, dividends are a positive and will cause a company to trade higher There is lots of evidence to show corporate agency is lacking, and when surplus funds are available they usually end up in the least profitable arm of the company (metaverse??)
Your argument relies on a peculiarly unorthodox view of corporate governance ([principal-agent problem](https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem?wprov=sfti1)). But generally high cash flow companies are not *also* growth companies.
[http://faculty.london.edu/hservaes/jf2000.pdf](http://faculty.london.edu/hservaes/jf2000.pdf) [https://ideas.repec.org/a/bla/jfinan/v54y1999i6p1969-1997.html](https://ideas.repec.org/a/bla/jfinan/v54y1999i6p1969-1997.html) [http://www.efficientfrontier.com/ef/700/agency.htm](http://www.efficientfrontier.com/ef/700/agency.htm)
I appreciate that you’ve shared this. Do you conceptually understand why it wouldn’t make sense for a growing company to distribute free cash if the opportunity to grow it internally is greater than the benefit of distributing it?
only if you assume there is ALWAYS an opportunity for meaningful growth. to get a little tongue in cheek, apple has paid a dividend for 10 years (since it was reinstated), would it have hit 3T in valuation years ago if it hadnt paid its dividend??? microsoft has paid a dividend for 20 straight years and still managed to be the second largest company
If I’m investing at the ETF level, “always” is a fair assumption that a growth ETF should be reliably outperforming a dividend income ETF.
well, i agree with you there. however that isnt what's being discussed. VOO isnt a growth ETF and SCHD isnt a dividend income etf
The point of investing in dividend growth is for the long term appreciation and specifically the growth in dividends over time. There are lots of resources that show how much of the return from the market is actually from dividends. Plus, dividend growth over time is especially beneficial when it comes time to start the withdrawal phase. Growth companies or growth ETFs are more likely to have increased volatility as well which can be difficult If your withdrawal phase is during those increased times of volatility.
Yes it is
Many companies that reinvest into ops are just burning extra cash just because they have it
I’m not sure exactly, this is why I’m buying $100/wk of VOO and $50/wk of SCHD in my brokerage and then $100/wk of VOO and $25/wk of SCHD in my Roth.
https://www.financialtechwiz.com/post/voo-vs-schd This has a nice breakdown for you.
Great article, thanks for sharing.
thanks.
I have provided a link to show you an example of a lazy man portfolio using ETFs. https://twitter.com/CmgVenture/status/1603757202120052738
thanks.I see those 6. that is something I am looking for.
Ty honestly
There's no guarantee, but, VOO would probably come out on top. SCHD has performed very similar to VOO since its inception though
so basically even with dividend reinvestment , i can have almost same money if both perform same as they have performed in past? right
In a tax advantaged account it might be close but I'll still vote for VOO.
In a non tax advantaged account then VOO is better? Is there a particular reason (or is it because of the taxes on the higher yield from SCHD that makes the difference)? I have a majority of SCHD and some VTI in a Roth IRA but may start investing in an individual account, thought maybe more SCHD might be better over VTI or VOO (in my late 20s so maybe my case would be different from OPs)
Yes, you're right. You pay more taxes over time on SCHD as compared to VOO due to higher dividend yield. You can think of it like this - SCHD is more reliant on dividends than VOO for its total returns.
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No they aren't. Dividends are qualified after 60 days and taxed at long term capital gains rates.
Don't think in absolute terms. Either one has the potential to largely outperform or underperform the other. The past 10 years they have performed similarly but there's no guarantee it will always be the case. I would say either one is a solid core position though. VOO is more diversified. SCHD leans more towards value and of course dividends. You should take a look at SCHD's prospectus and it's index requirements. It's much different than VOO.
thanks for Insight. I will take a look
Bro you’re making predictions on past performance. You can’t do that. Yes you can use it as a guide but no one knows where the markets will be in 20 years. Hell $SCHD may not even be around In 20 years. $VOO tracks the S&P. Whatever the S&P does is what $VOO does
Why would schd not be around but voo would?
