Why half my portfolio is in VT as a dividend investor
As a dividend investor, it is quite curious be heavily invested in a broad market ETF instead of a dividend focused ETF like $Schwab US Dividend Equity ETF(SCHD)$ , $Vanguard Dividend Appreciation ETF(VIG)$ or $Vanguard High Dividend Yield ETF(VYM)$ .
I decided on a portfolio allocation of:
- 50% $VANGUARD INTL EQUITY INDEX FUND INC TOTAL WORLD STK INDEX FUND ETF SHS(VT)$
- 50% dividend-growth ETFs
I did this for a few reasons:
1) To diversify into international markets, being able to capitalise on emerging markets as well as developed markets. This allows me to lower my risk as a 100% equities investor.
2) It is market-capitalisation weighted, adding more to winners and cutting losers automatically (saves me transaction fees)
3) It still pays a dividend of between 1%-2%
4) VT would function as the primary growth driver of my portfolio that is lower in volitility compared to other growth ETFs. It will become a smaller part of my portfolio as I near retirement age, with a larger emphasis on income-focused/dividend ETFs.
5) The other 50% of the portfolio in dividend-growth ETFs would consistently increase their dividend payouts and would usually consist of companies that have strong revenue streams. This would allow me to have a high yield-on-cost and alllow my dividend income to keep up with inflation.
Thank you for reading this and remember to do your due diligence. Happy investing! [Happy]
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