$50,000 In SCHD Will Beat Your Full Time Job! ๐ฅ
Summary
TLDRThis video explores the Schwab US Dividend Equity ETF (SCD) as a potential investment to outpace a full-time job's income. It highlights SCD's low expense ratio, focus on dividend growth, and its diverse portfolio of stable stocks. The presenter uses conservative estimates to demonstrate how reinvesting dividends can significantly grow a $50,000 investment over 30 years, illustrating the power of compounding and the potential for SCD to provide substantial annual dividend income, even with modest contributions.
Takeaways
- ๐ผ The video discusses the Schwab US Dividend Equity ETF (SCD) as an investment that could potentially replace a full-time job's income.
- ๐ SCD has a low expense ratio of 0.06%, which is beneficial for long-term investors looking to minimize costs.
- ๐ฑ The ETF focuses on dividend growth, selecting stocks that not only pay dividends but also have the potential to increase them over time.
- ๐น SCD's performance has been strong, with a 212% increase since inception and an average annual growth of 19%, although the video uses more conservative estimates for future calculations.
- ๐ The top holdings of SCD are stable, well-established companies, providing a sense of security and reliability for investors.
- ๐ The sector exposure of SCD is well-balanced, which helps in spreading risk across various industries.
- ๐ฒ The trailing 12-month dividend yield of SCD is 3.41%, offering a consistent income stream for investors.
- ๐ The video illustrates how reinvesting dividends can significantly grow an investment over a 30-year period due to the power of compounding.
- ๐ก Using conservative growth estimates, a $50,000 investment in SCD could grow to over $850,000 after 30 years, with an annual dividend income of over $52,000.
- ๐ The video suggests that even a smaller initial investment with regular contributions can grow substantially over time, highlighting the importance of starting early and consistency.
- ๐ Investing in SCD within a tax-advantaged account like a Roth IRA or 401k could further enhance returns by eliminating dividend tax rates.
Q & A
What is the Schwab US Dividend Equity ETF, and what does the ticker symbol SCD represent?
-The Schwab US Dividend Equity ETF is an exchange-traded fund that focuses on dividend growth, investing in a mix of stocks across various sectors. The ticker symbol SCD represents this ETF, making it easily identifiable for trading purposes.
What is the expense ratio of the Schwab US Dividend Equity ETF, and why is it significant?
-The expense ratio of the Schwab US Dividend Equity ETF is 0.06%, which is significantly low. This is important because it means that the ETF has minimal fees, allowing investors to keep more of their returns without being eroded by high costs.
Why is the focus on dividend growth important for SCD?
-The focus on dividend growth is important because it means that SCD specifically selects stocks that not only pay dividends but also have the potential to increase those payouts over time. This provides investors with the opportunity for growing income streams along with the potential for capital appreciation.
How does the lower interest rate environment impact dividend-paying companies and SCD?
-In a lower interest rate environment, borrowing money becomes cheaper for companies, including those held by SCD. This can lead to increased profits for these companies, which may result in higher dividend payouts for investors, making dividend stocks more attractive.
What are some of the top holdings of SCD that contribute to its stability?
-Some of the top holdings of SCD include stable and time-tested companies such as Texas Instruments, UPS, Home Depot, Black Rock, Cisco Systems, Pepsi, Lockheed Martin, Pfizer, Chevron, and Bristol Meyers Squibb. These holdings provide a solid foundation for the ETF's performance.
What is the current trailing 12-month dividend yield of SCD, and why is it significant?
-The current trailing 12-month dividend yield of SCD is 3.41%. This is significant because it indicates the ETF's ability to provide a consistent income stream to investors, which is a key factor for those seeking steady returns.
How has SCD's dividend growth performed over the last 10 years?
-Over the last 10 years, SCD's dividend growth has been steadily increasing, showcasing the ETF's ability to provide growing income to its investors over time.
What are the conservative expected annual dividend amount increase and share price appreciation percentages used in the script's calculations?
-The conservative expected annual dividend amount increase percentage used in the calculations is 8%, and the expected annual share price appreciation percentage is 6%. These conservative estimates are used to provide a more realistic long-term outlook.
How does reinvesting dividends back into SCD contribute to wealth building over a 30-year period?
-Reinvesting dividends back into SCD allows investors to take advantage of the power of compounding gains. As dividends are reinvested to purchase more shares, the investment grows exponentially over time, similar to rolling a snowball down a hill, becoming larger as it accumulates more.
What is the potential outcome of a $50,000 investment in SCD over 30 years, based on the conservative calculations provided in the script?
-Based on the conservative calculations, a $50,000 investment in SCD over 30 years could grow to approximately $852,183, with an annual dividend income of over $52,400, demonstrating the potential for significant wealth accumulation and passive income generation.
