I built my core portfolio that I’ll invest weekly into until the day I die. QQQM 25%, SCHD 13%, DGRO 12%, VGT 25%, VOO 13%, VTI 12%. I treat VOO & VTI like one ETF so it makes up the 25%. They’re so close in performance I figured just to split them and take advantage of both. They do have slightly different returns over time.
@@jian11188 That’s an awesome portfolio. You might consider splitting SCHD with DGRO and VTI with VOO. They compliment each other. So instead of looking at them as 4 ETFs, look at them as 2 ETFs. You really should add VGT to your mix. You’re young. You will thank me in 30 years that you added VGT.
Love the portfolio. I think this will spit out the dividends you need long-term with the contribution amounts you're putting in! You're in a great spot to not have to chase dividend yield some day! The growth will continue (rocky road, but zoomed out is good) in retirement. Great place to be.
My core positions are SCHD, QQQM and VOO. While the market it down, I focus on QQQM and VOO, they are the better deal and given my limited means to begin with, it makes buying those shares that much easier for me - just to buy them. Once the market takes off again, the needle on SCHD isn’t going to move as much, It’s always going to be easier for me to acquire individual shares, and I’m relying dividends anyway.
Hey Robert. That is a perfect plan! I love that you are buying more of the holdings when they are down. One of the hardest things for me to help people with is that we need to do the opposite of our emotions. Many tell me that will buy something like QQQM when it goes up again. This is doing it exactly wrong. You have it down sir!
Great job Teeps. I just joined the membership. Not sure how much I need a million spreadsheets (ha), but I wanted to support your efforts. Keep up the good work.
Great video! I’m glad to see the channel grow! I started with Professor G and wanted to find a similar strategy from someone less clickbaity. So happy to have found your channel a few months ago! 😊
Thanks Ben! I appreciate it. I watch Professor G as well. Good dude. I don't think my channel will be as successful as some of the bigger creators. I'm a bit more boring (: But I'm not going anywhere. Glad to have you here for the journey.
My workplace retirement account only allows mutual funds which have higher expense ratios. They have an above average match. What would you do in this case? Thank you so much for your channel!!!
Jeff, excellent vid man...finally some XLK love! You can't go wrong with XLK, VGT, or even FTEC as the best tech ETFs...but when it comes down to Total Returns, you simply will have a very hard time finding anything that beats XLK on any of the mid to long term time frames...not enough people talk about XLK.
I think XLK is great! Can't go wrong with it as long as we stay the course. XLK has been amazing the past decade particularly. I was shocked to see VGT beat it over 20 years (that includes the run up recently, VGT beat it by 'that much and then some' over the previous decade). VGT also won the dollar cost average investing scenario, albeit close to a tie. To me, they are a coin flip. I like small and mid tech added, personally. But like you said, can't go wrong with either.
Also VGT is cheaper too. . Lol😂. .09 vs .10. I think VGT is great too. I just prefer the more concentrated funds like XLK, VOO and SCHD over VTI, VGT and VYM.
GREAT video Jeff. Love so many of those ETFs. Have SCHD, DIVO, VGT, QQQM, VOO, VTI. Have the right levels for 2 of 3. Still need a little more growth. Thanks for all your excellent presentations. Lastly and most importantly I continue to pray for you, your wife and family and continued peace during this difficult time and the loss of a dear man in your lives. Peace be with you.
Thank you Lance. I appreciate the feedback about the channel and you being a channel member. It means a lot. But your wishes for my family means even more!
Thanks for watching and for the suggestion. I think that is a great idea. I'll look into pull that data next time. The screener I use doesn't have it, but I should be able to drop another data table in and get it added.
I love it! Stay the course during these bumpy times. Keep dollar cost averaging into your portfolio with new buys. Selling gets more tempting as things fall. Don't do it! (: We'll be happy when we zoom out.
Another great video and truly timeless advice! One thing I was thinking about was the % allocation for cash. It seems to me what you really need is a certain amount of cash on hand as a % of your yearly expenses, not truly as a % of your assets. So, initially when you first start that 3-6 month of savings may actually be higher than 10% of your total assets, same when you have a family and put in 6-12 months in. But as you get older and your investment portfolio grows, sticking to 10% may push you into putting too much cash on the sidelines unnecessarily. Example would be if yearly expenses are $50K/year and you have $2M of assets. 10% is $200K in cash, which is 4 years of expenses and likely way more than anyone would actually require. I’d say the most you’d want in this case is $150K (3 years expenses) and only for those who are at/very near actual retirement. Otherwise you likely are more than covered with even less than that. You could still keep the 10% but use the difference (10% - cash needed for x months of savings) for things like HODL factory/individual investments/more risky things like crypto.
That is awesome feedback Anthony. I agree with everything you said as far as the cash fluctuating in the different stages of our investing journey. I like to keep it at 10% of my main investment pie. This is somewhat a replacement for not having bonds. I prefer HYSA + SCHD to replace 'that' long-term. But it is mostly for auto-dip buying as well. Even if I have 3 million in the portfolio, I like that 300k cash for shopping when the next -30% crash comes (and leaves me cash heavy). It's a bit of peace of mind for me, but really it's opportunity money. I always talk about how timing the market is bad, and I stand by that. But I still like to get quality ETFs at a good price over time. I take my system over my gut. I'm not the next Warren Buffett to be sure (:
Thanks for the video. Whenever the market has consecutive days in the red, it’s always good to hear reminders to stay the course. Honestly, my portfolio wouldn’t be where it is now if I had sat on the sidelines. Dollar cost averaging through the downturns got me to having almost a million dollars in my investment portfolios.
Hey May! Absolutely, when the red hits, it feels demoralizing at first. The longer I've 'stayed the course', the more my mind has shifted. I'm down ~$80k in the past few weeks. The more red I see the more I smile. If we never sell, and keep adding shares, 'eventually' the market hits new all time highs. When the new highs hit, we have more shares. I guess we technically don't KNOW that it will always bounce back, but we have well over 100 years of a blueprint. If it never does, we all have much bigger problems than the market. Time to stay the course (:
I really appreciate the on hands visual of how to balance and "buy the dip" approach your have shared in this video. As i am currently moving from EdJones over to Robinhood, using this method over the next 6 months of DCA will help me to take advantage of the market movements. Keep up the great content. You do a fantastic job of catering to my smooth brain needs. 😆
Hey Roy. I'm glad that helped! The beauty is, it will never be wrong. It is mathematically impossible. I should make the point that holding individual stocks *can* have this method go wrong. Because a company can go to zero (buying a falling knife down to zero and throwing away money at 'the dip'). But, with low cost, passively managed ETFs, it is impossible to not by the dip with target allocations. I'm a math nerd, so I like to take my emotions out of the mix (:
Thanks for another great video Jeff! Hope you and the family are doing well. When rebalancing for your target percentages, do you ever sell out of one that's way over to bring up one that's way below? Or do you only ever rebalance via new investments and adjusting cash?
Hey Eric! Thanks for the kind words and for the question. This has been new grounds for me ever since I left my high paying job to start making these videos. I used to put new dollars into the underweight holdings. I had a lot of 'new dollars' back then (: I was always able to keep things balanced over time. With my portfolio getting larger over time, and me having way less income, I will likely need to throw in some actual rebalances here and there. I like the idea of truing things up on an annual basis. New dollars will trickle in, and I will buy the underweight holdings (that will never change). If the targets get way imbalanced over time, I'll likely sell some SCHD or VGT in my traditional IRA to buy the other. This will not trigger any tax events. I know the S&P 500 will get disproportionally high because we are still pumping money into my wife's 401k (100% goes to S&P 500). I'm okay with that imbalance for now, so I will concentrate on keeping SCHD, VGT, crypto (small slice), and my individual stocks balanced. I'm going to sell my 'JEPQ' later this year (when I have held it for a full year), so I'll be able to true up the underweight holdings at that time. Short answer: It's best to do it with new dollars every time you invest. I like the mindset of 'holding shares forever' if possible.
I appreciate the kind words Kumar. I'm glad the videos help. You are not alone in making mistakes. I wish I could say I'm perfect, but the lie detector would be beeping like crazy (:
Thank you for being here. Working on this channel last week was one of the few things that 'felt good'. So I rolled with it. Still not doing a lot of extra, though. Day by day.