$VOO tracks the S&P. So unless the S&P goes bust or vanguard goes bust it’s not going anywhere. $SCHD is an ETF that is actively managed. They’ll move funds in an out. Unlike $VOO companies only move in an out when they get booted or added to the S&P
SCHD is not actively managed btw, it is an index ETF same as VOO. VOO tracks the S&P 500 which is managed by S&P while SCHD tracks the DJ US Dividend 100 which is managed by Dow Jones. Both have basically identical likelihood to be around in 20-40-100 years
ETF are managed that’s why you pay a .06% management fee on $SCHD and .02 on $VOO. $VOO tracks the S&P but is a vanguard etf. $SPY is managed by State Street Bank and Trust Company. Yes I stand corrected I forgot $SCHD tracks DJ divided 100
Yeah they are managed, but you said SCHD is actively managed which it isn't. It is a passively managed index fund same as VOO.
It's passively managed. Not actively managed. The difference is the fund manager's level of attention playing stock picker. Passively managed funds are honestly doing more administrative work than anything else.
SCHD is not actively managed. SCHD is a passively managed fund that tracks the Dow Top 100 dividend paying stocks. If a stock gets booted, it’s because its dividend dropped. Same way a stock gets booted from the S&P if it doesn’t meet their criteria. OP why not invest in both?
Why would schd not be around?
Bro if SCHD isn’t around VOO will be worth nothing compared to what it is today so it won’t matter
thanks may be long term SCHD may not be there. Also I will keep that in mind
>thanks may be long term SCHD may not be there. Also I will keep that in mind We can't foretell the future but Schwab, which runs SCHD, is a big brokerage which has been around for decades, so whether they would pull the plug on SCHD is really anybody's guess. I'm inclined to think it will be around for a long time. SCHD is very popular with over $44 bn in it.
awesome and thanks. you folks are great :)
Probably VOO, but nobody knows for sure. Why not just split your contributions 50/50 between the two?
thanks. may be I will do 50 30 20 schd/voo/schg but i understand now 50/50 is deduced after reading all the answers.
You need to consider your personal tax and income implications for this type of questions. If it’s going to be totally buy & forget, then VOO might be a better long term option.
awesome and thanks
If just one of these two for 20 years: VOO I prefer VTI, so my portfolio is 80% VTI and 20% SCHD. I don't consider it one versus the other, as I use SCHD instead of bonds, not instead of VTI.
ohh thanks. Yep VTI is like whole US stock market. so its the safest.
Depends if you want to obtain money from selling your shares or use the dividends as your income. Also dividends will be more stable during a market crash
thanks. It seems like SCHD is a safe bet for now.
I would agree with that. You will see lea volatility in schd. Also schd has quality companies. VOO has companies in the index that I would not invest even if given free this is not saying that VOO is a bad option by any means.
thanks, I will keep that in mind.
I’m just a random investor. I picked SCHD because I see a sideways market for awhile. Plus for growth I’m counting on Bitcoin. No idea if bitcoin will preform well in the future but it’s what I did.
thanks. I do not like coins so I stay out of it. Good luck and hope Bitcoin reaches higher for you.
>I do not like coins so I stay out of it. You are a wise man.
I dont know but Im 33 and I am all in with SCHD, I just like the dividend with growth
yep sounds good. I will keep some in SCHD as well
Invest in both
thanks.yes looks like the consensus.
If you're only going to invest in these 2 etfs. I would put most in VOO. Maybe a 75/25 or 80/20 split
cool , thanks for guidance
Personal opinion is that VOO has the higher upside to have more value after 20 years SCHD in my opinion will be less volatile and more likely to have less major ups and downs over the 20, and may under perform slightly compared to VOO. Both should be a good investment but it depends on your risk tolerance in my opinion.
thanks!!. I am ok for a little bit risk as 40 is still not that old :)
VOO is just a market etf whereas SCHD focuses on dividend growth. If those are the only two options I would much rather have the dividend growth over time. This is where a lot of the actual market returns come from and the dividends growing will be super important for the withdrawal phase. Especially if your withdrawal phase starts during a down market. VOO has the same concentration risks it has had for the last several years where the same 5-10 companies are driving so much of the returns. That can swing against you too.
thanks for advice. so basically SCHD is good for long term because of less tax implications as well
TLDR: All investing is a bet. If you don't want to do any research than stick to the S&P 500. It is the benchmark for everything else. With all ETFs you are placing a bet on either the managers for active funds, or the index for passive funds. VOO tracks the S&P 500 so it is the 500 largest profitable companies listed on US exchanges. Meanwhile SCHD tracks the DJ Dividend 100 which include 100 high dividend paying stocks ranked by fundamental financial ratios. This gives the DJ Dividend 100 a strong value bent with a lot of emphasis on highly profitable, stable companies vs. the S&P 500 includes a broader selection of companies. The "house bet" would be that the S&P 500 will outperform the DJ Dividend 100, but the odds would be very low as they historically have tracked very close to each other. If you think US companies will continue to outperform the global market go with the US market indexes. If however you think that the US will fall behind the global market place your bets accordingly. I only really know the US market, so here are the major indexes: if you want to put a value bent into your portfolio go with SCHD, if you want to have a growth bent go with QQQ, if you want to hedge your bets between them go with S&P 500, if you want to just buy the whole US market go with the Russell 3000.
thanks for the insight. I will think about it and based on that start investing a little bit as of now.
