Welcome to our insightful exploration of the successful investment strategy combining 50% SCHD and 50% VGT, which has impressively beaten the S&P 500 for the 10th consecutive year. In this video, we begin with an overview of the current market trends, followed by an in-depth analysis of why the VGT and SCHD combination is a powerful approach to ETF investing. We delve into the specifics of each ETF, highlighting the strengths and strategies behind VGT and SCHD.
The core of our discussion focuses on a 10-year backtest against VOO, demonstrating the consistent outperformance of this investment strategy. We provide insights into this approach’s long-term impact and compounding benefits. This video is essential for anyone interested in ETF investing, offering proven strategies for market outperformance.
⏰Timestamps:
0:00 – Intro
2:03 – The Market
4:04 – VGT + SCHD = Magic
6:04 – VGT Details
8:27 – SCHD Details
11:57 – The 10-Year Backtest vs VOO
14:48 – The Difference Compounds!
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This video is about How To Beat The S&P 500: Proven Success With 50% SCHD & 50% VGT Investment Strategy. But It also covers the following topics:
ETF Investment Strategies
SCHD Performance
VGT ETF Insights
Video Title: How To Beat The S&P 500: Proven Success With 50% SCHD & 50% VGT Investment Strategy | Jeff Teeples
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The debate over active versus passive investing has been ongoing for decades, with proponents of each style fiercely defending their strategy. But what if there was a way to combine both approaches and consistently beat the S&P 500, one of the most widely followed benchmarks for the U.S. stock market? It turns out there is a strategy that has been able to achieve just that – a 50% allocation to the Schwab U.S. Dividend Equity ETF (SCHD) and a 50% allocation to the Vanguard Information Technology ETF (VGT).
For the past 10 years, this 50/50 strategy has outperformed the S&P 500, as represented by the Vanguard S&P 500 ETF (VOO), on an annual basis. This is a remarkable achievement, given that the VOO is often used as a benchmark for the performance of actively managed funds and large-cap stocks in the U.S. market.
The SCHD ETF is a low-cost, passively managed fund that seeks to track the performance of the Dow Jones U.S. Dividend 100 Index. This index consists of 100 high dividend yielding U.S. stocks, with a focus on companies that have a history of consistently paying dividends. This strategy provides investors with exposure to stable, dividend-paying companies that have the potential to provide reliable income over the long term.
On the other hand, the VGT ETF is also a low-cost, passively managed fund that seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index. This index consists of large, mid, and small-capitalization stocks within the technology sector of the U.S. equity market. The fund provides investors with exposure to some of the most innovative and fast-growing companies in the U.S. economy, including industry giants such as Apple, Microsoft, and Alphabet.
By combining these two ETFs in a 50/50 allocation, investors are able to achieve a balanced exposure to both dividend-paying stocks and the high-growth potential of the technology sector. This unique combination has been able to consistently outperform the S&P 500, even during periods of market volatility and economic uncertainty.
This 50/50 strategy has not only delivered superior returns but has also exhibited lower volatility and drawdowns compared to the VOO. This suggests that the combination of dividend-paying stocks and technology companies can provide investors with a more stable and resilient investment strategy, even during turbulent market conditions.
It’s important to note that past performance is not indicative of future results, and there are no guarantees when it comes to investing in the stock market. However, the track record of the 50/50 SCHD and VGT strategy over the past decade is certainly compelling and worthy of further consideration for investors looking to achieve superior returns while managing risk.
In conclusion, the 50/50 allocation to SCHD and VGT has proven to be a successful combination for investors seeking to outperform the S&P 500 on an annual basis. By combining the stability of dividend-paying stocks with the growth potential of the technology sector, this strategy has been able to consistently deliver superior returns while managing volatility. As always, investors should conduct thorough research and consider their own risk tolerance before making any investment decisions.
What do you think of SCHD’s Higher Portfolio Turnover?
Berkshire Hathaway and Nasdaq 100 and S&P 500 mix?
Will a mix of S&P 500 and Nasdaq 100 ETFs be as good?
This is a compelling case. I actually rebalanced my portfolio after watching from SCHG. Then I went down the rabbit hole and did a 50/50 pairing of XLK and SCHD that seemed to have a hair better performance than this combo. Can’t really go wrong with either!
I've got 25% each in SCHD, VGT, VOO and JEPQ.
Nice video Jeff, thanks for sharing. My portfolio is SCHD, SCHG, VGT, ARKK and QYLD 20% each one. I'm also a non-US citizen and the 30% on dividend taxes kills me. So, I'm currently thinking in getting rid of my positions in SCHD and QYLD to only invest in growth ETFs while still in my 30s, and once I reach 50 years old go back to 50% SCHD and 50% VGT/SCHG. Wha would you do? Thanks in advance!
