Imagine this: 15 years ago, Harry invested $10,000 in VTI, and his friend put the same amount in SCHD. Fast forward to today, and the results are eye-opening. One of them might be earning enough passive income to cover rent without selling a single share, while the other has more total wealth—but pays taxes every time cash is needed.
Most investors think growth always beats income, or that dividend funds are the secret to early retirement. But here’s the kicker—both groups are missing a critical detail, and ignoring it can cost you years of your retirement.
Quick disclaimer: This isn’t financial advice. We’re just breaking down real numbers to help you make smarter long-term investing decisions. Always do your own research or talk to a financial advisor before investing.
The Dilemma: Growth vs Dividend Growth
When building a portfolio for financial independence, there are two main strategies:
VTI (Vanguard Total Stock Market ETF) – Own the entire market, sell shares when you need cash.
SCHD (Schwab U.S. Dividend Equity ETF) – Own carefully selected dividend-paying companies, live off distributions.
It sounds simple—but here’s what most “finance gurus” online don’t tell you. Both strategies make money, both beat the average investor—but only one lets you retire earlier without massive taxes.
Harry’s Journey: VTI
VTI gives you a slice of 3,532 companies—not just the tech giants like Apple, Microsoft, and Nvidia, but almost every publicly traded company in the U.S.
Current share price: $325.72
Expense ratio: 0.03% (basically free!)
10-year total return: 268.49%
Harry’s $10,000 grew to roughly $26,849, with a year-to-date return of 13.45%, even through market volatility.
Dividends? Low, at 1.15% annual yield. But here’s the secret:
Every quarterly dividend reinvested automatically
Compound interest quietly growing his wealth
No tax until he sells
Even with low dividend yield, VTI has paid dividends 23 years straight—and yes, they’ve grown four consecutive years.
Harry’s Experiment: SCHD
SCHD focuses on dividend growth:
Current share price: $27.21
103 carefully selected dividend aristocrats
Dividend yield: 3.80% (triple VTI!)
5-year dividend growth: 10.38%
Expense ratio: 0.06%
Harry’s $10,000 here grew to $21,686 over the past decade—not as high as VTI, but here’s the magic:
Quarterly dividends pay like clockwork
Dividends qualify for preferential tax treatment
Income grows automatically, inflation-proofing your retirement cash flow
The Real Test: Living Off Your Investments
Let’s say Harry retires with $500,000 in each fund:
VTI: 1.15% yield → $479/month. To reach $40,000/year, he’d need to sell shares, triggering capital gains taxes.
SCHD: 3.8% yield → $1,583/month. Only a fraction of shares need selling, and dividends face lower taxes.
Over 30 years, that difference could save hundreds of thousands in taxes. 💰
Which ETF Should You Hold Forever?
✅ Choose VTI if:
You’re under 40
You won’t touch the money for 20+ years
You prioritize total growth over income
✅ Choose SCHD if:
You’re within 10–15 years of retirement
You want rising passive income
You prefer qualified dividends and tax efficiency
💡 The sophisticated strategy? Hold both ETFs.
70/30 in your 30s (70% VTI / 30% SCHD)
Adjust to 60/40 in your 50s
40/60 in your 60s
This way, you capture VTI’s growth while enjoying SCHD’s steady dividend income, balancing high-growth tech with stable, income-generating sectors.
Action Step:
Figure out how many years until you need your portfolio to start paying you.
If over 15 years → VTI growth wins.
If under 10 years → SCHD’s rising dividends dominate.
Or better yet, split between both for maximum flexibility.
💥 Ready to start your ETF journey? Don’t wait—start building long-term wealth with smart ETF investing today.
👉 Buy VTI & SCHD on Moomoo now: https://j.moomoo.com/0xFRE4
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