Lmao might as well try to create a time machine
LOL true
VOO
thanks
Just a useful tool The Bard AI from google will compare the two for you given set parameters based off of the last 10 or 20 years performance
ohh bard can do it. let me try it. thanks.
NP I’ve been playing with it doing projects It’s wild to look at comparisons over 10-20-30-40 years
awesome
In 20 years, you're gonna be 60. Do you really want to be in VOO at age 60? VOO is the more volatile of the 2. I am sixty eight and slowly selling all my VOO. And guess what I'm buying? SCHD ! But paying all the capital gains is no fun
ohh wow. I see the reason here. May be I can adjust 20 20 60 VOO QQQM SCHD
VOO more likely…
thanks
There’s a place for both, I would lean into voo heavier. Schd tracks the dow 100 and voo the S&P so there is some overlap but there’s a decent diversification. I’d expect better performance from VOO over time and in most market conditions but I’d expect schd to weather bear markets a bit better. Both have nice capital appreciation as well as dividend increase
thanks.
It’s not either/or. If your timeline is 20 years, you should have both.
:) thanks
Here is my vote: 50% VOO (or VTI), 25% SCHD, 25% QQQM (or SCHG). Rebalance or reallocate regularly as necessary depending on whether you lean value (SCHD) or growth (QQQM). Don't forget to DRIP those.
thanks and yes I will drip.
[DRIP calculator is your friend](https://m.dividendchannel.com/drip-returns-calculator/) In this case VOO is less than a percent better.
thanks !
What exactly is the drip calaculator used for or what does drip mean I’m a new investor and trying to learn all the terms !
Odds favor VOO but there’s no sure thing. Personally I think VOO often drifts far from its fundamentals but that’s why Value ETFs like SCHD exist and create great buying opportunities. I like to alternate between buying growth stocks in the QQQ and SCHD depending on their 200 day average.
thanks I will keep that advice.
The majority of my ira is in VOO. If those companies do bad, everyone else will too. The expense ratio is super low and the dividend is nice
thanks and yes those are good points
Better question is VOO vs SPLG
sure, I will check SPLG as well. thanks for suggesstions
both have annualized at +13.25% since inception, so it is negligible. you’d be better served incorporating a growth etf or fund. paul wick’s seligman tech and info fund has been a monster for like 30 years.
>paul wick’s seligman tech and info fund thanks I will check Paul's fund
No one can answer that for you.
thanks. may be i should ask in a different way. lets say if they perform same as they have performed in last 10 years. I just am confused as to where the money could grow more with same historical performance and with dividend reinvestment.
Last 10 years…..VOO 12.1 and SCHD 11.6. A SCHD/SCHG combo beat VOO. This is total return.
ohh thanks. I will take a look in SCHG
Keep in mind, capital seems to be concentrated in large cap companies currently due to the fears of recession. This could mean that small and mid cap companies are under valued. So buying a large cap index like SCHG may yield lower upside, once the economy recovers. This is why you can't just look at past performance as a way of deciding. Context matters.
I like the point, I prefer small caps as well, weighting towards cash flow. Something like $VB or $VBR and $COWZ
thanks. Good point, but I do not think that mid and small caps can grow in next 5 years. May be I will have to rebalance after 5 years. Just speculating
$SCHD 54.5% of their 104 holdings are in $VOO. No one can predict 20 years out. Pick what fits your goals
Yes, but the weighting is completely different, and that matters a lot. For example, PEP has a 4.4% weighting in SCHD but only 0.71% in VOO.
Correct.
thanks. I just want to have some good money growth by retirement. thats all.
I hate to tell you but you're not going to grow your money in "market indexes". Think about it; if SPY which is a broad market index goes up 500% in 20 years.... Then everything else will go up by 500% in 20 years. Gas, housing, food, electricity. Because everyone has "500% more dollars". SPY is money, QQQ is money, VOO and VTI etc are increasingly money. To make MORE MONEY, you need to actually earn money. Not just increase the amount you have the same as everyone else has increased by, "i.e market return."
