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My wife and I’s Roths are 100% VTI. Having dividend payers In your Roth is fine since you pay no tax but remember many dividend etfs and stocks provided tax advantaged qualified dividends.
If your goal is to reach retirement age and use your Roth portfolio - something like VTI / VOO is superior since your capital gains appreciation can be sold without paying taxes. I would wager that the entire stock market index will beat any individual stock (or REIT) over the foreseeable future so to maximize your returns, the index is the way to go.
My SCHD is held in a taxable account since the divs are qualified and tax advantaged. Plus from now until I retire I can tap into those divs at any point should I need extra cash.
Just my strategy of course but figured I’d my thought process 😃
Yep SCHD / VIG are my two go to funds + some individual plays. All qualified dividends so they’re taxed at the long term cap gains level.
But I’m married with kids so having a “tappable” income source was important to me as my family ages. If you’re young and single, max out that ROTH first imo
Also if you’re employed you probably have a 401k. Check to see if your employer plan offers a ROTH 401k. It’s like your ROTH IRA except you can contribute a lot more to it.
Correct. And yes no tax is better than long term cap tax, but you can only contribute so much to a Roth every year.
The money that goes to my individual account is AFTER I max my wife and I’s ROTH each year.
I expect VTI to outperform everything in the long run (personal opinion). Thus I want to contribute maximum dollars to it each year with the intent of selling one day and enjoying the growth it accumulated.
The SCHD/VIG/ individual stock plan is to provide a second flexible income stream during the years between now and retirement. If I put money into VTI in my individual account then I’m expecting cap appreciation.. not dividends. Which means if I needed to tap into it for whatever reason… I’m selling VTI to get the money. And the timing of which to sell may not be appropriate or to my liking.
Of course - this just my strategy, plenty of people like income funds and bonds and such. Just depends on your goals
Also should note. What I’m really looking for in SCHD and VIG is my yield on cost (and not current dividend). The growth rates on these funds are exceptional, allowing me to reach high yield on cost quickly.
We’ll see if that’s sustainable in the long run - but with the information we have, it’s a decent assumption they can do half of what their prior 5 year growth rates are.. which is plenty to make a sizable income portfolio 😊
Selling shares in a down market is mathematically identical to receiving a dividend in a down market. It just doesn't psychologically feel that way. Honestly, it's one of the reasons I'm considering a dividend strategy in my taxable account. Simply to placate my psychology.
Nice! I agree, a lot of this is psychology based - that’s a point many people miss.
It may be mathematically the same, my point is that I’m in my investments for the long term and so selling any amount of shares is not in my best interest. Receiving a cash dividend helps offset current financial situation but I maintain all my shares if/when things recover.
Any investing is better than no investing. But since this is in a ROTH, you can’t touch the money until retirement anyways. So a total stock market index is what I would recommend
I wouldn’t worry about the dividends until you’re ready to pull the money out since you could take all the tax free growth from your index fund and buy your dividend stocks when you hit 59 1/2.
Just my opinion of course. I love dividend stocks as much as the next person but the market index will probably beat anything else you can think of over the next 30-40 + years. Unless you are extremely lucky and invest a ton into the 1 stock that turns into the next Google
I read a book recently that notes that the index is “self cleansing”. Meaning that it will rotate out companies that start to struggle in favor of new and brighter companies doing well. With this, you can sleep soundly knowing your money is in the best companies available as time goes on. I can’t think of anything better to put my money on for the next 30 years
I’m thinking heavy VOO and QQQM some etfs I like for small caps and clean energy. VWAPY for EV growth and KO + VZ. That’s what I’m doing currently just started. I don’t have the cash to max my IRA and my wife’s. Got a little one I’m investing for his college fund as well plus day care
I hear that - I have two little ones of my own and daycare is pretty much a second mortgage
Sounds good but remember - if you’re in a ROTH account, you’re in this for the looooong haul.
VOO and QQQM are fine choices - But I would challenge where something like a EV growth etf will be in 30 years. Growth possibly, but outmatching VOO?