Can you make a video comparing investing in only market and growth until your age 40-60 then investing into value/dividend. Versus starting in 20s with balance of market/growth/value÷nds the whole times into retirement age and what would have better returns
Hey Cameron. I have been brainstorming a video for this idea. I feel like things are getting scary right now because growth has gone up like crazy. It isn't 'always' the best to use growth until retirement, and then change. I'm a fan of a balance. Of course, 'more growth' is better for younger people, and 'more value' is better for retired folks, but I think a balance is always recommended. I'll keep plugging away at this one.
@JeffTeeples it is a common argument/discussion for alot of my etf buying friends. Keep up the great work I enjoy how you use graphs to break down different etfs yield etc it is helpful.
Another informative video. I'd like to suggest a couple of ETFs that may be worth looking into. I'm curious as to what you think about them. They seem comparable to the more well known but have a lower expense ratios. Over many years, the amount one's able to reinvest can add up. FTEC (Tech, alternate to VGT), SOXQ (Semi, alternate to SOXX), SPLG (S&P, alternate to VOO). If anyone can find the same type of alternate to SMH I'd really like to check it out. SMH is concentrated, but it's hard to deny what's needed to really fuel the beloved VGT ETF - Semi's. If you believe in VGT you have to believe in the 'gas' that will fuel the car. Oh, also SCHG>VUG and even QQQM (at times).
Hey Bryan. Thank you for watching and for the comment. I like all of the alternate ETFs you mentioned. They follow the same indexes and will get the job done. There are many great options for investors. Unfortunately, there are so many more terrible, high cost ETFs out there.
Great video. That’s why I’m a big fan of M1 finance. I like that I just deposit an amount of that I want to invest every week and it automatically keeps my target allocations as close as possible.
Thanks for watching and commenting. M1 Finance is so great for that. Easily the best I've come across. It's logic and methodology is superior when it comes to 'auto dip buying'. I'm established in E*Trade and enjoy it as well. But a small part of me always itches to go all in on M1 Finance.
I timed the market when I gained control of a family members Roth IRA recently. Consecutive highs and hot inflation numbers just rubbed me the wrong way. So I kept 50% in the money market when S&P was pushing $5300. That's the good news. The bad news is I underestimated the pullback, and was down to a 10% money market position by last Tuesday! Now I'm using buy limits to average down every 1% on the lower price per share funds like the Jeps and SCHD. Then I'll use monthly and quarterly dividends to go shopping for VGT and VOO
Thank you for watching and for the comment. Nice work on the strategy. Once you get everything invested, the hard work is done. Then it’s dollar cost averaging in and staying the course. You got this!
Thanks for the comment Jed. Oh yeah, SCHG has been amazing in the past few years. Even better than QQQM, which is my favorite ETF of that type. Love the holdings of SCHG and the low expense ratio!
Looking at the returns over a long period on a yrly basis smooths everything out and hides the real pain and losses one could experience if you went all in at the wrong time. I know timing is a bad word. A good example of a bad period is if Jeff showed everyone the 10 yr return if you put 100k to work in various ETFs on 3/2000 and looked at your return 10 yrs later 3/2010. Hint, you would not break even on your QQQ purchase till 2014 after you felt it go down 80+%, not in one yr of course, but 3 yrs.
Hey Gary, I could not agree more. This is why I highly recommend a nice balance of categories. Growth is 'usually' the best over long periods of time, but we don't *know* what will happen in the next 'X amount of time'. To be clear, I don't cherry pick data at all in these videos. Zero. I use defined time frames (10 years, 20 years, 5 years, max, etc). But I understand your point, and agree with you.
Great video and thanks for the top notch content. I've watched this video several times and starting on my weekly homework..... how much weight do you put on expense ratio? Seems like your return outweighs the cost to do business. Thoughts?
Hey Anthony. Thank you for the kind words & great question. The beauty is that expense ratios are included in the 'total returns' from Seeking Alpha and portfolio back test. This has me spending no time 'doing the math' as it is all baked into the fund. However, past performance is no guarantee of future results. I do put a huge emphasis on expense ratios. For example, IYW is close to VGT and XLK over the past 20 years. It feel about 30% short, and the 0.40% expense ratio is likely a big portion of that difference. This doesn't seem like much, but it will be a six figure difference over time. IYW would have to outperform XLK and VGT by a solid amount to cancel the compounding expense ratio. It is a fantastic 'tie breaker' when things are fairly close on performance. I will say that anything under 0.20% is pretty darn good. For example, I'll go with QQQM over SCHG 'IF' I like QQQMs holdings and performance better.
Generally where is it best to keep these etfs? Brokerage account? Roth IRA? Traditional Ira? Where is best to keep something like SCHD? Thank you Jeff!!!
Thank you for the questions. The ETFs in this video, along with SCHD, are all great within any account type. They all pay qualified dividends, so a taxable brokerage works well. Anything is great in a tax protected account (especially funds that pay non-qualified dividends like JEPQ). I like to hold my SCHD in a taxable account, and VGT in an IRA, personally.
Love your channel!! 🎉 I have a question 🙏🏻 from a fellow accountant! You said that QQQ is great cuz it rebalances automatically but VGT doesn’t quite do the same? I didn’t understand! Does VGT rebalance itself like other indexes? If not, how does it stay current? Thx! ❤
Thanks for the kind words Matthew. VGT will rebalance 'within tech'. So it will capture market cap changes over time within technology. What I meant was QQQM will balance across sectors. If the trend of the new largest 100 companies in the Nasdaq changes, QQQM will automatically update much like VOO grabs the largest 500 companies. If a new sector takes over and tech takes a dive, VGT will go down while QQQM will hold more companies of the new sector. It is about 50% tech right now, but who knows what the future will hold. I will say, I believe in tech long-term, and thus love VGT. But it is less 'self-updating' if the sector trends change. VGT will hold tech only if tech is the best sector (which it has been) or the worst sector (ouch).
Quick question Jeff, is there a reason why you would ever invest in multiple Growth ETFs, such as SCHG, VGT, and XLK in the growth section, instead of investing in just one Growth ETF in the growth section?
Hey Drake. I think it makes sense to have multiple growth ETFs if you like them for different reasons. For example, I have been rolling with VGT for the past many years. I am going to add QQQM to my growth mix. I love VGT, but don't want 100% of my growth in technology. QQQM is about 50% tech. So a 50/50 mix will get me 75% tech, which I like (because I love tech), but it gives me a little help if tech drops in the future. When you hold both, you guarantee that you will get returns right in the middle each year.
Hello Jeff, I have recently watched your portfolio allocation by each age group video and decided to rock with 10% SCHD, 40% VOO, and 50% Growth ETFs. And now after watching this video, I have decided to allocate 17% into both XLK and VGT and 16% into QQQM = 50% Growth ETF. Is the different mix of Growth ETFs in the growth section of my portfolio acceptable?
Thank you for watching and for the question. I think that is a great growth mix. As long as you don't panic sell when the market crashes, you'll do great when you zoom out a couple decades. When the next crash comes, and it will, be sure to keep dollar cost averaging into the market. But the discounts of all 3 of those great growth ETFs and ride it out.
Thank you for watching and commenting! It helps a lot. I'm glad you enjoy the videos. I'm trying to keep the time down (been running long), but not at the cost of omitting valuable information (:
Thank you for watching and commenting! I always want to go game every time I see your name. Still have Tears of the Kingdom to start! Waiting for the right mindset. Lately it has been knocking out some Indie games on Xbox.
Thanks for watching and for the question. Small caps aren't bad to invest in. They will generally be more volatile than 'like sector' large caps. You'll crash more when times are hard, but boom more when the smaller companies are on the come up as well. The reversion to the mean over time makes any 'type' of funds viable.
I would like to add more to my question, what is right amount to DCA to the machine so it makes sense to get the $200,000 all in. I should fund this account first and just hold . Are those three slices I have purchased are great combo for beginner like me?
I'm so nerdy I think I answered all of these questions in the first one (: You definitely want to get it in the market (in general), but doing so at your desired pace is the right move.
Thank you for the fantastic content and congrats on your success as an investor!.. I am a new subscriber to the channel. I am holding to buy my core growth etf position for my portfolio because of recent market events. What's your opinion about start investing and buying overpriced large cap funds such as VGT IWY , etc , versus other "cheaper" growth funds such as XMMO , VOOG that are trading at much lower P/ E ratio. Thank you very much in advance!