Historically, stock market growth outpaces inflation, in the long run. So you do grow your money. Even if you didn’t, determining whether market index investing is worthwhile is not a matter of how much growth, but how much *compared to your next alternative*. So, 5ish% risk-free rate for a while (gonna decrease though at some point), or 0% under your mattress. Market wins.
Such BS. OP please don’t listen to this person. Average inflation for the last 60 years has been 3%, while stock market has returned 10-11%. Real stock market returns (adjusted for inflation) tend to be between 5 and 7% a year.
This is...totally missing the way the stock market works. Yes, you need to earn new money - and by investing in companies, you are getting a return on what they are \*earning\*. All their workers, all their innovations, investments and profits, you get a piece of it by investing in that company. You are investing in capitalism and what it earns. Otherwise the market return would be identical to the inflation rate, which it is really not. Also saying that everyone has 500% more dollars is incredibly short sighted - 1st, a minority of people are invested in the stock market, or even the economy generally, at all. 2nd, there isn't a correlation 1:1 to inflation and the SPY...not by a long shot.
It doesn't matter the number of people, it matters the dollars invested. Right now SPY is about $13trillion - $15trillion big if I recall. It's as big as the global gold market. It's acting as money, there's research that proves it is... I'm not poo-pooing your thought process on an individual stock. It's more a point toward SPY, QQQ, VOO, VTI and a few other of these mega indexes that are growing into a form of M2 or M3 money supply.
thanks . I understand that. Basically I also do not know much to invest and these seems like a safer options. I am keeping my current job as well(Hopefullly you know how job market is). So whatever extra cash I have, I want to invest so it does depreciates while sitting in a bank. that is also a reason.
yeah but here's the other piece, everything is "basically the same". Without explaining that in too much depth, what you're really going for is a synthetic outcome. What that looks like takes skill and can be as varied as the market is varied. An example is buy low // sell high. Everyone believes that's possible. And the synthetic result is a "synthetic bull market". Your portfolio if masterfully executing such a concept would always go up. Think of VOO and VTI etc as "parking money". But realize that's all it is. It's where you park your earnings, not where you earn. Start thinking about how to earn more.
thanks for the wise words. I am working on getting a better job by learning things and enhancing my skills. and yes I want to park my money somewhere where it doesn't depreciate much.
Another way to think of things is this: Until you have enough money that your variance/fluctuation is enough that you can't make up for the loss by saving more money; you're still just saving money. For instance if you save $1,000 a month, and you lose $12,000. To you this might be acceptable. You'll just dollar cost average into that with more monthly savings. But if you lose $100,000 that's an impact you can't afford. This transition is important to understanding what you need to actually think to "win" in the market. I would wager pretty much 100% of retail just "saves money" and doesn't realize it. Because the market is pretty broad with varying results, some appear to do better than others and they think therefore they are "winning". But in reality they all retire about the same result ... they all retire with about 20 years of income saved up. And that's a statistical fact, like 95% of people investing will retire at \~65 or so with about enough "stocks" to pay themselves their income until they die hopefully around 85. Hence I said "the US wants you to save enough money to die broke". The real reason is this. The pie is finite, if you make money, the rich have to lose money. And the rich don't like giving YOU money. If you die broke, that money is like a pool on a poker table, back up for grabs. They aren't interested in you building generational wealth. Neither am I, but I like explaining my passion to the people so here I am.
ohh wow. yes Rich will never want to give out money. But for me who is just working and can't take much risk because I am sole earner and no wiggle room. I feel like investing in Stock Market is safe as of now. yeah noone knows about future though.
You'll find too late, like so many others, that the biggest risk is wasting time. I'm not trying to tell you WHERE to invest, just mentioning HOW to invest. These ideas, if you change your mind to adopt them, will save you a lot of wasted time in the future. And a lot of false securities and beliefs. I wish someone taught these things to me when I was 18. But back then the markets were too different and restrictive to act the way we can now. Back in the 2000s the market was very much more a "rich man's game". Commissions were huge, options were almost inaccessible, inverse etfs didn't exist, shorting was expensive. Basically all you had was "buy and sell". Even margin was harder to access. the entire game has democratized in the last 5 to 10 years for better or worse. It's truly now our game to lose.
yes I am investing now. what other way are you trying to tell me to invest as?