I'd like to challenge you on the growth prospect of VGT. 53% of VGT is in MSFT, AAPL, NVDA & AVGO. These 4 experienced phenomenal growth over the last decade and that's the reason by VGT did so well. While I still have my faith in MSFT, can the other 3 keep up with the same level of growth in the coming decade? If not, the VGT won't grow like it did.
Is having QQQM and VUG both in the same account redundant? Thinking about switching VUG to VGT
What are your thoughts on international fund exposure? ie VXUS SCHF etc
Please cover AQST stock if you can
Great video. Do you think SCHG could do as well as VGT In this test
This exactly what I have 5k shares of SCHD and 500 shares of VGT! I'm adding approximately $2500 every month!
I was heavy into SCHD, and used VOO and QQQ to make up the rest of my portfolio. I wonder what 50% SCHD, 25% VOO, and 25% QQQ would have done.
VOO/QQQM/SCHD adjust % for age. Feel like we're all on same page whether it's a new age 2 or 3 fund portfolio. Bonds and International stocks have been replaced by growth and strong dividend stocks/ETFs.
Should one still do that if they are investing today with where SCHD and VOO are currently?
SCHD has been dead money for the last two years. Zero percent returns over the last 24 months, whether you reinvested the dividend or not. VOO has done slightly better, giving you a total 1.9% return over the last 24 months with dividends reinvested. Abysmal performers vs cash. But keep pumping retail investors to their portfolio death.
Great video… solid facts. Just scary to go 50% into one sector… although tech would definitely be the one to do it in, especially for a long time period.
What about SCHD not always being qualified dividends though? This is fine in tax advantage but it was also a reason i didn’t put SCHD in my brokerage.
Thoughts?
I realigned my Roth this year. I now have 40% in VOO, 30% in SCHD, and 30% in QQQM. In my brokerage account, my goal this year is to invest $50 a day into VGT. It isn't much but I think it will really help my portfolio. I just recently started option trading and any gains in that will likely go into SCHD. Really appreciate your video!
VGT. has 40% in just two stocks, MSFT and Apple ..bit scary
Great video and analysis as always. I started with a 50/50 split between VGT and SCHD. Only recently have o started to build up the cornerstone VOO position. I have pondered this a lot and think I will go with a split of 40% VGT, 40% SCHD and 20% VOO.
What kills me is the 30% tax I need to pay on dividends as a non us citizen… I am 44 now so perhaps I should allocate 30% to SCHD and 30% to VOO for the next 5 years. Can’t decide. My situation slightly different. What would you do? Thanks Michael.
New sub here, great videos!
Im very new to the ETF world or investing in anything other than my govt 457 ROTH. I have a few questions, maybe you can help –
I just learned I can manage my own ROTH 457 through a PCRA Schwab account and want to purchase SCHD and VGT. I want to invest the maximum ($23,000 a year) for 15-20 years and retire early at 50 or 55.
1) what percentage of each would you invest into if you want an extra source of income through dividends at retirement age?
2) Are these 2 ETFS the only 2 to buy from here to retirement? Should I throw another in the mix? Thanks for your help!
Understood. Your DGRW video was great too. SCHD has a low fund overlap with VOO, but most of the well-known “dividend” ETFs such as VIG, DGRO, VYM, etc do not by comparison. I was simply surprised that after substituting DGRW into Portfolio Visualizer for SCHD and pairing it with 50% VGT, it provided a higher 10 year return than SCHD, and every other dividend fund I could think of, including NOBL, HDV, DVY, FDVV, and DTD as well. As you suggested if it were to be integrated, the VGT and SCHD %’s can simply be reduced, which worked well too when backtesting. Just an observation. Thanks for the great content!
Great video. Substitute DGRW for SCHD and see the results. More diversified fund, too. Higher return with a little less downside protection. Great return either way. Agree that VOO as a third fund in equal parts is the way to go. I don’t disregard the Oracle either.
I have been investing in SCHD & SCHG and have been out performing! Perhaps VGT is what I should pair with SCHD !?
Very informative video
Your right lol vgt is freaking amazing
Jeff – In one of your previous videos, you recommended a modern three fund portfolio of VOO/VGT/SCHD. Do you think the 50/50 allocation of VGT and SCHD is a better choice? And is XLK a good substitute for VGT?
If you did SCHD and VOO 50/50 you would probably have a similar outcome
Thanks for getting me on the VGT train sir!
Love it! I landed on 50% ITOT, 35% FTEC & 15% SCHD and plan to leave like that for the next 10-15 yrs.
I love this! I currently rebalanced to VOO 40% VGT 15% QQQM 15% and SCHD 30% . I couldn’t decide which to keep for growth so I’m keeping both.