Hey Walter. I think it's great to consider all data about the ETFs before building a portfolio mix. I would say build a portfolio (using 100%) based on your age, goals, risk tolerance, and work situation. For example, for me, I like about a third each of VGT / SCHD / VOO. Nothing to do with the market conditions 'right now', or the recent happenings. More about the future outlook (I'm a tech bull, for example, and thus VGT) of each. Past performance and quantitative data will help inform decisions. After you have your 100% target allocations (you may use VOOG for your growth instead of VGT, 'that' doesn't matter), it's all about staying the course. When you dollar cost average your money in over the years, you'll want to buy the one that is below it's target allocation (buying the dip without trying to get too cute with timing the market). Keep that going for 20-30 years and you'll be wealthy. I think changing the allocations is fine here and there as well. We want to stay open-minded, and things are always changing. But generally sticking to your targets will help build serious wealth.
@JeffTeeples thank you so much for the feedback!.. it is not easy to find content creators that share such high-quality information (life changing). I will consider your suggestion. My idea is to go all on growth for some time (with sector diversification to counterbalance) and then transient to more stable/ income. My best wishes to you and your channel, keep the good work 👏! Have a great week ahead 👍
"The answer is that we always buy." That goes against money managers who increasingly say that it is a good time to keep some money on the side . . . for better buying opportunities.
Hey John. Money managers are in this game to make more money (from you). They want it to sound as complicated as possible to get the business. I highly recommend Rob Berger's 'Retire Before Mom and Dad' and John Bogle's 'The Little Book of Common Sense Investing' for an understanding of how it works. I'll give you a little bit beyond the books here. The *VERY* few that outperform passively managed indexes will wait on the sidelines with cash waiting for the right opportunity. Think Warren Buffett, for example. There are two problems with this: 1) It loses well over 90% of them money over the past 100 years. This is a fact, and is not my opinion 2) The very few it works for, like Buffett, have so much more knowledge, time, and most importantly, qualitative information (directly from CEOs and boards) than folks like us will ever have Stay. The. Course. Nobody cares more about your money than *you*.
I'm doing 50/50 with SCHD and JEPQ because the total returns look good for both over time and it shouldn't be so emotionally painful in a market downturn or during rotations with value vs. growth stocks. The dividend income and DRIP with JEPQ should always keep a smile on your face each month regardless of what the market is doing... bull markets are easy for all of us, it's how we handle the bear markets emotionally that matter more IMHO.
Hey Stephen. I like VXUS better for the broad exposure and lower expense ratio. It has performed a decent amount better as well. I don't currently hold an International ETF. But that will likely change in the future. I'm always watching. I could see going with a slice of VT eventually. Or possibly VXUS.
If you had $100K to invest, is it more beneficial to allocate between 1 or 2 ETF ( ie: SCHD/DGRO) or multiple ETF (ie: SCHD, DGRO, SCHG, XLK, IYW)? Basically, focus on a few or divide equally between? Also, it seems like continued annual investment is better than just a beginning lump sum?
Hey Richard. I think it is best to have 3 ETF 'types'. I split between dividend ETFs (SCHD, DGRO), cornerstone ETFs (VOO, VTI), and growth ETFs (SCHG, XLK, IYW). Within each type, you can roll with one holding, or have multiple. Overlap doesn't matter at all within each type. For example, if you have 40% of your portfolio in 'growth', you can have 100% of that in XLK if you love tech that much. Or you can have 10% XLK 10% VGT 10% SCHD 10% QQQM. It will be $40k (in your scenario) regardless. Each ETF has 100% overlap with itself. Overlap DOES matter across types. If you replace some of your dividend section with QQQM, then you are 'heavy' in tech per your target allocations. Here is my canned answer for lump sum investing vs dollar cost averaging: Lump Sum vs DCA with large chunk received: The lump sum investing (LSI) vs dollar cost averaging (DCA) is the debate that will never die. It's a tough one that doesn't have a 'right answer'. LSI is better 67-80% of the time (depending on what study you follow). It makes sense, as the market 'generally' goes up over long periods of time. Time in the market beats 'waiting to time' the market over the years. However, you can LSI everything in, and see it drop by 40% the next month if the next recession hits. Nobody knows when that will happen. My suggestion is to LSI a solid amount (half if you're comfortable, or whatever % makes sense to you) into your investments. Then DCA the rest in over the next year or so (take the remaining amount to invest divided by 52 and invest that amount weekly). Again, there is no 'right answer' to this one. I tend to favor LSI, but it comes with its risks for sure. The key is to divide the DCA amount remaining by the number of weeks you want to spread it over, and stick to the system until it is fully invested.
People get confused about 'when overlap adds risk'. Let's say you have $100,000 total in your portfolio, and you want to put $40,000 into growth ETFs. The other $60,000 will go in VOO and SCHD. Let's say you have QQQM as your growth stock. All $40,000. Your 'growth' section is 100% in QQQM. QQQM has 100% overlap with QQQM. Some will argue you shouldn't split some of the money into something like VGT because 'VGT and QQQM have high overlap'. Meaning they hold many of the same companies. But $20,000 in VGT and $20,000 in QQQM will be 'less overlap' than $20,000 in QQQM and $20,000 in QQQM (aka $40,000 in QQQM). QQQM = QQQM. So every dollar buys the exact same thing. 'Overlap' is a bad reason to not put money into VGT because it has 'high overlap' with QQQM. Again, assuming we are talking about the $40,000 total for the growth section.
Haha, no doubt. Boeing is known for being in the news quite often. Not always (cough* rarely *cough) for good news. Thanks for watching and dropping a comment.
Hey Tyson. They are both fantastic, and they have an 80% weighted overlap. If you want more small and mid size tech companies, then you'll likely prefer VGT. It has 316 holdings. If you want to core up with the biggest companies only, then XLK is the one for you. It only has 68 holdings. XLK is basically the VOO of tech, and VGT is the VTI of tech. They are almost interchangeable, but slightly different. Nothing wrong with slicing it down the middle between both. It will get you the weighted average of the two. 10k in VGT 10k in XLK 5k in VGT & 5k in XLK The bottom option will always perform exactly in the middle (: The expense ratio is the same. VGT is .1%. XLK is .09%. A mix is .095%. People get confused and think it costs more to have both. It doesn't.
Thank you for the detailed response Jeff, it was very informative! Also, sorry to ask you another question but regarding fund overlap in one type, for example, in the growth etf section, if two funds, say QQQM and VGT, were split 50/50 would their high fund overlap be detrimental or no? I don't quite understand the concept of fund overlap fully.
Hey Tyson. As long as you have the same amount of money in total, it is not detrimental. You will get the weighted average of the two. For example: QQQM is about 50% tech stocks. VGT is 100% tech stocks. If you get an even mix of both, you'll have 75% tech stocks in your growth section. It will also give you the average return as well. If QQQM is up 10% and VGT is up 6%, you'll be up about 8% (assuming a 50/50 mix). Overlap is not bad within a specific section for your portfolio. For example, the above would be your growth section of your portfolio.
Thank you for watching and for the question. It is very important to track expense ratios. All things equal, or close to equal, I strongly recommend the lower expense ratios. Expense ratios are included in the data from Seeking Alpha & portfolio backtest. This saves me from crunching the numbers. But it is still worthy of having a column on my spreadsheet, because past performance doesn't guarantee future results, and I like to roll with funds that have lower expense ratios. IYW is 0.40% VGT is 0.10% XLK is 0.09% If they have similar results, I'm choosing VGT or XLK every time.
Thanks for the comment and great question. I would dollar cost average it into 33% VOO / 33% SCHD / 17% VGT / 17% QQQM. I like the growth and value mix. I have enough years of investing ahead of me to ride out the volatile growth.
Thank you for the comment and the suggestion. I do need to make a new video to detail by age allocations. I did make one a while back. It is here: ua-cam.com/video/mqmpaEOtO6o/v-deo.htmlsi=8qUNkO3tbxYvv0gw
@@JeffTeeples yes sir! Please continue doing what you're doing exceptional production and informative value! You can't get this type of money education not even at Harvard Business! Thank you, Jeff!