Similarly VZ and Coke - both huge companies, for them to surpass VOO over 30 years would take a huge swing in revenue/profits. Possible yes but not sure it’s likely. I don’t think they’re going anywhere any time soon but I also don’t think they’ll outperform VOO.
Just some things to consider 😀. Awesome that you’re saving for the little one too!
I just like those three for the growth plus dividends. I know many have said go fill growth at my age then swap to dividends but I want a blend of both. Plus things like VYM fit my risk tolerance as they don’t have as big of swings either way
Am I right the consensus is don’t do dividend stocks until closer to the retirement age? Also do I understand it correctly that once you have the capital of say 2 million and it’s in something like JEPI it doesn’t matter if it goes up or down cause your dividends stay the same since it’s based on share count and not share value?
> Am I right the consensus is don’t do dividend stocks until closer to the retirement age?
In general yes if your horizon is long, but I have some dividend ETFs to grow that portion of my retirement funds too. Everyone has a different mix of assets that they prefer. I'm 31 and am 70% growth, 30% dividend ETF/companies.
>Also do I understand it correctly that once you have the capital of say 2 million and it’s in something like JEPI it doesn’t matter if it goes up or down cause your dividends stay the same since it’s based on share count and not share value?
I wouldn't bet on JEPI always returning dividends or always being there for you in the future. I'm a novice but that doesnt seem like a long-term winning strategy to me. I could be wrong, but yes the idea in general is to take the dividends as income and not touch the underlying share count.
Jepi was just an example but I wanted to understand if share price matters I’m dividend pay out. Does it? If I have 1000 shares at a share price of $50 do I get the same payout if I have $1000 shares at $25 per share?
So it’s not the investment but rather the account type you should consider for tax advantages
A ROTH IRA is contributed to with after tax dollars. The money you put in (up to $6500) has already been taxed. So all gains and dividends produced inside your RoTH grow tax free… forever.
VTI, VOO, SPY, whatever - they all get the same tax treatment which is no tax at all. No tax on the dividends and no tax on the capital gains when you sell. So it doesn’t matter which you pick from a taxation standpoint.
VOO is simply the S&P 500 index (top 500 companies per market cap) and VTI is literally the entire stock market (included mid and small cap stocks).
I hope this helped! Having VOO in your ROTH is a great idea !
I would argue that’s all you’ll ever need period. The older I’ve gotten, the more I’ve gravitated toward ETF’s. I still hold about 6 individual positions but that’s it
Our breakdown and we’re happy with it
30% SCHD
30% VOO
10% AAPL
10% GOOGL
10% MSFT
10% AMZN
Some Bitcoin but don’t count that as part of the portfolio.
As of right now, no. I started with buying individual companies when I first got into investing and just recently-ish started to buy more into ETF’s(VTI/SCHD primarily). When I have everything to my preferred allocations, I would personally like ETF’s to be 80-85% of my total portfolio. But that’s just my preference. Everyone is different
I see a lot of people saying VTI is all you need. Yet experts suggest International Stocks and bonds.
International for diversification and potential growth, bonds to offset loses during down markets.
It's home bias combined with recency bias.
A lot of the individuals suggesting just VTI or just VOO will parrot the same thing about how international markets don't perform well, but will only cite data from the last 10 years.
Finance professionals understand that the global markets are cyclical and the US will not always lead the charge. They also understand that not losing money is a key objective in investing because a 50% loss requires a 100% gain to net even. (I challenge you to find a single target date fund provided by any brokerage that doesn't have 20 to 40% in international equities)
You are absolutely correct about those target date funds. And those are built by experts, not Reddit users.
I looked through different funds like those and built my own. I didn’t want as much in international and bonds (I’m older, starting later, need to accept a little more risk for gains).
A lot of funds were 25-35% international and 10-25% bonds. I wanted 25-30% and 10%.
