This Simple ETF Duo Beats the Market

This Simple ETF Duo Beats the Market

Apr. 17, 2024

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Even action-loving traders have boring buy-and-hold accounts.

I know a trader, for example, who trades a high 6-figure account with short-term options and still has a boring don’t-touch stock account on the side.

And we’ve talked about the 3-Pronged Plan in the Newsletter (one prong for systems, one prong for boring buy-and-hold dividends, one prong for reckless speculation).

Why do a boring stock account when systems will surely make more money?

No good reason, really, other than it’s nice to have something that’s steady.

By having a prong that probably grows and definitely pays a dividend, it helps us forget about it and let it work. Plus, it’s nice to have an account that’s “guaranteed” to bring income in while we ride the ups and downs that come with our systems.

So let’s take another look at that boring prong.

Of course, the index fund zealots will say that the only thing allowed in the boring stock prong is an index ETF. VOO and SPY are the favorite choices.

And there’s nothing wrong with that.

What’s wrong is when people tell us that’s the ONLY way to do it and that VOO is the only way to make the most money.

Because it’s obviously not true.

We can potentially make more money than VOO and get a higher dividend at the same time.

And it’s really easy.

Just trade a portfolio with two ETFs: SCHD and VGT.

SCHD usually matches the market on its own and VGT, being a high-growth, techy ETF, will surpass the market by a wide margin in bullish times.

Here are the substantially better results if we use that simple portfolio instead of just VOO:

A 50/50 mix of SCHD and VGT beats the market from 2012-April 2024. While 17.1% may not seem like it’s that much higher than VOO’s 14.4%, it translates into almost $17,000 more profit if we started with a $10k account.

That’s nothing to sneeze at.

And it’s super easy.

And the portfolio has an average yield 1.1% higher than VOO or SPY.

In our next portfolio, we’ll go back to talking about systems.

Talk to you soon.

 

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.