First! Jeff, congrats on the 20 new members this week (I was one)! Thank you...great video! Regarding dollar-cost-averaging during a rocky market vs leaving cash on the sidelines, suppose someone had 100k, or 300k, or 500k cash...over what timeline (how much of that cash per month) would you recommend dollar-cost-averaging in? Ideally, we'd still be putting cash in at the future lowest, low, but no way to tell when that will be. :)
Hey Nate. Thanks for joining the UA-cam membership! It means a lot. That is a great question. The lump sum investing vs dollar cost averaging is a great debate that doesn't have a 'right' answer. I'll post my canned answer below. However, for your specific situation, I would treat the amount you have to put into the market separately from your incoming cash flow. For example, if you have $1,500 to put into the market each week (new money from paycheck, after paying bills and saving as much as you can), put the entire amount in. Save and invest as much as possible. Hit that employer 401k match, and put away as much as you possibly can every month. Account for the $100,000 you have on the sidelines completely separately. You should still be plowing your money into the market as if it doesn't exist. As far as getting the $100,000: Dividend the full amount on the sidelines by how many weeks you want it to take to become fully invested. If you want it in over the next 52 weeks, you would put in $1,925 (slightly rounded) per week. Here is my answer to lump sum investing vs dollar cost averaging: LSI is better 67-80% of the time (depending on what study you follow). It makes sense, as the market 'generally' goes up over long periods of time. Time in the market beats 'waiting to time' the market over the years. However, you can LSI everything in, and see it drop by 40% the next month if the next recession hits. Nobody knows when that will happen. My suggestion is to LSI a solid amount (half if you're comfortable, or whatever % makes sense to you) into your investments. Then DCA the rest in over the next year or so (take the remaining amount to invest divided by 52 and invest that amount weekly). Again, there is no 'right answer' to this one. I tend to favor LSI, but it comes with its risks. The key is to divide the DCA amount remaining by the number of weeks you want to spread it over, and stick to the system until it is fully invested.
Jeff, thank you for the detailed reply. You use 52 weeks as the example timeframe. Is there a rule-of-thumb recommended timeframe window to use, or is it completely arbitrary? Thanks for the great content!
Very nice combo. Stay the course and dollar cost average into that in all markets. It will be a rollercoaster, but these things 'usually' go up when we zoom out (:
Hey Shelley. There are (next to) zero fees and taxes associated with buying and holding these ETFs. Are you able to elaborate on your question / concern? I'm not quite sure I follow. Perhaps you meant actively managed mutual funds or ETFs? In that case, I'm with you 100%. I don't remember the exact content of this video, but it should be the passively managed, low cost ETFs that I always discuss. Very low expense ratios and no 'bogus' fees attached (unlike some of the bad EFTs and mutual funds out there). If I eluded to the 'bad ones', I should have been very clear about it (but I don't recall talking about them).
So logically we don’t have to invest on other ETF’s since eventually growth will win . Why not just invest in one only like QQQM . Investing on other ETF’s brings our average profits down . 🤷🏻♂️
Hey Cesar. Technically, you are 'very likely' correct. If you can stomach the rollercoaster and have many years to invest, QQQM has outperformed S&P 500 over 40 years by a wide margin. This includes multiple recessions. However, you could see $1,000,000 turn into $300,000 over a couple years with another dot com like crash. If you were planning on retiring around then, you would have lost well over half of your cash flow from your new asset allocation. I'm a big believer in having growth, dividend, and a cornerstone (VOO or VTI). The amount of each will vary per preference. In your case, you may want to weigh heavily towards growth (QQQM) if you're okay with the rocky ride.
@@JeffTeeples thank you . I like this quote “History provides crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” Shelby M.C. Davis, Legendary Investor
Great question. QQQ is only used for the data because it has the history when looking back 5+ years. QQQM is the better buy. Same indexed holdings at a lower expense ratio.
Will be exciting to see how QGRW does. It's still new. I'm not a huge fan of the 0.28% expense ratio. But it's not too bad. But it puts it a little behind other great ETFs from the get-go.
I would like to know are the following all distributes qualified dividends? QQQm SCHD DGRO VGT VOO VTI . 2nd question, I have just open M1, and have been learning how to use the system, How do you feed the $200,000 into the system to achieve a decent results. I had just put in $6,800 in the account for 3 slices in the pie, 34% VOO 33% VGT 33% QQQM , but I would like to eventually put all of the amount I just mentioned . I have no experience in investment but watching you has been very encouraging, thank you for your help and guidance.
Hey Brianna! The first question is a yes. QQQM, SCHD, and DGRO pay qualified dividends. I've read that VOO pays 100% qualified dividends. It technically has some REITS, so I'm not sure how. Either way, it pays, or almost pays, 100% qualified dividends. I actually don't know for VTI, but I'm assuming its a similar situation. We can say that all of the tickers in question pay qualified dividends. I think your mix of VOO / VGT / QQQM is fantastic as long as you have a long-term mindset. VGT and QQQM will be rollercoasters along the way. Never sell low, and keep dollar cost averaging in. As you get closer to, or in retirement, you may want to consider slicing in some SCHD (or a quality dividend ETF of your choice). As far as when to invest, it is tricky between throwing it all in right away (lump sum investing) vs DCA. There is no right answer to this one, it is strictly based on preference. DCA may be a little better now with how the market is looking. If you use DCA, you can dividend the total amount by the number of weeks you want to get it in. Put in that much per week to slowly invest it all. Note that anything you 'normally put in' real time is separate from the $200,000 math. If you put in $1,000 per month from your normal income, this will be in addition to your dollar cost averaging in the large amount. 52 weeks is a fairly common one to use. It is better to be fully invested, long-term, but this will help you get it in over time without risking a market drop the following week. In your case, maybe drop something like $4,000 per week (or whatever makes you comfortable, there is no right answer, you could do $2k per week over 2 years, or drop half in and do $4k over a half year for the rest. It's fully up to you.
I'll be honest, I knew zero about this one. I think the reason is that the high expense ratio of 0.77% (that will be hundreds of thousands over an investing career) filters it out on my ETF finding process. It has performed fairly well, though! Out performed the market in the last 3-5-10 years. Not too shabby! (:
I built my core portfolio that I’ll invest weekly into until the day I die. QQQM 25%, SCHD 13%, DGRO 12%, VGT 25%, VOO 13%, VTI 12%. I treat VOO & VTI like one ETF so it makes up the 25%. They’re so close in performance I figured just to split them and take advantage of both. They do have slightly different returns over time.
I built more simpler, 31 years old. VTI 50%, QQQM 30%, SCHD 20%.
@@jian11188 That’s an awesome portfolio. You might consider splitting SCHD with DGRO and VTI with VOO. They compliment each other. So instead of looking at them as 4 ETFs, look at them as 2 ETFs. You really should add VGT to your mix. You’re young. You will thank me in 30 years that you added VGT.
Love the portfolio. I think this will spit out the dividends you need long-term with the contribution amounts you're putting in! You're in a great spot to not have to chase dividend yield some day! The growth will continue (rocky road, but zoomed out is good) in retirement. Great place to be.
Can't go wrong with that one. Nice work!
@@jian11188 You should really consider adding VGT to your mix.
My core positions are SCHD, QQQM and VOO. While the market it down, I focus on QQQM and VOO, they are the better deal and given my limited means to begin with, it makes buying those shares that much easier for me - just to buy them.
Once the market takes off again, the needle on SCHD isn’t going to move as much, It’s always going to be easier for me to acquire individual shares, and I’m relying dividends anyway.
Hey Robert. That is a perfect plan! I love that you are buying more of the holdings when they are down. One of the hardest things for me to help people with is that we need to do the opposite of our emotions. Many tell me that will buy something like QQQM when it goes up again. This is doing it exactly wrong. You have it down sir!
Great job Teeps. I just joined the membership. Not sure how much I need a million spreadsheets (ha), but I wanted to support your efforts. Keep up the good work.
Thank you for that! Very cool & helpful. I appreciate the extra support!
Great video! I’m glad to see the channel grow! I started with Professor G and wanted to find a similar strategy from someone less clickbaity. So happy to have found your channel a few months ago! 😊
Thanks Ben! I appreciate it. I watch Professor G as well. Good dude. I don't think my channel will be as successful as some of the bigger creators. I'm a bit more boring (: But I'm not going anywhere. Glad to have you here for the journey.
My workplace retirement account only allows mutual funds which have higher expense ratios. They have an above average match. What would you do in this case? Thank you so much for your channel!!!
keep pumping out those financial informational videos Jeff!!!!
Will do, Kevin. Thank you for the consistent support since the beginning.
Jeff, excellent vid man...finally some XLK love! You can't go wrong with XLK, VGT, or even FTEC as the best tech ETFs...but when it comes down to Total Returns, you simply will have a very hard time finding anything that beats XLK on any of the mid to long term time frames...not enough people talk about XLK.
yes, I have chosen XLK over VGT as my ETF for this sector.
