I broke down what SCHD can do for you in an IRA, and I won’t stop there. Stick around this whole video to learn how SCHD’s returns differ from VOO and SPY and learn about the power of compound interest.
#everythingmoney #valueinvesting #schd
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What SCHD will Do For Your IRA | SCHD ETF
If you have an Individual retirement account (IRA), you are likely always on the lookout for ways to maximize the growth of your retirement savings. One option to consider is investing in an exchange-traded fund (ETF) like SCHD (Schwab U.S. Dividend Equity ETF). This ETF offers a unique set of benefits that can help bolster your IRA’s performance and ultimately set you up for a more secure retirement.
SCHD is designed to track the performance of the Dow Jones U.S. Dividend 100 Index, which includes 100 high-quality U.S. stocks with a strong history of paying dividends. This focus on dividend-paying stocks offers several advantages for IRA investors.
First and foremost, dividend-paying stocks provide a steady stream of income, which can be particularly useful in retirement. By owning SCHD in your IRA, you can benefit from regular dividend payments that can supplement other retirement income sources, such as Social Security or pension payments. This can provide a welcome source of additional cash flow, particularly during times when market volatility makes other investments less reliable.
In addition to steady income, dividend-paying stocks have historically outperformed non-dividend-paying stocks over the long term. This means that by investing in SCHD, you have the potential to generate higher returns and grow your IRA more quickly. When considering the long time horizon of retirement savings, this potential for superior growth can make a significant impact on the overall value of your IRA.
Furthermore, SCHD’s focus on high-quality U.S. stocks can provide a level of stability and security to your IRA. These companies are typically well-established, financially healthy, and have a track record of consistently paying dividends. This can help mitigate the risk of significant losses in your retirement savings, which is particularly important as you near or enter retirement.
Finally, since SCHD is an ETF, it offers investors the benefit of diversification. By owning SCHD in your IRA, you gain exposure to a broad range of dividend-paying stocks across various sectors, rather than putting all your eggs in one basket. This diversification can help reduce risk and smooth out the overall performance of your retirement portfolio.
Overall, investing in SCHD can be a valuable addition to your IRA. By offering a steady stream of income, the potential for strong growth, stability, and diversification, SCHD can help set your IRA up for long-term success and provide you with increased peace of mind as you plan for retirement. It’s certainly worth considering for anyone looking to make the most of their retirement savings.
I’m going to invest in your mom
VTI til I die
SCHD
What about SCHG? For Roth IRA account?
Index funds when you’re 21-55 and still in your earning years. Dividend income using SCHD when you’re in retirement years…. this video “assumes” everyone is young….. don’t forget the retired folks….. there’s a reason why SCHD is popular, and it’s NOT for growth, leave that to the index funds says Warren Buffet.
30% capital gains?? The capital gains tax rate is not applicable to dividend income. And same problem as your last video. Total return may not be the best approach for every situation. You can read my comment on your other video. But I will simply state here: For someone who is retired, the cushion provided by the additional dividend income from SCHD may significantly reduce the probability of needing to sell your equity position.
In my taxable account I went into dividend investing route. In my Roth I did the buy and hold route with an S&P 500 etf and total market etf along with some Berkshire B stock and SCHD.
I am adding SCHD throughout in 2023, as that seems to be fairly priced (P/E 13 or 14) due to banking sector hit. VOO/QQQ is way overpriced now thanks to AI bubble. Added some growth ETF when they were cheap in 2022, but in 2023, they are too pricey to buy.
A very, very larger thing you guys missed is something called volatility. When comparing VOO and SCHD over say the last 10 years, VOO worst year performance is -18.19% compared to SCHD's -7.47%. I think there are TONS of people who will take the 11.77% CAGR over VOOs 12.84% CAGR. I mean you don't have to sweat out those 20% down years for crying out loud.
I will be very neutral about SCHD in IRA. It is futile to get SCHD in tax defered account unless you have retired. If you are young, it is best to get broad market in IRA. I highly doubt SCHD can beat the market in the long term. Those mature companies hand over the money to the shareholders so there is less room for them to grow faster in the future. I would use broad market as a backbone. Use small amount of money (aound 10 percent) to SCHD for value and dividend tilting. But I would use this in taxalble account. In the future, if I retired, I can simply convert half of broad market into schd in IRA without paying any taxes.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.,.