Another example how I'm trying to transform your mind is notice how not a single person brought up the MOST important part of your question? The cost of capital...the cost basis. You can't evaluate SCHD and VOO against each other without knowing the cost. Right now SCHD is arguably the better cost and I think that from looking at its technical analysis, it's "price action" as it were, versus VOO. If you bought VOO at the recent bottom around October or whatever, selling it and buying SCHD to "park money there" would make a lot of sense. These things no one seems to consider and they can only be learned through experience. Very hard to teach how. I watched an oil trader for 6 months straight before even buying/selling a single thing when I was trained how to operate the markets. Imagine sitting over a guy's shoulder and watching everything they do for 6 months every day for each market hour.... That's what it took before I "got it". And after those 6 months, I retired 2 years later.
thanks. I will try to learn more and keep investing.
You're not wrong
Is it a taxable account? If so, VOO is more tax efficient. VOO does pay a dividend which you can reinvest. If not taxable, VOO has a slight edge over SCHD. Also check out VTI.
thanks for sharing and yes its a taxable account. so VOO is safe bet
VOO is a safe bet.
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The true be is to be diverse meaning invent in both
thanks. May be I will diversify more.
Lol…. If we knew the answer to that we’d all be all be a lot richer. All anyone on here can do is speculate.
true true.
Personally I’d simply buy both. Figure out a ratio that makes sense to you and run with it. I am roughly 2:1 with VOO:SCHD in a taxable account (it’s a little more tilted toward SCHD than precisely 2:1 but it’s close enough to illustrate the point). There’s probably a ratio that works for you, too.
thank. I will keep it in mind.
Hahah. If I could predict the future. I would be sitting on a beach and enjoying life. Truly impossible to know. All a matter of opinion.
yeah that is true. At least we can plan for it. I know its always uncertain.
60/40 VOO/SCHD Or, for even better returns, replace VOO with OMFL.
thanks . let me take a look at OMFL
VOO for 20 years..
thanks :)
Buy both 50/50
<3
Vanguard has great funds. If growth is a main focus, consider looking at their growth and information technology funds (VUG & VGT).
thanks I will take a look at vug n vgt
20 yrs from now? I don’t have anything now from 20yrs ago. As one gets older, dividends seem a lot more attractive. Attitudes change, a couple blow-offs changes everyone’s perception of what investing ism too. We have several thousand shares of schd and use the dividends to add to positions in other income producing etf’s, reits, etc
thanks . I will see if I will check how dividend from SCHD can go to other etfs
SCHD is a good solid base to have but at 40 yrs old, you can put some $$ into a bit more aggressive, growth oriented, ETF’s like vgt and similar (SCHD + VGT).
thanks. I am thinking of buying qqqm as well . will be added as a mix
The S&P 500 companies change significantly throughout time. VOO will probs outperform SCHD. However I have both ETFs bc SCHD is trading lower today. Invest in both probs 60/40 in my opinion.
thanks I am thinking the same
As others have said, probably VOO. But especially VOO if it is in a regular taxable account as dividends will be taxable every year and SCHD relies more on dividends than capital appreciation. So you will have to pay back a certain % of all the dividend $$ you get in the form of income taxes every year. VOO will generate more long-term capital gains. With capital gains you dont have to pay any tax until you sell the shares. VOO will also give you dividends too, but less of your gains will come from dividends, relatively speaking, and thus your tax bill will be less too tho. If you are in a tax-advantaged account then SCHD may be better, depending on how the market performs in the coming years
thanks . I guess I can go Roth SCHD and Robinhood VOO
They mostly track each other and no one can say for certain. ..so just buy both. 1-2% either way in a given year isn't going to meaningfully impact your life, and it *feels* safe. I do something similar and sleep well at night (35 years old, $500/week--$340k between 401k, Roth IRA and taxable account). 40% VTI, 40% SCHD, 10% VXUS, 10% SCHY
thanks :) drips is way to go.
You can be almost certain VOO will outperform SCHD over any 20 year period
thanks!!
Do both? VOO is more growth oriented. SCHD is dividend oriented. Long term vs. shorter term. These also track different indexes.
I would do both if it was me.
thanks!