I think XLK is great! Can't go wrong with it as long as we stay the course. XLK has been amazing the past decade particularly. I was shocked to see VGT beat it over 20 years (that includes the run up recently, VGT beat it by 'that much and then some' over the previous decade). VGT also won the dollar cost average investing scenario, albeit close to a tie.
To me, they are a coin flip. I like small and mid tech added, personally. But like you said, can't go wrong with either.
XLK is a fantastic choice. Thanks for sharing.
@@JeffTeeples agree...keep up the good work!
Also VGT is cheaper too. .
Lol😂. .09 vs .10. I think VGT is great too. I just prefer the more concentrated funds like XLK, VOO and SCHD over VTI, VGT and VYM.
You are the BEST!! I am learning so much from you. Thank you 🤩
Thanks Mandy! I appreciate the kind words (:
GREAT video Jeff. Love so many of those ETFs. Have SCHD, DIVO, VGT, QQQM, VOO, VTI. Have the right levels for 2 of 3. Still need a little more growth. Thanks for all your excellent presentations. Lastly and most importantly I continue to pray for you, your wife and family and continued peace during this difficult time and the loss of a dear man in your lives. Peace be with you.
Thank you Lance. I appreciate the feedback about the channel and you being a channel member. It means a lot. But your wishes for my family means even more!
Good job and great content; in POV u should also consider the P/E. I chose to invest in SMH and skipped xlk just because of the high p/e ratio.
Thanks for watching and for the suggestion. I think that is a great idea. I'll look into pull that data next time. The screener I use doesn't have it, but I should be able to drop another data table in and get it added.
VGT in one portfolio, QQQ in another portfolio. Sticking to the basics as always!
I love it! Stay the course during these bumpy times. Keep dollar cost averaging into your portfolio with new buys. Selling gets more tempting as things fall. Don't do it! (:
We'll be happy when we zoom out.
Thank you for another great video! Hang in there, stay strong!
Thanks Oldrin! I appreciate the consistent support of the channel.
Another great video and truly timeless advice! One thing I was thinking about was the % allocation for cash. It seems to me what you really need is a certain amount of cash on hand as a % of your yearly expenses, not truly as a % of your assets. So, initially when you first start that 3-6 month of savings may actually be higher than 10% of your total assets, same when you have a family and put in 6-12 months in. But as you get older and your investment portfolio grows, sticking to 10% may push you into putting too much cash on the sidelines unnecessarily. Example would be if yearly expenses are $50K/year and you have $2M of assets. 10% is $200K in cash, which is 4 years of expenses and likely way more than anyone would actually require. I’d say the most you’d want in this case is $150K (3 years expenses) and only for those who are at/very near actual retirement. Otherwise you likely are more than covered with even less than that. You could still keep the 10% but use the difference (10% - cash needed for x months of savings) for things like HODL factory/individual investments/more risky things like crypto.
That is awesome feedback Anthony. I agree with everything you said as far as the cash fluctuating in the different stages of our investing journey.
I like to keep it at 10% of my main investment pie. This is somewhat a replacement for not having bonds. I prefer HYSA + SCHD to replace 'that' long-term. But it is mostly for auto-dip buying as well.
Even if I have 3 million in the portfolio, I like that 300k cash for shopping when the next -30% crash comes (and leaves me cash heavy).
It's a bit of peace of mind for me, but really it's opportunity money. I always talk about how timing the market is bad, and I stand by that. But I still like to get quality ETFs at a good price over time. I take my system over my gut. I'm not the next Warren Buffett to be sure (:
Thanks for the video. Whenever the market has consecutive days in the red, it’s always good to hear reminders to stay the course. Honestly, my portfolio wouldn’t be where it is now if I had sat on the sidelines. Dollar cost averaging through the downturns got me to having almost a million dollars in my investment portfolios.
Hey May! Absolutely, when the red hits, it feels demoralizing at first. The longer I've 'stayed the course', the more my mind has shifted.
I'm down ~$80k in the past few weeks. The more red I see the more I smile. If we never sell, and keep adding shares, 'eventually' the market hits new all time highs. When the new highs hit, we have more shares.
I guess we technically don't KNOW that it will always bounce back, but we have well over 100 years of a blueprint. If it never does, we all have much bigger problems than the market.
Time to stay the course (:
Keep investing no matter what the market is doing. If the market drops, you get more shares for your dollar.
Amen! This is the way!
Jeff
I wish I know this formula ten years ago.
Thank you
Edwin
That is the beautiful thing about investing, it's never too late. But I completely agree with your sentiment (:
Informative analysis Jeff and explained so clearly. Thank you.
Thank you for always being here in the comments. I appreciate it, and I'm glad you like the videos!
I really appreciate the on hands visual of how to balance and "buy the dip" approach your have shared in this video. As i am currently moving from EdJones over to Robinhood, using this method over the next 6 months of DCA will help me to take advantage of the market movements. Keep up the great content. You do a fantastic job of catering to my smooth brain needs. 😆
Hey Roy. I'm glad that helped! The beauty is, it will never be wrong. It is mathematically impossible.
I should make the point that holding individual stocks *can* have this method go wrong. Because a company can go to zero (buying a falling knife down to zero and throwing away money at 'the dip').
But, with low cost, passively managed ETFs, it is impossible to not by the dip with target allocations. I'm a math nerd, so I like to take my emotions out of the mix (:
Thanks for another great video Jeff! Hope you and the family are doing well.
When rebalancing for your target percentages, do you ever sell out of one that's way over to bring up one that's way below? Or do you only ever rebalance via new investments and adjusting cash?
Hey Eric! Thanks for the kind words and for the question.
This has been new grounds for me ever since I left my high paying job to start making these videos. I used to put new dollars into the underweight holdings. I had a lot of 'new dollars' back then (: I was always able to keep things balanced over time.
With my portfolio getting larger over time, and me having way less income, I will likely need to throw in some actual rebalances here and there. I like the idea of truing things up on an annual basis. New dollars will trickle in, and I will buy the underweight holdings (that will never change). If the targets get way imbalanced over time, I'll likely sell some SCHD or VGT in my traditional IRA to buy the other. This will not trigger any tax events.
I know the S&P 500 will get disproportionally high because we are still pumping money into my wife's 401k (100% goes to S&P 500). I'm okay with that imbalance for now, so I will concentrate on keeping SCHD, VGT, crypto (small slice), and my individual stocks balanced.
I'm going to sell my 'JEPQ' later this year (when I have held it for a full year), so I'll be able to true up the underweight holdings at that time.
Short answer: It's best to do it with new dollars every time you invest. I like the mindset of 'holding shares forever' if possible.
Thank you Jeff. Lol..your video just comes at right time before i do any mistake :-)
I appreciate the kind words Kumar. I'm glad the videos help. You are not alone in making mistakes. I wish I could say I'm perfect, but the lie detector would be beeping like crazy (:
Good to see you this week.
Thank you for being here. Working on this channel last week was one of the few things that 'felt good'. So I rolled with it. Still not doing a lot of extra, though. Day by day.
Can you make a video comparing investing in only market and growth until your age 40-60 then investing into value/dividend. Versus starting in 20s with balance of market/growth/value÷nds the whole times into retirement age and what would have better returns
Hey Cameron. I have been brainstorming a video for this idea. I feel like things are getting scary right now because growth has gone up like crazy. It isn't 'always' the best to use growth until retirement, and then change. I'm a fan of a balance.
Of course, 'more growth' is better for younger people, and 'more value' is better for retired folks, but I think a balance is always recommended. I'll keep plugging away at this one.
@JeffTeeples it is a common argument/discussion for alot of my etf buying friends. Keep up the great work I enjoy how you use graphs to break down different etfs yield etc it is helpful.
Another informative video. I'd like to suggest a couple of ETFs that may be worth looking into. I'm curious as to what you think about them. They seem comparable to the more well known but have a lower expense ratios. Over many years, the amount one's able to reinvest can add up. FTEC (Tech, alternate to VGT), SOXQ (Semi, alternate to SOXX), SPLG (S&P, alternate to VOO). If anyone can find the same type of alternate to SMH I'd really like to check it out. SMH is concentrated, but it's hard to deny what's needed to really fuel the beloved VGT ETF - Semi's. If you believe in VGT you have to believe in the 'gas' that will fuel the car. Oh, also SCHG>VUG and even QQQM (at times).
Hey Bryan. Thank you for watching and for the comment. I like all of the alternate ETFs you mentioned. They follow the same indexes and will get the job done. There are many great options for investors. Unfortunately, there are so many more terrible, high cost ETFs out there.
