FIRED Up Wealth
Motley Fool Analyst & Investment Educator
Holding broad US stocks compounds returns; crash selling and overtrading destroy that advantage. Most would be dramatically richer holding quality stocks or the market for life. The S&P 500 has compounded roughly 10% a year with dividends reinvested; DALBAR's studies show investors lag by 1-3 percentage points or more annually from behavior. Random stock buy-and-hold usually fails: durable quality or broad diversification captures the few firms creating almost all wealth. x.comÂ
Low-cost growth ETFs can build serious wealth through exposure to the best companies and strongest trends, without managing individual stocks. A clean setup is a core of VOO or VTI, a growth tilt through SCHG, VUG or QQQM, and an aggressive tech tilt through VGT. The ranking is SCHG, VUG, QQQM, SPYG, VGT, MGK, then IWF, which is solid but costlier. Many overlap, so owning all adds little diversification, and growth-heavy funds can be hit hard by rising rates, tech selloffs or rotation to value. … Show more
The Schwab U.S. Dividend Equity ETF is having a massive year while providing steady passive income. Boring investments held for the long term are how wealth gets built. x.comÂ
The VUS ETF should keep a 3.5-4% yield over the next five years while delivering high growth that crushes SCHD. Its top holdings are Apple, Nvidia, Broadcom, Microsoft and Micron, yet it pays a dividend of over 3%, and no one is talking about it. x.comÂ
For most individual investors, ETFs tracking the S&P 500 or a world index are the best way to build wealth, with at least 50% of a portfolio there. A concentrated portfolio of 5-10 stocks, mostly AI-buildout names, could work for skilled stock pickers but could also suffer a 70% drawdown, and most people lack the skill, patience or funds to handle the swings of growth stocks. x.comÂ
Schwab US Dividend Equity ETF pays more to live on in retirement than an S&P 500 fund. At its 12.93% annualized total return since 2011, $500 a month from age 25 to 62 grows to about $4.41 million, and its 3.46% yield then pays about $152,000 a year without selling a share. The same plan in Vanguard's S&P 500 ETF builds a bigger $6.17 million pile but pays only about $73,000 a year in dividends. x.comÂ
The Global X SuperDividend ETF is a silly product that works well as a short to hedge long positions. Simply buying the world's highest-yielding dividend stocks is virtually guaranteed to underperform in almost all market conditions because of adverse selection. The fund has produced essentially zero total return, dividends included, over 15 years of a raging bull market. The short won't pay off in every rolling 12-month period, but it does in most. x.com x.com x.comÂ
Owning the S&P 500 and Nasdaq-100 through low-cost index funds captures tomorrow's winners as they emerge without predicting them, since both indexes keep replacing fading companies with stronger ones. Since inception, the S&P 500 fund is up about 814% and the Nasdaq-100 fund about 1,683%. Contribution rate matters more than timing: $400 a month at 10.5% for 30 years grows to about $876,000, double the $438,000 from $200. x.comÂ
The Schwab U.S. Dividend Equity ETF can generate meaningful passive income. Holding 20,000 shares at roughly a $0.25 quarterly dividend would pay about $5,000 every quarter without effort, enough income for some people to retire on. x.comÂ
QQQ remains the better way to grow wealth than QQQI, because taxes on QQQI's distributions further erode its return even for holders who reinvest them. A post the author replies to notes QQQI lets holders keep distributions without selling shares, which some prefer. x.comÂ