What are the benefits of investing in SCD within a tax-advantaged account like a Roth IRA or Roth 401k?
-Investing in SCD within a tax-advantaged account like a Roth IRA or Roth 401k can significantly enhance returns by eliminating the dividend tax rate, allowing for more capital to be reinvested and compound over time, thus potentially increasing the overall wealth generated from the investment.
Outlines
๐ฐ Unlocking Financial Freedom with Schwab US Dividend Equity ETF
Discover how a $50,000 investment in the Schwab US Dividend Equity ETF (ticker symbol SCD) can potentially outpace your full-time job's income. Learn about its low expense ratio, dividend growth focus, and why it's a great choice for long-term investments. The video will cover the ETF's performance, real-world examples, and the benefits of investing in SCD.
๐ Analyzing the Schwab US Dividend Equity ETF
The Schwab US Dividend Equity ETF offers a mix of stability, dividends, and growth potential with a minimal expense ratio of 0.6%. This ETF focuses on dividend growth, selecting stocks with the potential to increase payouts over time. It provides a diversified portfolio across various sectors, making it a solid choice for those looking to build a retirement or investment portfolio with steady income and growth.
๐ Why I Love SCD and Its Investment Potential
SCD's trading price, the impact of the FED's interest rate policies, and the ETF's top holdings are discussed. Lower interest rates can benefit dividend-paying companies, leading to higher stock prices for SCD. The ETF's balanced sector exposure and stable stock selections make it a low-risk option for conservative investors. The importance of dividend growth and its steady increase over the years is also highlighted.
๐งฎ Calculating Dividends with Conservative Numbers
Using conservative figures, the video demonstrates the potential growth of a $50,000 investment in SCD over 30 years. By reinvesting dividends, the investment can grow significantly due to compounding gains. The video also covers different scenarios with varying initial investments and monthly contributions, showing how consistent investing can lead to substantial returns over time.
๐ Exploring Dividend Calculator Scenarios
Different scenarios using the dividend calculator are explored, including investing in a Roth IRA or Roth 401k for tax advantages. The video emphasizes the potential for higher returns and dividend income over 30 years with smart, conservative investing. It highlights the importance of starting with a reasonable amount and consistently growing the investment to achieve significant financial growth.
๐ Recap and Key Insights for Investors
The video recaps the conservative projections for a $50,000 investment in SCD, showing how it can grow to $853,000 with over $52,000 in annual dividend income after 30 years. It stresses the importance of smart investment choices and the power of compounding gains. The video aims to inspire viewers to consider SCD as a valuable option for building a financial future and achieving a comfortable retirement.
Mindmap
Keywords
๐กSchwab US Dividend Equity ETF
๐กDividend Growth
๐กExpense Ratio
๐กConsistent Dividend Yield
๐กReinvestment
๐กCompounding Gains
๐กPortfolio Diversification
๐กTop Holdings
๐กStock Appreciation
๐กTax-Advantaged Accounts
๐กAnnual Dividend Income
Highlights
Investing in Schwab US Dividend Equity ETF (SCD) could potentially outpace a full-time job's income.
SCD has a low expense ratio of just 0.06%, making it cost-effective for investors.
The ETF focuses on dividend growth, selecting stocks with potential for increasing payouts over time.
SCD offers a mix of stability, dividends, and growth potential across various sectors.
SCD's top 10 holdings include stable, time-tested companies like Texas Instruments and Pepsi.
Sector exposure of SCD is well-balanced, providing diversification and risk mitigation.
The trailing 12-month dividend yield of SCD is 3.41%, offering consistent returns.
Dividend growth over the last 10 years has been steadily increasing for SCD.
Lower interest rates can lead to higher stock prices for dividend-focused ETFs like SCD.
Conservative investment scenarios suggest significant growth potential for SCD over 30 years.
Reinvesting dividends in SCD can supercharge investment growth through compounding.
An initial $50,000 investment in SCD could grow to over $850,000 after 30 years.
Starting with a smaller investment and adding contributions can also lead to substantial growth.
Investing in tax-advantaged accounts can further enhance the returns from SCD investments.
SCD's consistent dividend payouts and share price growth make it a strong choice for long-term investors.
The belief that a massive fortune is needed for investment success is debunked by smart choices like SCD.
SCD offers a balanced approach to earning from market fluctuations with the added benefit of cost-effectiveness.