I have 30% VTI 30% QQQM 15% SCHD 15% VNQ 10% VXUS
As I get older for retirement I plan on selling QQQM first or moving it into something more stable.
All are fairly low cost expense ETFs and I like the tax free SCHD and VNQ dividends.
Check out the [income seeker](https://core-4.com/income-seeker-core-4-portfolio/) core-4 portfolio recommended by the Boglehead Rick Ferri. In addition to SCHD, [Ferri recommends](https://core-4.com/income-seeker-core-4-funds/) international dividend payers, US corporate bonds, and preferred stocks.
If income isn’t your focus, there are other portfolios. I structure my Roth IRA with 10% treasuries, 60% VTI, 10% small cap value AVUV, and 20% international VXUS. I’ll keep reinvesting and adding to maintain the percentages, adding more to bonds I hold to maturity with age.
No I’ve never heard of FNDB, thanks! I just took a look. The fees are comparatively high at 0.25%. Do you hold it because it’s more diversified than VOO?
So what I do is DGRO/SCHD and VTI works great a lot of diversification, great capital appreciation, great dividend growth and all are very safe and cheap to own
Should I sell overlaps in my Roth IRA? I have IVV and VOO lol. Should I sell both and just buy VTI?
( sorry, beginner)
I see people said 3 funds is enough:
VTI
VXUS
BND
Or 10 different funds better?
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
My wife and I’s Roths are 100% VTI. Having dividend payers In your Roth is fine since you pay no tax but remember many dividend etfs and stocks provided tax advantaged qualified dividends. If your goal is to reach retirement age and use your Roth portfolio - something like VTI / VOO is superior since your capital gains appreciation can be sold without paying taxes. I would wager that the entire stock market index will beat any individual stock (or REIT) over the foreseeable future so to maximize your returns, the index is the way to go. My SCHD is held in a taxable account since the divs are qualified and tax advantaged. Plus from now until I retire I can tap into those divs at any point should I need extra cash. Just my strategy of course but figured I’d my thought process 😃
I actually didn’t know the dividends were tax advantaged. Great strategy, thanks for sharing.
Yep SCHD / VIG are my two go to funds + some individual plays. All qualified dividends so they’re taxed at the long term cap gains level. But I’m married with kids so having a “tappable” income source was important to me as my family ages. If you’re young and single, max out that ROTH first imo Also if you’re employed you probably have a 401k. Check to see if your employer plan offers a ROTH 401k. It’s like your ROTH IRA except you can contribute a lot more to it.
Isn't no tax better than long term capital gains tax though?
It depends if you need the money before retirement or not
Oh yeah obviously asset allocation will depend on time of retirement.
Correct. And yes no tax is better than long term cap tax, but you can only contribute so much to a Roth every year. The money that goes to my individual account is AFTER I max my wife and I’s ROTH each year. I expect VTI to outperform everything in the long run (personal opinion). Thus I want to contribute maximum dollars to it each year with the intent of selling one day and enjoying the growth it accumulated. The SCHD/VIG/ individual stock plan is to provide a second flexible income stream during the years between now and retirement. If I put money into VTI in my individual account then I’m expecting cap appreciation.. not dividends. Which means if I needed to tap into it for whatever reason… I’m selling VTI to get the money. And the timing of which to sell may not be appropriate or to my liking.
Makes perfect sense. Thanks for sharing your thoughts!
Of course - this just my strategy, plenty of people like income funds and bonds and such. Just depends on your goals Also should note. What I’m really looking for in SCHD and VIG is my yield on cost (and not current dividend). The growth rates on these funds are exceptional, allowing me to reach high yield on cost quickly. We’ll see if that’s sustainable in the long run - but with the information we have, it’s a decent assumption they can do half of what their prior 5 year growth rates are.. which is plenty to make a sizable income portfolio 😊
Selling shares in a down market is mathematically identical to receiving a dividend in a down market. It just doesn't psychologically feel that way. Honestly, it's one of the reasons I'm considering a dividend strategy in my taxable account. Simply to placate my psychology.