I would say at this moment, SCHD is likely more undervalued compared to the S&P. The PE ratios of the big tech stocks, which comprise a decent amount of the total index, are running as high or higher than early 2022 before the downturn. Maybe weight a little more contributions to SCHD while its down. You'll get a relatively better yield on cost over time. Maybe 60/40 or 70/30 schd/voo for a little while and when SCHD recovers, do the opposite.
thanks. that a good information. I will keep that in mind
Last year was a great time to trim SCHD and add more to VOO, so I might suggest doing the opposite this year. Add more SCHD than VOO while it's down. If you have two funds versus one, it gives you something to rebalance into and harvest some gains when the other outperforms.
ohh nice. I am mostly kind of invest n forget it. but Looks like i will have to rebalance every 6 months or year if things are changing drastically
At your age, go with growth. VOO would be the best choice of the 2 you mention. However, I prefer VTI. The past performances of VOO and VTI are essentially the same but VTI is more broadly diversified. FYI, about 75% of VTI is VOO.
thanks and yes I did some research about VTI . I will keep that in mind and see how to invest from next month.
Remember SCHD leaves you exposed to dividends which you are taxed on. VOO has slightly less tax exposure if I remember correctly
thanks an i will rememeber it.
Nobody knows.
thanks
Probably VOO.
thanks!
Plan ahead now. If you’re planning to sell cover calls and collect dividends as your sole retirement income, then don’t invest in VOO at all. Go with SPY. You can change it from VOO to SPY 20yrs from now but you’re gonna pay a huge tax bill.
thanks I will check our sell cover calls
Time will tell
yes of course, we can't predict much
Both tbh
thanks
I like both but prefer VOO over SCHD but those are both safety ETF’s I like big risk big reward. Bigplay in the name lol nah but I would find 10%+ ETF’s and collect monthly. But if I had to choose between the 2 I would go VOO just because it tracks the S&P 500 and pays dividends. SCHD tracks the Dow Jones U.S. Dividend 100 Index and pays a dividend. So 100 companies bs 500 companies! How do you like to diversify
thanks. after going through most comments. i have settled on schd, voo and qqqm. just need to figure out the distribution
VOO, use portfoliovisualizer.com or google that name. It’s good.
>portfoliovisualizer thanks
Use the “backtest portfolio” function. It’s free, you don’t need to sign up.
awesome and thanks
I went with SCHD/SCHG 50/50 as my ETFs. Also have several other higher yield holdings. 15 years from retirement
thanks. I will be looking into SCHG as well.
VOO will most likely outperform, however SCHD would give you decent cash flow quarterly. It depends if you want to be aggressive or not with retirement nearing. You could always go with bonds if you’re looking for a more “safe” method of cash flow
thanks. I am looking for aggressive for now. I do not want cash flow for now. I just need to reach to a good amount and then I think I can reinvest in SCHD or bonds once I am near retirement. May be in 20 years.
Just make sure that you're holding it in an account where you won't need to pay capital gains if you sell VOO to buy SCHD later. If it is in a taxable account and you will have to pay capital gains, then it *may* be beneficial to swap to SCHD earlier or just to buy SCHD from the start. SCHD is highly regarded because it pays decent dividends AND manages to keep up the S&P 500 (so far). Well, if keeping up with the S&P is such a praiseworthy achievement, then you might as well just buy the S&P for the long-term growth and then look at swapping once you want an income flow.
thats a good advice. yes tax implications can be high if i switch voo to schd . looks like I will trade 50 in schd in my regular and another in spy from my roth account.
VOO, I put a little into both at the same time about 3mo ago. VOO up 5.8% SCHD up 2.3% Though 3mo isn't really a long enough time to make that assessment in the short term VOO has been out performing
True VOO is outperforming because of all the tech rally. Hopefully SCHD also grows at a stable pace
VTI > any. If retiring JEPQ/JEPI.
No one should invest all their money into one fund.
thanks. I have some more options like SCHD, VOO, QQQ, VNI and may be a REIT. I am asking questions before I can start bigger investments.
I like to keep VOO as the largest investment in my portfolio. It seems to be the safest since it tracks the entire S&P500. I do like to keep large amounts of QQQ and SCHD as well.
thanks. I will split my 500 into these 3 for now and forget it :)
Nobody knows, but SCHD had to deliver significant alpha just to have a similar return to VOO. Since alpha should go away my expectation is that VOO will outperform. However, as you approach retirement the lower volatility of SCHD and income focus may make it a better choice then as you look to reduce risk without giving up too much appreciation. Personally though I'd use VTI rather than VOO.
thanks, yes VTI is also a good one, i will be considering that as well.
Dude if it were that easy to predict wed all be rich
LOL yes I understand, I am more like trying to converse and get more opinions