Transcripts
are you dreaming of the day your
investment can finally set you free from
your 9 to-5 grind well that day might be
closer than you think today we're diving
into the Schwab us dividend Equity ETF
better known as ticker symbol SCD and
showing you how an initial $50,000
investment could potentially outpace
your full-time job's income your time's
valuable and I'm not going to keep you
hostage here's everything we're going to
talk about today number one we'll
explore Schwab's us dividend Equity ETF
and dive into what it is its low expense
rtio and its dividend growth Focus
number two we'll cover whyd excites me
and discuss its performance and
consistent dividend yield number three
we'll go over a real world example and
I'll illustrate how $50,000 in SD could
outperform your full-time job through
dividends and growth plus I'll give you
a couple of other bonus scenarios and
number four I'm going to wrap things up
by shining a spotlight on the incredible
benefits of SD as a long-term investment
and trust me you'll want to stick around
to the very end because the grand finale
it's going to be epic something you
definitely did not see coming and if
you're new here don't forget to hit that
subscribe button and ring the bell so
you never miss an
[Music]
update
all right let's dive into the famous
Schwab us dividend Equity ETF and cover
what it is what it does and its
impressively low expense ratio of just 0
6% think of Schwab as your future
retirement that you can use to get peace
of mind that gives you a solid foothold
in the market with a mix of stability
dividends and growth potential this ETF
or exchange traded fund is like a
carefully curated playlist of stocks
across various sectors offering you a
piece of the action in everything from
Tech to healthcare but here's where it
gets interesting what sets SCD apart is
its focus on dividend growth meaning it
specifically picks stocks that not only
pay dividends but have the potential to
increase those payouts over time all
while keeping your cost low with its
minimal expense ratio so investing in SD
is like planting a seed that grows not
just through the value of the ETF itself
but through increasingly larger dividend
checks without eating into your returns
with high fees it's designed for those
who are playing the long game looking
for steady income and growth making it a
standout option for building your
investment or retirement portfolio in
essence SCD is more than just an ETF
it's a gateway to financial growth
offering a balanced approach to earning
from the markets ups and downs with the
added perk of being incredibly
cost-effective while always paying
dividends let's break down why I love
CHD and I think you'll see why it's not
just any ETF on the market picture this
SCD is currently trading at around $79
per share and it's near the all-time
highs which beckons the question of can
it go higher first we're looking at the
big picture and having SD as a 30-year
investment so in the overall scope
today's price doesn't matter over a
30-year time frame and second the FED
plans to lower interest rates which
makes borrowing money cheaper for
everyone including big companies for an
ETF like SD which holds a bunch of these
big companies that payout part for an
ETF like SD which holds a bunch of these
big companies that pay out part of their
profits as dividends this is great news
lower interest rates mean these
companies can save money on their loans
make more money because people are
spending more and ultimately share more
profits with their investors through
bigger dividends dividend stocks
especially those with stable and
reliable payouts become more valuable to
investors in a lower interest rate
environment because investors are
willing to pay more for the perceived
safety and income generation of these
stocks which is likely to lead to a
higher stock price for SD but here's
where it gets really exciting for
conservative investors that desire a
low-risk portfolio the top 10 Holdings
ofd are stable stocks that have
withstood the test of time Texas
Instruments UPS Home Depot Black Rock
Cisco Systems Pepsi Lockheed Martin
fizer Chevron and Bristol Meyer squib
it's a dividend lovers dream portfolio
diving deeper SD sector exposure is
brilliantly balanced with 17.12% in
Industrials 16.73% in financials 15.9%
in healthcare 11.95% in consumer staples
9.2 25% in energy and the rest are
spread across various sectors this level
of diversification means you're not
putting all your eggs in just one basket
even if a few stocks don't perform as
expected the etf's broad coverage
Shields you from significant impact now
let's talk about dividends the trailing
12-month dividend yield is
3.41% which may not be that high but it
is consistent in something we can likely
count on for years to come here you can
see SD's dividend growth over the last
10 years has been steadily increasing
and you'll see why this is important
when we start plugging the numbers into
the dividend calculator I'm going to use
conservative numbers today now one key
figure we need is the average yearly
growth of the dividend payout over the
last 11 years from 2013 to 2023 it's
been
11.16% keep this 11.16% in mind because
I'm going to be even more cautious and
use 8% in the dividend calculator for
the expected annual dividend amount
increase percentage per year I want to
make sure these numbers aren't confusing
our next key figure is the stock
appreciation since Inception SCD has
increased by
212% which is about 19% per year however
I think that's too high and not
realistic to continue moving forward
looking at the 5-year average it's
10.37% I'm going to be super
conservative and use 6% for our expected
annual share price appreciation
percentage in our calculations the key
figures I'm using for both the expected
annual dividend amount increase
percentage and expected annual share
price appreci appreciation percentage in
