In yesterday’s post, it appears that I was a little too hard on the Contrafund. Dividend Growth Investor pointed out that the chart I used from Yahoo Finance didn’t account for dividend reinvestments. Check out this chart instead. This article from the Wall Street Journal supports what he is saying. The only fair thing to do is to include the Contrafund in my experiment. Since I had my 401(k) money in the Contrafund for years, it only seems fair to use it as a benchmark as well.
Jason from Dividend Mantra also suggested that Schwab US Dividend Equity ETF (SCHD) is a better fund for a dividend growth strategy, so I replaced VIG with it.
So, my portfolio now includes $30,000 in each of these 7 funds:
- VGT (Vanguard Information Technology): I love technology.
- VBR (Vanguard Small-Cap): Small cap, yay!
- VNQ (Vanguard REIT): Real estate.
- VXUS (Vanguard International Stock): Bonjour!
- SCHD (Schwab US Dividend Equity): For the dividend-heads.
- VTI (Vanguard Total Stock Market): The measuring stick.
- FCNTX (Fidelity Contrafund): The actively managed fund.
I like the changes:
- Dividend Mantra Jason is a smart guy and a dividend fanatic, so I’d rather go with his suggestion of SCHD over VIG.
- It will be fun to see how the actively managed Contrafund does against the passive gang of 6.
Tune in for the first update on May 12.
Oh, and if you did the math, you know that I have $65,000* left over. I’m not sure how or when I’ll deploy that yet. You’ll be the first to know when I do though.
*$65,000 is about what an entry level Tesla costs. Tempting, but I’m not that crazy.
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I love Contrafund. But if you look at the life of the fund (and I think this includes dividends) it is slightly below the general market, but still, on average, gets a 10-11% return. Nice choices.
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We shall see. I’m very curious to see how it stacks up against Vanguard over the next couple decades…
Remaining $65K- dollar cost averaging into VTI for the next year- this will make you sound fancy, and every month you’ll rethink your strategy and decide to move ahead with the plan. I think you would like that.
YES! This is my favorite suggestion so far! Love it!
It isn’t a “fancy” strategy though, it is “hard working.” See here: https://www.1500days.com/the-1500-children-drop-the-f-bomb/
Haha! Dollar cost averaging is hardworking or lazy and lacking in creativity depending on who you ask, but definitely not fancy.
Definitely not! 🙂
In the short-term I think we’re all aware that any one of those can win the race. But what would be interesting is who the long-term winner will be. Can’t wait for the 10 year update in 2025!
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Yeah, completely agreed and actually even 10 years is too short of a timeline. For example, if the Eurozone gets back on it’s feet or if America chokes, VXUS could be a big winner in the near term.
I think your odds of VXUS winning over VTI is pretty good. International valuations are much better than domestic at the moment. Reversion to the mean should show that gap close with time.
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My guess-the 65k is stocks. You have done too well with individual stocks to say goodbye and I don’t blame you. I probably will never go 100% mutual funds. Some stocks ate too tempting and gotta have some adventure.
Ha! My stock buying days are behind me. Well, maybe not, but I don’t buy stocks in large quantities (> $2000) very often (Google: 2004, Apple: 2007, Facebook: 2012, Lending Club: 2014). So, I’m not due for at least a couple years.
Really though, I must be able to build a VERY STRONG case to myself to buy a stock and nothing stands out now. Index funds will overwhelming be where future money goes.
They raised the minimum price of the Tesla to $75000 with the S70D announcement although about $67.something k after tax rebates 🙂
I’m with Sue though, you like your stocks too much to give them up.
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Crap! Perhaps I’ll pick up a used one? Move to Colorado and we can split one!
Any reasons for going with ETF and not with straight MF?
As far as I can tell, they are exactly the same to the long term investor. So, VTI is shorter to type than VTSAX, hence the decision.
1500, are you considering the tax free Roth conversion ladder in early retirement like Mad Fientist and Jim Collins? It seems like lower volatility would be preferred during the rollover and then back to aggressive after it’s safely reclassified as a Roth contribution.
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Hi Danny-
Yes, that is absolutely my strategy. However, at least 400K of my portfolio is after tax, so I wouldn’t have to do the conversion ladder for a long time, if ever. I’m hoping that my after tax stuff will last me until I hit 59.5 when I can tap the 401(k) normally. If not though, I’ll go with the ladder.
Nice one! This help those who do not know where to put their money. It will help too if people are very familiar first with the kind of investments they are entering in before actually investing in it.