I still think you missing the point of schd vs spy. If u don’t want to sell your shares and collect dividends schd is the way to go. Collecting 1%-2% vs 3%-4%. So let’s say you have 1 million right. Schd would pay u 35k were as spy would pay 15k. I personally have about 80% spy and the other 20 in schd/dgrw. But it’s all a matter of goals and wat u want
SPY is beating SCHD by over 23% this year…..
The wisest thought that is in everyone's minds today is to invest in different income flows that do not depend on the government, especially with the current economic crisis around the worldRetirement doesn't come with a specific requirement, people need to understand that having a right retirement plan is ideal and can help build a financial fortitude. Also, having a financial counsellor that will guide you through every process would be good, not just any expert but a very good one!
The wisest thought that is in everyone's minds today is to invest in different income flows that do not depend on the government, especially with the current economic crisis around the worldRetirement doesn't come with a specific requirement, people need to understand that having a right retirement plan is ideal and can help build a financial fortitude. Also, having a financial counsellor that will guide you through every process would be good, not just any expert but a very good one!
I like having SCHD in my portfolio for diversification. I have less than 20% in my Roth IRA and in my traditional IRA I invest the rest of my money in VTI and VUG.
I agree wholeheartedly what you've showcased here and in your other SCHD video. I have a question:
What would be the fastest way you think to invest, so to replace my current W2 income completely but relatively safely when it comes to capital retention against inflation?
Build a growth/value based portfolio and sell everything for an "SCHD" type investment when I reach $2M-
Or
Invest in a dividend based portfolio so to capture cheaper stock prices vs divided yields-
Sorry if this is a stupid question but is it still a good idea to invest in VOO in your late 40s?
Splg is the best sp500 index imo
You are not considering dividend growth nor DRIP at all…
Dividends for life!
Thank you for the video. In general, I don't disagree. But …having retired with enough savings, my goal now is NOT total return but dividend growers (with modest capital growth) to generate increasing income. Year after year dividend growers boost my income. I'm happy with "set and forget" and the stability of companies that have a culture of allocating some of the profits to dividend increases each and every year.
I am heavy in Tech….SCHD gives my portfolio the diversity it needs. It’s one and done.
in australia is pretty lucrative as we can get the tax credit on dividends
Here is what is missing from Mo's view. Sure you can keep growing your portfolio until you are 60 but then what do you do? How do you cash out? If you've grown your portfolio to $5 million, do you just take it all out and spend it? This money needs to be invested in something that generates income, that's why older people buy SCHD and dividend stocks. People need the income to live off of and continue to possibly grow. There is a "growth" part of a portfolio strategy then there is an "income" part of the strategy. It's find to tell young people to focus on growth but it's not ok to keep hammering that one size fits all strategy for everyone. Mo will change his tune when he hits 60 and needs to figure out what to do with all that cash, keeping it in "growth" is a loser proposition especially if the market crashes right as you are about to cash out, it happens every decade. And it's ironic that Gabe keeps hammering that the market is overvalued now. Of course, everyone should have a diversified portfolio of real estate, bonds, and stocks (growth and income), not just stocks. Mo & Gabe are stubborn mules but they'll eventually get it in about 20 years.
I dont understand this idea of "double taxation".
Companies are taxed on theur profits. If they use their profits to buy back shares or oay dividends they are still taxed on their profits.
Whether you make a personal profit by earning a dividend or selling the stock you pay a tax.
Both scenarios same taxes. The only difference is that in dividend investing you pay your taxes slowly over time instead of in a huge chunk when yoyre at or near retirement. You dont have to sell down your principal so you can have peace of mind in retirement.
Dividend investing doesnt make sense for Moe and Paul because theyre rich. Tax wise it makes a lot of sense for low and middle imcome class earners.
I dont get why this show tries to crap on dividend investing but does so with next to zero research on the topic.
age – 34, for now going to pick SCHD, for good feeling and motiviation. i wiil knownly paying X% for that 🙂
Disagree. If you are based overseas you are taxed differently. And you may have different objectives. For some, it might be to receive a regular dividend income which VOO doesn't provide as much and as frequently
Most of the people investing in schd have a qualified dividend tax rate of 0%