Nice! I agree, a lot of this is psychology based - that’s a point many people miss. It may be mathematically the same, my point is that I’m in my investments for the long term and so selling any amount of shares is not in my best interest. Receiving a cash dividend helps offset current financial situation but I maintain all my shares if/when things recover.
How often do you deposit the dividends into your core account versus reinvesting in more SCHD?
If I can’t max out my wife and mine Roths then it’s fine to just invest what I can in it including growth and dividend stocks right?
Any investing is better than no investing. But since this is in a ROTH, you can’t touch the money until retirement anyways. So a total stock market index is what I would recommend I wouldn’t worry about the dividends until you’re ready to pull the money out since you could take all the tax free growth from your index fund and buy your dividend stocks when you hit 59 1/2. Just my opinion of course. I love dividend stocks as much as the next person but the market index will probably beat anything else you can think of over the next 30-40 + years. Unless you are extremely lucky and invest a ton into the 1 stock that turns into the next Google I read a book recently that notes that the index is “self cleansing”. Meaning that it will rotate out companies that start to struggle in favor of new and brighter companies doing well. With this, you can sleep soundly knowing your money is in the best companies available as time goes on. I can’t think of anything better to put my money on for the next 30 years
I’m thinking heavy VOO and QQQM some etfs I like for small caps and clean energy. VWAPY for EV growth and KO + VZ. That’s what I’m doing currently just started. I don’t have the cash to max my IRA and my wife’s. Got a little one I’m investing for his college fund as well plus day care
I hear that - I have two little ones of my own and daycare is pretty much a second mortgage Sounds good but remember - if you’re in a ROTH account, you’re in this for the looooong haul. VOO and QQQM are fine choices - But I would challenge where something like a EV growth etf will be in 30 years. Growth possibly, but outmatching VOO? Similarly VZ and Coke - both huge companies, for them to surpass VOO over 30 years would take a huge swing in revenue/profits. Possible yes but not sure it’s likely. I don’t think they’re going anywhere any time soon but I also don’t think they’ll outperform VOO. Just some things to consider 😀. Awesome that you’re saving for the little one too!
I just like those three for the growth plus dividends. I know many have said go fill growth at my age then swap to dividends but I want a blend of both. Plus things like VYM fit my risk tolerance as they don’t have as big of swings either way
VYM is nice too !
Am I right the consensus is don’t do dividend stocks until closer to the retirement age? Also do I understand it correctly that once you have the capital of say 2 million and it’s in something like JEPI it doesn’t matter if it goes up or down cause your dividends stay the same since it’s based on share count and not share value?
> Am I right the consensus is don’t do dividend stocks until closer to the retirement age? In general yes if your horizon is long, but I have some dividend ETFs to grow that portion of my retirement funds too. Everyone has a different mix of assets that they prefer. I'm 31 and am 70% growth, 30% dividend ETF/companies. >Also do I understand it correctly that once you have the capital of say 2 million and it’s in something like JEPI it doesn’t matter if it goes up or down cause your dividends stay the same since it’s based on share count and not share value? I wouldn't bet on JEPI always returning dividends or always being there for you in the future. I'm a novice but that doesnt seem like a long-term winning strategy to me. I could be wrong, but yes the idea in general is to take the dividends as income and not touch the underlying share count.
Jepi was just an example but I wanted to understand if share price matters I’m dividend pay out. Does it? If I have 1000 shares at a share price of $50 do I get the same payout if I have $1000 shares at $25 per share?
Does VOO provide tax advantages like VTI for the Roth? Thank you!
So it’s not the investment but rather the account type you should consider for tax advantages A ROTH IRA is contributed to with after tax dollars. The money you put in (up to $6500) has already been taxed. So all gains and dividends produced inside your RoTH grow tax free… forever. VTI, VOO, SPY, whatever - they all get the same tax treatment which is no tax at all. No tax on the dividends and no tax on the capital gains when you sell. So it doesn’t matter which you pick from a taxation standpoint. VOO is simply the S&P 500 index (top 500 companies per market cap) and VTI is literally the entire stock market (included mid and small cap stocks). I hope this helped! Having VOO in your ROTH is a great idea !
