VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

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pc95
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Joined: Sat Sep 17, 2011 9:26 pm

VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by pc95 »

Been awhile since on Bogleheads - Its been a tough year for this dividend investor. Prior to this volatile market (ala virus), had stock singles, CDs, smaller amount of ETFs, foreign currencies, gold, and 401ks. Never got a rental - too many horror stories from friend land-lords. To recap - Singles have taken beatings, although recovered a portion in some; still whooped thanks to a fairly large portion in Energy singles and some REITs. Had had VYM a few years ago, but was not as enthusiastic of it when market was in a comparatively much better place. For long while (working years) have been doing apportioning investment within stock and CDs for 15+ years (in addition to normal 401ks). It helps us sleep at night Fixed income with CD's has been shredded, and is paltry - so have turned back to VYM and SCHD - don't like volatility in singles, so now looking at dividend ETFs. Initiated positions in SCHD and SCHX in the early summer, but now wondering where's a good place to take cover and still grab a 3-4% return? Are stocks in for a medium term downslope for 3-5 years? Or more? Or just 1 or 2? Dont know.

Interest rates all but assure CD anemic returns for 2-4 more years (thank you FED) --- https://www.nytimes.com/2020/09/16/busi ... rates.html I have a hard time with a 5 yr 1.5% CD - cannot do that really. I had pinched my nose with 2.75% 5-year CDs before in the mid 2010s for my conservative appetite . The stench is awful now for 1.5% CDs.....SFGIdirect just slashed their online rate again to 0.67%. Its getting bitterly close to "under the mattress" and reminding me grimly of Japan bank rates (truly awful). What's a value investor to do?

Anyone for the old Dollar-Cost-Averaging with ETFs? is the 'mattress' for sky-fallers only? For what its worth, I do have the obligatory gold position in real metal and ETF. Not interested in it at current levels (and it doesn't give income!) Currently I've been dividing about 35% to the 'mattress' and 65% to ETF 'fishing'. Wondering about allocating a chunk of fishing to straight Dollar Cost Averaging. The 401s are already on blends. What-say-you? Danke.
dru808
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by dru808 »

pc95 wrote: Fri Oct 16, 2020 11:50 pm
Been awhile since on Bogleheads - but now wondering where's a good place to take cover and still grab a 3-4% return? Are stocks in for a medium term downslope for 3-5 years? Or more? Or just 1 or 2? Dont know.

What-say-you? Danke.
Do you think the core boglehead investing philosophy has changed since you’ve been gone?

If we knew what was in store for the next 5 years we’d all get rich quick.
60% SCHK | 25% VIGI | 15% ILTB
Bama12
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by Bama12 »

SCHD...
Topic Author
pc95
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by pc95 »

I think its fairly safe to state that this has little to do with getting rich quickly - and more to do with smoothing out bumps, or contemplating ephemerality of our new trends. Have been lucky enough with my profession to stay away from trappings of getting rich quickly to a degree - or maybe having more to do with my work history. I'm more interested in economic stability which in these so-called modern economic times seems more and more precarious and difficult to come by. Being a saver is getting tougher, but what are the trajectory changes, large or small, that come with that? Or maybe there isn't any,,,,
snailderby
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by snailderby »

pc95, what's your goal with this portfolio? Lower volatility than the stock market with higher returns than cash or CDs? And are you still in the accumulation stage, or are you approaching (or enjoying) retirement?
aristotelian
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by aristotelian »

I am not clear what you are proposing. Are you taking money from CD's and replacing them with dividend stock ETF? That seems like exactly what the Fed wants you to do, taking increased risk in response to low yields. Many people are doing this and this type of talk gives me concern that there is a bubble forming. There is a saying not to fight the Fed... But in my opinion, this amount to reverse market timing.

If you are talking about shifting from VTI to SCHD, while maintaining the same stock allocation, this is less problematic but still I don't see any reason why that would be more "conservative". There is a good chance that you will miss out on the TSLA's and AMZN's of the world and underperform. Nobody knows the future, but I do know that VTI is more diversified.
nix4me
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by nix4me »

I like dividend stocks as well but do realize that every stock that is in SCHD and VYM are also in VTI.
Topic Author
pc95
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Joined: Sat Sep 17, 2011 9:26 pm

Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by pc95 »

[quote=snailderby post_id=5551585 time=1602937244 user_id=137228]
pc95, what's your goal with this portfolio? Lower volatility than the stock market with higher returns than cash or CDs? And are you still in the accumulation stage, or are you approaching (or enjoying) retirement?
[/quote]

Yes, it may not be reachable now - low volatility with high(er) fixed returns one probably ought to accept one or the other. I've been investing in both, but it seems to be diverging. Will probably always be accumulation. Retirement now seems farther off. And you? I'm assuming retired. Investing is close to a hobby for me, but maybe that's part of the problem. Need to dig up my older hobbies or maybe build some new ones.
Topic Author
pc95
Posts: 208
Joined: Sat Sep 17, 2011 9:26 pm

Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by pc95 »

[quote=aristotelian post_id=5551645 time=1602939548 user_id=116225]
I am not clear what you are proposing. Are you taking money from CD's and replacing them with dividend stock ETF? That seems like exactly what the Fed wants you to do, taking increased risk in response to low yields. Many people are doing this and this type of talk gives me concern that there is a bubble forming. There is a saying not to fight the Fed... But in my opinion, this amount to reverse market timing.