the dividend calculator are much lower
than the historical averages I want to
make sure you know where these numbers
come from so you don't think I'm just
making this stuff up I'm being extra
conservative on purpose if you like how
I'm breaking this down and being careful
with the numbers let me know in the
comments so I know to include these
types of explanations in my future
videos looking at the bigger picture
with these conservative numbers I'm
going to show you why SD is a great
choice for long-term investors the real
magic happens when you reinvest your
dividends back into SD to purchase more
shares this method allows you to
supercharge growing your investment over
the next 30 Years thanks to the power of
compounding gains it's like rolling a
snowball down a hill the more it rolls
the bigger it gets that's the secret
behind Building Wealth with SCD now let
me show you how just $50,000 in SD could
beat your full-time job and retire you
rich and if you feel I've earned it a
quick hit on the like And subscribe
button show some love and support for my
videos and for those diving deeper into
trading my patreon has real-time Trading
alerts and if you're interested in
trying out my custom trading view
indicators there's a free trial link
below thanks and with that covered let's
play with the dividend calculator so you
can see the math let's get our dividend
calculator set up first thing we want to
come down to the distribution frequency
and we want to change that to quarterly
we want to make sure the drip is on so
we're reinvesting our starting principal
is going to be
$50,000 dividend tax rate will'll leave
that at 15% the initial annual dividend
yield that's
3.41% are expected annual dividend
amount increase percentage per year is
8% and we just covered where that number
came from the expected annual share
price appreciation 6% and remember both
of these numbers are conservative our
years invested are 30 now let's go ahead
and calculate the dividends in our first
year we're starting with $50,000 in
principal our annual dividend works out
to
$1,726 193 and if you look at the
numbers they're not that impressive and
that's completely normal after 5 years
we're looking at principal of
$7,695 annual dividend
$2,631 10 years we're at
$110,000 and
$451 in dividends after 15 years now
it's starting to get a little bit better
$174,300
$785 in dividends dropping down to 20
years
$280,000 with
$3,893 in dividends 25 years
$459,000 with over $255,000 in dividends
and now you can see the cumulative
effect and big changes are happening and
at the end of 30 years we're at
$767,000 and $
46,4 in dividends so to summarize our
dividend portfolio after 30 years it's
up to
$852
1838 the total return 1,
166% average annual return return 99.92%
and the annual dividend income is now
$52,400 into SCD today so let's play
with some different numbers let's go
with $10,000 of starting principal and
our annual contribution let's do $100 a
month so that would be $1,200 per year
we'll keep everything else the same if
we're going to calculate the dividends
now we're going to see still quite
sizable after 30 years
$374,000 a total return of
73% and our average annual return
7.24% let's say you can beef that up a
little bit and go $200 a month so we're
at
$2,400 hit the calculate button and now
we're looking at
$577,000 a 6.72% annual return and the
annual dividend income
$35,200 a month which many of you guys
can swing so that would be $3,600 a year
and when we calculate dividends look at
this
$781,000 roughly a total return of
561 average annual return 6.5% not too
bad and our annual dividend income is
now up to $
47,7 and now as a bonus I want to give
you one more scenario I'm a real big fan
of investing in tax advantage accounts
so if you could do this in a Roth or a
Roth 401k you wouldn't have any dividend
tax rate and double check with your CPA
on that so let's change that dividend
tax rate to 0% and let's see how it
changes our numbers all we do is hit the
calculate dividends button and boom our
ending balance is now
$1,290 average annual return up
10.61% and our annual dividend income is
$
62,3 se8 guys if you can do this in a
Roth IRA or a Roth 401k definitely
seriously consider going that route
playing with the dividend calculator is
fascinating and while we can't know for
sure how the next 30 Years will unfold
I've chosen very conservative numbers
compared to SD's past performance my
conservative approach suggests there's a
strong possibility that the actual
results will be much higher here's a key
Insight that strikes a chord with every
investor whether you're well experienced
or just beginning the belief that you
need a massive Fortune to build a future
where your investment support you is
just not true with smart choices like
SCD even a single investment of $50,000
or starting small and consistently
growing your SD portfolio could grow to
replace $50,000 in income over time
patience and smart investing can make a
huge difference let's recap our
conservative numbers the $50,000
investment in CHD turned into $853,000
the total return is 1, 166% the average
annual return is 99.92% after 30 years
the annual dividend income is over
$52,000 if you're curious ious about how
the portfolio looks using the 5-year
historical averages hang tight I'll
share those numbers with you in just a
moment today's video goes beyond just
investing it's about making wise
investment choices with an ETF known for
its consistent dividend payouts and
potential for share price growth if
you're aiming for a financial
GameChanger diving deeper into SCD could
be the move that helps you build your
financial future and sets you up for a
great retirement don't forget to check
out my daily pre-market insights on my
YouTube Community tab to stay a step
ahead in the investment game
[Music]
name
keep it real and I'll catch you in the
next
video
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