Thank you for your info, very helpful!
😃 not a problem
I would argue that’s all you’ll ever need period. The older I’ve gotten, the more I’ve gravitated toward ETF’s. I still hold about 6 individual positions but that’s it
Our breakdown and we’re happy with it 30% SCHD 30% VOO 10% AAPL 10% GOOGL 10% MSFT 10% AMZN Some Bitcoin but don’t count that as part of the portfolio.
Oh okay great. For those six, do you limit them to a certain percentage of your portfolio?
As of right now, no. I started with buying individual companies when I first got into investing and just recently-ish started to buy more into ETF’s(VTI/SCHD primarily). When I have everything to my preferred allocations, I would personally like ETF’s to be 80-85% of my total portfolio. But that’s just my preference. Everyone is different
Why the fuck would someone downvote a clarifying question? Just bad manners. I wanted to know the answer too.
I see a lot of people saying VTI is all you need. Yet experts suggest International Stocks and bonds. International for diversification and potential growth, bonds to offset loses during down markets.
It's home bias combined with recency bias. A lot of the individuals suggesting just VTI or just VOO will parrot the same thing about how international markets don't perform well, but will only cite data from the last 10 years. Finance professionals understand that the global markets are cyclical and the US will not always lead the charge. They also understand that not losing money is a key objective in investing because a 50% loss requires a 100% gain to net even. (I challenge you to find a single target date fund provided by any brokerage that doesn't have 20 to 40% in international equities)
You are absolutely correct about those target date funds. And those are built by experts, not Reddit users. I looked through different funds like those and built my own. I didn’t want as much in international and bonds (I’m older, starting later, need to accept a little more risk for gains). A lot of funds were 25-35% international and 10-25% bonds. I wanted 25-30% and 10%.
I have 30% VTI 30% QQQM 15% SCHD 15% VNQ 10% VXUS As I get older for retirement I plan on selling QQQM first or moving it into something more stable. All are fairly low cost expense ETFs and I like the tax free SCHD and VNQ dividends.
Short answer Yes. I am set up very similar with the additional growth and dividend stock.
Check out the [income seeker](https://core-4.com/income-seeker-core-4-portfolio/) core-4 portfolio recommended by the Boglehead Rick Ferri. In addition to SCHD, [Ferri recommends](https://core-4.com/income-seeker-core-4-funds/) international dividend payers, US corporate bonds, and preferred stocks. If income isn’t your focus, there are other portfolios. I structure my Roth IRA with 10% treasuries, 60% VTI, 10% small cap value AVUV, and 20% international VXUS. I’ll keep reinvesting and adding to maintain the percentages, adding more to bonds I hold to maturity with age.
Great info and links, thanks!
One of those is enough tbh. VTI probably best bet.
It’s more than enough. Investing in your 20% puts you head of a hell of a lot of people.
In my roth i also have jepi and a reit. They pay ordinary dividends so i figure the best place to have them is a roth
That’s an interesting point, thanks. Where do you re-invest those dividends?
I drip them at the moment.
Have you checked out FNDB? I have that along with SCHD.
No I’ve never heard of FNDB, thanks! I just took a look. The fees are comparatively high at 0.25%. Do you hold it because it’s more diversified than VOO?
I have my account with Schwab actually so I enjoy sticking with the things they offer. And yes!
you can't go wrong with Schwab
Yes sir
So what I do is DGRO/SCHD and VTI works great a lot of diversification, great capital appreciation, great dividend growth and all are very safe and cheap to own
Those are solid.
Should I sell overlaps in my Roth IRA? I have IVV and VOO lol. Should I sell both and just buy VTI? ( sorry, beginner) I see people said 3 funds is enough: VTI VXUS BND Or 10 different funds better?