If you are talking about shifting from VTI to SCHD, while maintaining the same stock allocation, this is less problematic but still I don't see any reason why that would be more "conservative". There is a good chance that you will miss out on the TSLA's and AMZN's of the world and underperform. Nobody knows the future, but I do know that VTI is more diversified.
[/quote]

Right, this is what drove me into stocks more earlier to begin with. With exception of 401k which seemed different, it was a set and forget it, so easier to autopilot - and picked our allocations and have kept to them mostly. 4 and 5% CD rates were great (they were around awhile before) - 4% surfaced in latter 2018 for about 2-3 months - it was like a sighting of a rare bird in the wild. I'm wondering now that'll be the last sighting in my lifetime. The debt these days that people face is mind-boggling. Thanks for the comment.
bondsr4me
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by bondsr4me »

pc95 wrote: Fri Oct 16, 2020 11:50 pm Been awhile since on Bogleheads - Its been a tough year for this dividend investor. Prior to this volatile market (ala virus), had stock singles, CDs, smaller amount of ETFs, foreign currencies, gold, and 401ks. Never got a rental - too many horror stories from friend land-lords. To recap - Singles have taken beatings, although recovered a portion in some; still whooped thanks to a fairly large portion in Energy singles and some REITs. Had had VYM a few years ago, but was not as enthusiastic of it when market was in a comparatively much better place. For long while (working years) have been doing apportioning investment within stock and CDs for 15+ years (in addition to normal 401ks). It helps us sleep at night Fixed income with CD's has been shredded, and is paltry - so have turned back to VYM and SCHD - don't like volatility in singles, so now looking at dividend ETFs. Initiated positions in SCHD and SCHX in the early summer, but now wondering where's a good place to take cover and still grab a 3-4% return? Are stocks in for a medium term downslope for 3-5 years? Or more? Or just 1 or 2? Dont know.

Interest rates all but assure CD anemic returns for 2-4 more years (thank you FED) --- https://www.nytimes.com/2020/09/16/busi ... rates.html I have a hard time with a 5 yr 1.5% CD - cannot do that really. I had pinched my nose with 2.75% 5-year CDs before in the mid 2010s for my conservative appetite . The stench is awful now for 1.5% CDs.....SFGIdirect just slashed their online rate again to 0.67%. Its getting bitterly close to "under the mattress" and reminding me grimly of Japan bank rates (truly awful). What's a value investor to do?

Anyone for the old Dollar-Cost-Averaging with ETFs? is the 'mattress' for sky-fallers only? For what its worth, I do have the obligatory gold position in real metal and ETF. Not interested in it at current levels (and it doesn't give income!) Currently I've been dividing about 35% to the 'mattress' and 65% to ETF 'fishing'. Wondering about allocating a chunk of fishing to straight Dollar Cost Averaging. The 401s are already on blends. What-say-you? Danke.
You may want to look at VIG also.
LTC1952
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Joined: Sat Nov 29, 2014 10:16 am

Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by LTC1952 »

I have SCHD since I have my taxable and SD IRA with Schwab. VYM would be fine, too.
snailderby
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by snailderby »

pc95 wrote: Sat Oct 17, 2020 8:25 am
snailderby wrote: Sat Oct 17, 2020 7:20 am pc95, what's your goal with this portfolio? Lower volatility than the stock market with higher returns than cash or CDs? And are you still in the accumulation stage, or are you approaching (or enjoying) retirement?
Yes, it may not be reachable now - low volatility with high(er) fixed returns one probably ought to accept one or the other. I've been investing in both, but it seems to be diverging. Will probably always be accumulation. Retirement now seems farther off. And you? I'm assuming retired. Investing is close to a hobby for me, but maybe that's part of the problem. Need to dig up my older hobbies or maybe build some new ones.
If your goal is higher returns than cash but lower volatility than a total stock market fund, you considered a mix of stocks and bonds? Check out the graph in this link: https://www.portfoliovisualizer.com/bac ... tion4_3=70. A high dividend yield stock ETF would not have provided much downside protection in the 2008 to 2009 recession. Its value would have dropped by more than half, even more than the total stock market. A 30/70 split between a total stock market fund and intermediate treasuries, on the other hand, would have provided higher returns than cash with much lower volatility than a high dividend yield stock ETF. But this is just an example. Depending on your tolerance for risk and how close you are to retirement, you can adjust your stock/bond ratio to taste.
ChinchillaWhiplash
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by ChinchillaWhiplash »

Have you looked at International funds? Yields are generally higher than in the US. VYMI has a pretty high yield. Standard International index funds probably have higher yields than VYM. Also EM bond funds might be worth a look. EMB comes to mind. HYMB for municipal bond fund. Also, these classes are less correlated to Total US market and might provide a little stability in downturns. All have higher risk than traditional fixed income though and could still be pretty volatile.
tj
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by tj »

nix4me wrote: Sat Oct 17, 2020 8:15 am I like dividend stocks as well but do realize that every stock that is in SCHD and VYM are also in VTI.
The weighted allocations are completely different.
stlutz
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Re: VYM vs SCHD vs ? - Strategizing Moderately Conservative Investing

Post by stlutz »

We need to remember is that everything is priced relative to everything else. The pricing of stocks reflect the fact that interest rates are at 0 and will be for a while. Prices of residential real estate have gone up because mortgage rates are so low. And so forth.

An an investor, I wish I could get a CD yielding 5% and that stocks were selling at 8x earnings. They aren't.

The question for you is whether the current situation means that you have a *need* to take more risk. And are you willing to do so? From the OP I can't answer those questions for you, but worrying whether ETF X yields 2% while ETF yields 3% is putting the cart before the horse.
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