Day 80 | $10,501
The last couple of weeks have been a whirlwind for most portfolios—and emotions.
Trump winning the U.S. election sent stocks soaring, but only for a day or two. Then, the pendulum swung back in the other direction, causing back-to-back red days. Since then, we’ve clawed our way back to green, but today we’re trending down again!
In times like this, I want to encourage you to just keep investing regardless of the volatility swirling around you.
When we hear that the market as a whole has returned close to 10% annually over the last 30 years, we often forget that the 10% is an average of all those 30 years. In reality, some years will be up, some will be down, and the rest will be status quo.
Picking the winning years is a fool’s game. Even the brightest fund managers can’t agree on what trends to follow. It’s best to forget trying to time the market and simply trust that the average will work itself out in the long run!
The Power of $100,000
If you need a little more encouragement, let me remind you of what the late Charlie Munger once said:
“I don't care what you have to do. If it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000.”
Why does $100,000 matter?
That quote is all about the power of compounding interest. Let’s look at an example:
If you invest $10k each year at a conservative 7% annual return, it would take nearly 8 years to hit your first $100k milestone.
But going from $100k to $200k cuts that timeline down to just under 5 years.
Fast forward even further: going from $900k to $1 million takes only 1 year and 4 months!
Like a snowball rolling downhill, compounding starts slow but grows exponentially as it picks up speed. Uncle Charlie knew that $100k is where the magic begins—when your walk turns into a jog.
This is especially true for dividend investors like us. When I started my portfolio with $5k, it was producing just $10.83 per month in dividends—a small but exciting start! Today, the portfolio created over $100 a month in passive income.
The key is trusting the process and just keeping at it.
Buying My First ETF, SCHD
This month, I made an exciting addition to my portfolio: SCHD, my first ETF!
To help build a wider foundation of dividend-growing stocks, I decided it was time to diversify further with an ETF (Exchange-Traded Fund). If you’re unfamiliar with ETFs or how they work, let’s break it down.
What Are ETFs?
An Exchange-Traded Fund (ETF) is essentially a basket of investments—like stocks or bonds—that trades on an exchange like a single stock. ETFs combine some of the best features of individual stocks and mutual funds:
Diversification: ETFs hold multiple assets, reducing risk compared to owning individual stocks.
Low Costs: Their expense ratios are typically much lower than mutual funds.
Transparency: Most ETFs disclose their holdings daily.
Why SCHD?
The Schwab U.S. Dividend Equity ETF (SCHD) is one of my favorite ETFs because it aligns perfectly with my dividend growth strategy while providing diversification and stability.
Here’s why I chose SCHD:
High-Quality Holdings: SCHD tracks the Dow Jones U.S. Dividend 100 Index, which selects companies based on financial strength and consistent dividend payouts. It holds 103 high-quality companies known for their reliability.
Attractive Dividend Yield With a yield around 3.58%, SCHD provides solid dividend payment.
Impressive Dividend Growth SCHD boasts a 5-year dividend growth rate of 12%. This is pretty impressive as there's not a lot of stocks that can compete with both a 3.58% yield and a 12% growth rate.
Low Expense Ratio Its expense ratio is just 0.06%, meaning you pay only $6 annually for every $10,000 invested—a huge cost advantage over most mutual funds.
Strong Performance Over the past decade, SCHD has grown by over 111%, proving its track record as both a stable income generator and growth vehicle.
SCHD By The Numbers
Here are some quick stats about SCHD:
Holdings: 103 companies.
Top Holdings (41% of its portfolio):
BlackRock
Bristol-Myers Squibb
Cisco
Chevron
Home Depot
Texas Instruments
Verizon
UPS
Altria
Lockheed Martin
These companies represent some of the most financially sound businesses in America—exactly what I look for in my portfolio.
The Takeaway
Investing can feel overwhelming during volatile markets like these—but remember: time in the market beats timing the market every time!
Adding ETFs like SCHD can simplify your strategy while providing diversification and stability—allowing you to focus on high-conviction picks without sacrificing long-term goals.
So keep walking toward wealth—one step (or share) at a time—and remember Charlie Munger’s advice: just get to $100k first!
Until next time… keep buying!
Jeremy ✌️