25% SPLG, 25% VGT, 25% SCHD and 25% SCHG. Buy weekly.
Love the mix. Nothing but solid holdings there!
Great video. That’s why I’m a big fan of M1 finance. I like that I just deposit an amount of that I want to invest every week and it automatically keeps my target allocations as close as possible.
Thanks for watching and commenting. M1 Finance is so great for that. Easily the best I've come across. It's logic and methodology is superior when it comes to 'auto dip buying'.
I'm established in E*Trade and enjoy it as well. But a small part of me always itches to go all in on M1 Finance.
I was doing that by default 😂. But now that you explained it, it's a great strategy!
Haha, nice Daniel. Great minds think alike! Or maybe we are both... Ya know what, we're sticking with great minds!
I timed the market when I gained control of a family members Roth IRA recently.
Consecutive highs and hot inflation numbers just rubbed me the wrong way. So I kept 50% in the money market when S&P was pushing $5300. That's the good news.
The bad news is I underestimated the pullback, and was down to a 10% money market position by last Tuesday!
Now I'm using buy limits to average down every 1% on the lower price per share funds like the Jeps and SCHD. Then I'll use monthly and quarterly dividends to go shopping for VGT and VOO
Thank you for watching and for the comment. Nice work on the strategy. Once you get everything invested, the hard work is done. Then it’s dollar cost averaging in and staying the course. You got this!
SCHG is my largest position in my brokerage account. Been pretty solid position.
Thanks for the content Jeff👍💰💰💰💰
Thanks for the comment Jed. Oh yeah, SCHG has been amazing in the past few years. Even better than QQQM, which is my favorite ETF of that type. Love the holdings of SCHG and the low expense ratio!
My winners of the past 2 weeks is IBIT and SCHD. I will keep DCA VGT, QQQM and VOO.
That is incredible. The market is getting rocky. It's time for us to keep throwing more dollars *in*. Stay the course (:
Looking at the returns over a long period on a yrly basis smooths everything out and hides the real pain and losses one could experience if you went all in at the wrong time. I know timing is a bad word.
A good example of a bad period is if Jeff showed everyone the 10 yr return if you put 100k to work in various ETFs on 3/2000 and looked at your return 10 yrs later 3/2010.
Hint, you would not break even on your QQQ purchase till 2014 after you felt it go down 80+%, not in one yr of course, but 3 yrs.
Hey Gary, I could not agree more. This is why I highly recommend a nice balance of categories. Growth is 'usually' the best over long periods of time, but we don't *know* what will happen in the next 'X amount of time'.
To be clear, I don't cherry pick data at all in these videos. Zero. I use defined time frames (10 years, 20 years, 5 years, max, etc). But I understand your point, and agree with you.
Great video and thanks for the top notch content. I've watched this video several times and starting on my weekly homework..... how much weight do you put on expense ratio? Seems like your return outweighs the cost to do business. Thoughts?
Hey Anthony. Thank you for the kind words & great question. The beauty is that expense ratios are included in the 'total returns' from Seeking Alpha and portfolio back test. This has me spending no time 'doing the math' as it is all baked into the fund.
However, past performance is no guarantee of future results. I do put a huge emphasis on expense ratios.
For example, IYW is close to VGT and XLK over the past 20 years. It feel about 30% short, and the 0.40% expense ratio is likely a big portion of that difference. This doesn't seem like much, but it will be a six figure difference over time. IYW would have to outperform XLK and VGT by a solid amount to cancel the compounding expense ratio.
It is a fantastic 'tie breaker' when things are fairly close on performance. I will say that anything under 0.20% is pretty darn good. For example, I'll go with QQQM over SCHG 'IF' I like QQQMs holdings and performance better.
Generally where is it best to keep these etfs? Brokerage account? Roth IRA? Traditional Ira? Where is best to keep something like SCHD? Thank you Jeff!!!
Thank you for the questions. The ETFs in this video, along with SCHD, are all great within any account type.
They all pay qualified dividends, so a taxable brokerage works well. Anything is great in a tax protected account (especially funds that pay non-qualified dividends like JEPQ).
I like to hold my SCHD in a taxable account, and VGT in an IRA, personally.
This was a good one, Jeff! Thanks!
Thanks Tiff! I appreciate the kind words.
Love your channel!! 🎉 I have a question 🙏🏻 from a fellow accountant!
You said that QQQ is great cuz it rebalances automatically but VGT doesn’t quite do the same? I didn’t understand! Does VGT rebalance itself like other indexes? If not, how does it stay current? Thx! ❤
Thanks for the kind words Matthew.
VGT will rebalance 'within tech'. So it will capture market cap changes over time within technology.
What I meant was QQQM will balance across sectors. If the trend of the new largest 100 companies in the Nasdaq changes, QQQM will automatically update much like VOO grabs the largest 500 companies.
If a new sector takes over and tech takes a dive, VGT will go down while QQQM will hold more companies of the new sector. It is about 50% tech right now, but who knows what the future will hold.
I will say, I believe in tech long-term, and thus love VGT. But it is less 'self-updating' if the sector trends change. VGT will hold tech only if tech is the best sector (which it has been) or the worst sector (ouch).
I built my portfolio VOO 20%, VGT 20%, SCHD 20%, DIVO 20% and YIELDMAX 20%
Thank you for the comment. I love the balance. Staying the course with that will yield nice results over time. Great work.
Thank you for your comments and for your videos!!
Quick question Jeff, is there a reason why you would ever invest in multiple Growth ETFs, such as SCHG, VGT, and XLK in the growth section, instead of investing in just one Growth ETF in the growth section?
Hey Drake. I think it makes sense to have multiple growth ETFs if you like them for different reasons.
For example, I have been rolling with VGT for the past many years. I am going to add QQQM to my growth mix. I love VGT, but don't want 100% of my growth in technology. QQQM is about 50% tech. So a 50/50 mix will get me 75% tech, which I like (because I love tech), but it gives me a little help if tech drops in the future.
When you hold both, you guarantee that you will get returns right in the middle each year.
Hello Jeff, I have recently watched your portfolio allocation by each age group video and decided to rock with 10% SCHD, 40% VOO, and 50% Growth ETFs. And now after watching this video, I have decided to allocate 17% into both XLK and VGT and 16% into QQQM = 50% Growth ETF. Is the different mix of Growth ETFs in the growth section of my portfolio acceptable?
Thank you for watching and for the question. I think that is a great growth mix. As long as you don't panic sell when the market crashes, you'll do great when you zoom out a couple decades.
When the next crash comes, and it will, be sure to keep dollar cost averaging into the market. But the discounts of all 3 of those great growth ETFs and ride it out.
What do you think of FTEC it has almost the same amount of holdings as VGT but with a slightly lower expense fee?
I like FTEC. I think it’s a fine replacement for VGT.
Really nice job, Jeff. I appreciate you.
Thank you Andrew! Right back at you, I appreciate you taking the time to watch the videos and for dropping a comment.
Really appreciate your break downs, thanks! 👍🏼
Thank you for watching and commenting! It helps a lot. I'm glad you enjoy the videos. I'm trying to keep the time down (been running long), but not at the cost of omitting valuable information (:
Very informative excellent video thanks!
Thank you for watching and commenting! I always want to go game every time I see your name. Still have Tears of the Kingdom to start! Waiting for the right mindset. Lately it has been knocking out some Indie games on Xbox.
Superb Video Jeff!
Thank you Bruce! I appreciate you watching and dropping a comment. Also, love the shiny 1M member badge. Showing off that bling (:
Hi Jeff, thanks for what you do I actually learned a lot from you. Is is a good idea to invest in small cap ETFs?
Thanks for watching and for the question. Small caps aren't bad to invest in. They will generally be more volatile than 'like sector' large caps. You'll crash more when times are hard, but boom more when the smaller companies are on the come up as well. The reversion to the mean over time makes any 'type' of funds viable.
Thank you. I wish I knew in my 30s, but I think it's still not too late .
Thank you for watching and commenting. It is never too late. You got this!
I would like to add more to my question, what is right amount to DCA to the machine so it makes sense to get the $200,000 all in. I should fund this account first and just hold . Are those three slices I have purchased are great combo for beginner like me?
I'm so nerdy I think I answered all of these questions in the first one (:
You definitely want to get it in the market (in general), but doing so at your desired pace is the right move.
Another great Video!
Thanks Dru! I appreciate you taking the time to watch it.
Thank you for the fantastic content and congrats on your success as an investor!.. I am a new subscriber to the channel.
