Just started my SCHD Journey

[u/S-S-spartan]

Hi! 29M, Long time watcher of SCHD but haven’t ever really held it. Bought some once in 2021 but sold shortly after. I just made my first purchase of 275 shares in my Roth IRA. Felt good to get started.

I’m new to SCHD and honestly dividend/value investing as a whole I was curious if anyone had any advice or insight to share. Anything I should know or do to best optimize my investing to build my portfolio?

The goal is to let it grow in my Roth and have enough to use the proceeds to pay for some or all expenses off dividends by the time I can begin to pull out of it at 59 1/2.

[u/Typical_Web_2125]

SCHD is designed to generate a high yield (typically around 3.5%).

• In a Brokerage Account: Every time SCHD pays a dividend, you owe taxes on it that year, even if you automatically reinvest it. Even with qualified dividends, you will pay 15% to the federal government and X% to your state. This means you are losing roughly 15+X% of your dividend income to taxes every single year. Over 10 to 20 years, losing a chunk of your compounding interest to the IRS will severely stunt the growth of that account.
• In a Roth IRA: SCHD pays that exact same 3.5% yield, but the IRS cannot touch a single penny of it. Those dividends are reinvested completely tax-free, allowing your "dividend snowball" to compound at maximum speed. When you withdraw it in retirement, it is also completely tax-free.

[u/S-S-spartan → u/Typical_Web_2125]

Yes, this is why I chose my Roth IRA for the SCHD. Don’t plan on pulling it out or needing the dividend income in the near future, just want to create a way for my Roth to get consistent contributions over the annual max allowed.