I am holding to buy my core growth etf position for my portfolio because of recent market events. What's your opinion about start investing and buying overpriced large cap funds such as VGT IWY , etc , versus other "cheaper" growth funds such as XMMO , VOOG that are trading at much lower P/ E ratio. Thank you very much in advance!
Hey Walter. I think it's great to consider all data about the ETFs before building a portfolio mix. I would say build a portfolio (using 100%) based on your age, goals, risk tolerance, and work situation.
For example, for me, I like about a third each of VGT / SCHD / VOO. Nothing to do with the market conditions 'right now', or the recent happenings. More about the future outlook (I'm a tech bull, for example, and thus VGT) of each. Past performance and quantitative data will help inform decisions.
After you have your 100% target allocations (you may use VOOG for your growth instead of VGT, 'that' doesn't matter), it's all about staying the course.
When you dollar cost average your money in over the years, you'll want to buy the one that is below it's target allocation (buying the dip without trying to get too cute with timing the market). Keep that going for 20-30 years and you'll be wealthy.
I think changing the allocations is fine here and there as well. We want to stay open-minded, and things are always changing. But generally sticking to your targets will help build serious wealth.
@JeffTeeples thank you so much for the feedback!.. it is not easy to find content creators that share such high-quality information (life changing). I will consider your suggestion. My idea is to go all on growth for some time (with sector diversification to counterbalance) and then transient to more stable/ income.
My best wishes to you and your channel, keep the good work 👏! Have a great week ahead 👍
"The answer is that we always buy." That goes against money managers who increasingly say that it is a good time to keep some money on the side . . . for better buying opportunities.
Hey John. Money managers are in this game to make more money (from you). They want it to sound as complicated as possible to get the business. I highly recommend Rob Berger's 'Retire Before Mom and Dad' and John Bogle's 'The Little Book of Common Sense Investing' for an understanding of how it works.
I'll give you a little bit beyond the books here. The *VERY* few that outperform passively managed indexes will wait on the sidelines with cash waiting for the right opportunity. Think Warren Buffett, for example. There are two problems with this:
1) It loses well over 90% of them money over the past 100 years. This is a fact, and is not my opinion
2) The very few it works for, like Buffett, have so much more knowledge, time, and most importantly, qualitative information (directly from CEOs and boards) than folks like us will ever have
Stay. The. Course. Nobody cares more about your money than *you*.
I'm doing 50/50 with SCHD and JEPQ because the total returns look good for both over time and it shouldn't be so emotionally painful in a market downturn or during rotations with value vs. growth stocks. The dividend income and DRIP with JEPQ should always keep a smile on your face each month regardless of what the market is doing... bull markets are easy for all of us, it's how we handle the bear markets emotionally that matter more IMHO.
Thank you for the comment. That plan makes perfect sense for you. I think your system will work well over time if you stick to it.
VGT, VOO, VONG, VIG, and VTI. At 20% each.
That is a very nice combination. I love the coverage. Keep feeding that money making machine! Also, I’m a huge Vanguard guy, so bonus points (:
Another great video!!!
Thank you for watching! I appreciate the support.
Awsome content jeff
Thank you Linna! I appreciate the kind words!
Thanks as always for your content.
I appreciate the long time support! You're one of the original supporters. It helps the channel a lot!
Hey Jeff sorry to bother you with questions but I have one final one, for international exposure outside of VOO do you like VXUS or ACWX better?
Hey Stephen. I like VXUS better for the broad exposure and lower expense ratio. It has performed a decent amount better as well.
I don't currently hold an International ETF. But that will likely change in the future. I'm always watching. I could see going with a slice of VT eventually. Or possibly VXUS.
If you had $100K to invest, is it more beneficial to allocate between 1 or 2 ETF ( ie: SCHD/DGRO) or multiple ETF (ie: SCHD, DGRO, SCHG, XLK, IYW)? Basically, focus on a few or divide equally between? Also, it seems like continued annual investment is better than just a beginning lump sum?
Hey Richard. I think it is best to have 3 ETF 'types'. I split between dividend ETFs (SCHD, DGRO), cornerstone ETFs (VOO, VTI), and growth ETFs (SCHG, XLK, IYW). Within each type, you can roll with one holding, or have multiple. Overlap doesn't matter at all within each type.
For example, if you have 40% of your portfolio in 'growth', you can have 100% of that in XLK if you love tech that much. Or you can have 10% XLK 10% VGT 10% SCHD 10% QQQM. It will be $40k (in your scenario) regardless. Each ETF has 100% overlap with itself. Overlap DOES matter across types. If you replace some of your dividend section with QQQM, then you are 'heavy' in tech per your target allocations.
Here is my canned answer for lump sum investing vs dollar cost averaging:
Lump Sum vs DCA with large chunk received:
The lump sum investing (LSI) vs dollar cost averaging (DCA) is the debate that will never die. It's a tough one that doesn't have a 'right answer'.
LSI is better 67-80% of the time (depending on what study you follow). It makes sense, as the market 'generally' goes up over long periods of time. Time in the market beats 'waiting to time' the market over the years. However, you can LSI everything in, and see it drop by 40% the next month if the next recession hits. Nobody knows when that will happen.
My suggestion is to LSI a solid amount (half if you're comfortable, or whatever % makes sense to you) into your investments. Then DCA the rest in over the next year or so (take the remaining amount to invest divided by 52 and invest that amount weekly). Again, there is no 'right answer' to this one. I tend to favor LSI, but it comes with its risks for sure. The key is to divide the DCA amount remaining by the number of weeks you want to spread it over, and stick to the system until it is fully invested.
Appreciate the detailed response. What did you mean by "each ETF has 100% overlap among itself?) Good w/ the explanation between LSI vs. DCA.
People get confused about 'when overlap adds risk'. Let's say you have $100,000 total in your portfolio, and you want to put $40,000 into growth ETFs. The other $60,000 will go in VOO and SCHD.
Let's say you have QQQM as your growth stock. All $40,000. Your 'growth' section is 100% in QQQM. QQQM has 100% overlap with QQQM.
Some will argue you shouldn't split some of the money into something like VGT because 'VGT and QQQM have high overlap'. Meaning they hold many of the same companies.
But $20,000 in VGT and $20,000 in QQQM will be 'less overlap' than $20,000 in QQQM and $20,000 in QQQM (aka $40,000 in QQQM). QQQM = QQQM. So every dollar buys the exact same thing.
'Overlap' is a bad reason to not put money into VGT because it has 'high overlap' with QQQM. Again, assuming we are talking about the $40,000 total for the growth section.
@@JeffTeeples Makes sense.
Looks like you left Boeing at the right time! What about timing the market?
Haha, no doubt. Boeing is known for being in the news quite often. Not always (cough* rarely *cough) for good news. Thanks for watching and dropping a comment.
Hey Jeff, I can't seem to decide between VGT and XLK, would it make logical sense to split 50/50 into both for my growth section?
Hey Tyson. They are both fantastic, and they have an 80% weighted overlap. If you want more small and mid size tech companies, then you'll likely prefer VGT. It has 316 holdings.
If you want to core up with the biggest companies only, then XLK is the one for you. It only has 68 holdings.
XLK is basically the VOO of tech, and VGT is the VTI of tech. They are almost interchangeable, but slightly different.
Nothing wrong with slicing it down the middle between both. It will get you the weighted average of the two.
10k in VGT
10k in XLK
5k in VGT & 5k in XLK
The bottom option will always perform exactly in the middle (:
The expense ratio is the same. VGT is .1%. XLK is .09%. A mix is .095%. People get confused and think it costs more to have both. It doesn't.
Thank you for the detailed response Jeff, it was very informative! Also, sorry to ask you another question but regarding fund overlap in one type, for example, in the growth etf section, if two funds, say QQQM and VGT, were split 50/50 would their high fund overlap be detrimental or no? I don't quite understand the concept of fund overlap fully.
Hey Tyson. As long as you have the same amount of money in total, it is not detrimental.
You will get the weighted average of the two. For example:
QQQM is about 50% tech stocks. VGT is 100% tech stocks. If you get an even mix of both, you'll have 75% tech stocks in your growth section. It will also give you the average return as well. If QQQM is up 10% and VGT is up 6%, you'll be up about 8% (assuming a 50/50 mix).
Overlap is not bad within a specific section for your portfolio. For example, the above would be your growth section of your portfolio.
Jeff, does it make sense to track expense ratios in those spreadsheets, too? Isn't growth net of fees important?
Thank you for watching and for the question. It is very important to track expense ratios. All things equal, or close to equal, I strongly recommend the lower expense ratios.
Expense ratios are included in the data from Seeking Alpha & portfolio backtest. This saves me from crunching the numbers. But it is still worthy of having a column on my spreadsheet, because past performance doesn't guarantee future results, and I like to roll with funds that have lower expense ratios.
IYW is 0.40%
VGT is 0.10%
XLK is 0.09%
If they have similar results, I'm choosing VGT or XLK every time.
Thanks!
Thank you Brianna. You're too kind. Your support is amazing for the channel.
If you had a large sum of money ready to invest, how would you split it?
Thanks for the comment and great question. I would dollar cost average it into 33% VOO / 33% SCHD / 17% VGT / 17% QQQM.
I like the growth and value mix. I have enough years of investing ahead of me to ride out the volatile growth.
You should show your etf allocation by age .
Thank you for the comment and the suggestion. I do need to make a new video to detail by age allocations. I did make one a while back. It is here:
ua-cam.com/video/mqmpaEOtO6o/v-deo.htmlsi=8qUNkO3tbxYvv0gw
VGT/SCHD! 50/50 split!
My favorite combination! Very little overlap and a quality counterbalance set up!
@@JeffTeeples yes sir! Please continue doing what you're doing exceptional production and informative value! You can't get this type of money education not even at Harvard Business! Thank you, Jeff!
First! Jeff, congrats on the 20 new members this week (I was one)! Thank you...great video! Regarding dollar-cost-averaging during a rocky market vs leaving cash on the sidelines, suppose someone had 100k, or 300k, or 500k cash...over what timeline (how much of that cash per month) would you recommend dollar-cost-averaging in? Ideally, we'd still be putting cash in at the future lowest, low, but no way to tell when that will be. :)
Hey Nate. Thanks for joining the UA-cam membership! It means a lot.
That is a great question. The lump sum investing vs dollar cost averaging is a great debate that doesn't have a 'right' answer. I'll post my canned answer below. However, for your specific situation, I would treat the amount you have to put into the market separately from your incoming cash flow.
For example, if you have $1,500 to put into the market each week (new money from paycheck, after paying bills and saving as much as you can), put the entire amount in. Save and invest as much as possible. Hit that employer 401k match, and put away as much as you possibly can every month.
Account for the $100,000 you have on the sidelines completely separately. You should still be plowing your money into the market as if it doesn't exist. As far as getting the $100,000: Dividend the full amount on the sidelines by how many weeks you want it to take to become fully invested. If you want it in over the next 52 weeks, you would put in $1,925 (slightly rounded) per week.
Here is my answer to lump sum investing vs dollar cost averaging:
LSI is better 67-80% of the time (depending on what study you follow). It makes sense, as the market 'generally' goes up over long periods of time. Time in the market beats 'waiting to time' the market over the years. However, you can LSI everything in, and see it drop by 40% the next month if the next recession hits. Nobody knows when that will happen.
My suggestion is to LSI a solid amount (half if you're comfortable, or whatever % makes sense to you) into your investments. Then DCA the rest in over the next year or so (take the remaining amount to invest divided by 52 and invest that amount weekly). Again, there is no 'right answer' to this one. I tend to favor LSI, but it comes with its risks. The key is to divide the DCA amount remaining by the number of weeks you want to spread it over, and stick to the system until it is fully invested.
Jeff, thank you for the detailed reply. You use 52 weeks as the example timeframe. Is there a rule-of-thumb recommended timeframe window to use, or is it completely arbitrary? Thanks for the great content!
@N8FLY hey Nate. It is arbitrary. One year is fairly common, but it depends on the investors preference.
SCHG + SCHD + SOXQ
That is a great mix to dollar cost average into over the years. Keep accumulating those shares.
A combo of schg and soxq.
Very nice combo. Stay the course and dollar cost average into that in all markets. It will be a rollercoaster, but these things 'usually' go up when we zoom out (:
Don’t you pay a lot in taxes and fees? That’s something you should look into
Hey Shelley. There are (next to) zero fees and taxes associated with buying and holding these ETFs. Are you able to elaborate on your question / concern? I'm not quite sure I follow.
Perhaps you meant actively managed mutual funds or ETFs? In that case, I'm with you 100%. I don't remember the exact content of this video, but it should be the passively managed, low cost ETFs that I always discuss. Very low expense ratios and no 'bogus' fees attached (unlike some of the bad EFTs and mutual funds out there).
If I eluded to the 'bad ones', I should have been very clear about it (but I don't recall talking about them).
So logically we don’t have to invest on other ETF’s since eventually growth will win . Why not just invest in one only like QQQM . Investing on other ETF’s brings our average profits down . 🤷🏻♂️
Hey Cesar. Technically, you are 'very likely' correct. If you can stomach the rollercoaster and have many years to invest, QQQM has outperformed S&P 500 over 40 years by a wide margin. This includes multiple recessions.
However, you could see $1,000,000 turn into $300,000 over a couple years with another dot com like crash. If you were planning on retiring around then, you would have lost well over half of your cash flow from your new asset allocation.
I'm a big believer in having growth, dividend, and a cornerstone (VOO or VTI). The amount of each will vary per preference. In your case, you may want to weigh heavily towards growth (QQQM) if you're okay with the rocky ride.
@@JeffTeeples thank you .
I like this quote “History provides crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.”
Shelby M.C. Davis,
Legendary Investor
Why qqq instead of qqqm
Great question. QQQ is only used for the data because it has the history when looking back 5+ years.
QQQM is the better buy. Same indexed holdings at a lower expense ratio.
I thought Cathie Wood was “THE destroyer of wealth” 🤣
ROFL. Hey Carey, genuinely got me for a good laugh there. Thanks for the comment (:
(You're right)
I’m 60 and just starting this journey. I feel sad
Hey Morgan. You should feel glad! Plenty of time to get this thing rolling. It's never too late. Thank you for watching and commenting.
Hi, @@JeffTeeples are you trying to tell me that considerable progress can still be made in a few short years to see me through retirement? 🙂
Oh yeah! No doubt about it (:
QGRW!!!
Will be exciting to see how QGRW does. It's still new. I'm not a huge fan of the 0.28% expense ratio. But it's not too bad. But it puts it a little behind other great ETFs from the get-go.
I would like to know are the following all distributes qualified dividends?
QQQm SCHD DGRO VGT VOO VTI .
2nd question, I have just open M1, and have been learning how to use the system, How do you feed the $200,000 into the system to achieve a decent results. I had just put in $6,800 in the account for 3 slices in the pie, 34% VOO 33% VGT 33% QQQM , but I would like to eventually put all of the amount I just mentioned . I have no experience in investment but watching you has been very encouraging, thank you for your help and guidance.
Hey Brianna! The first question is a yes. QQQM, SCHD, and DGRO pay qualified dividends. I've read that VOO pays 100% qualified dividends. It technically has some REITS, so I'm not sure how. Either way, it pays, or almost pays, 100% qualified dividends. I actually don't know for VTI, but I'm assuming its a similar situation. We can say that all of the tickers in question pay qualified dividends.
I think your mix of VOO / VGT / QQQM is fantastic as long as you have a long-term mindset. VGT and QQQM will be rollercoasters along the way. Never sell low, and keep dollar cost averaging in. As you get closer to, or in retirement, you may want to consider slicing in some SCHD (or a quality dividend ETF of your choice).
As far as when to invest, it is tricky between throwing it all in right away (lump sum investing) vs DCA. There is no right answer to this one, it is strictly based on preference. DCA may be a little better now with how the market is looking. If you use DCA, you can dividend the total amount by the number of weeks you want to get it in. Put in that much per week to slowly invest it all. Note that anything you 'normally put in' real time is separate from the $200,000 math.
If you put in $1,000 per month from your normal income, this will be in addition to your dollar cost averaging in the large amount. 52 weeks is a fairly common one to use. It is better to be fully invested, long-term, but this will help you get it in over time without risking a market drop the following week.
In your case, maybe drop something like $4,000 per week (or whatever makes you comfortable, there is no right answer, you could do $2k per week over 2 years, or drop half in and do $4k over a half year for the rest. It's fully up to you.
I like FSHOX
I'll be honest, I knew zero about this one. I think the reason is that the high expense ratio of 0.77% (that will be hundreds of thousands over an investing career) filters it out on my ETF finding process.
It has performed fairly well, though! Out performed the market in the last 3-5-10 years. Not too shabby! (: