A few days ago I was on the back nine with a close friend of mine. He's getting married soon, life is moving fast, and somewhere between holes he brought up investing. He told me he'd finally hit a milestone — his HYSA had crossed a full year of expenses. Acting as an emergency fund. Now he wanted to know what to actually do with the money he was saving on top of that. He'd been sitting on it in a normal savings account, watching interest rates do the minimal work, but he knew deep down that wasn't a long-term strategy. He wanted his money to actually grow. So I told him to stop thinking about picking stocks and start thinking about building a foundation first. Here's roughly what I laid out for him: ~60% into $VOO. This is the core. The S&P 500, low cost, and over long enough time horizons it's done the heavy lifting for most investors. You're not trying to be clever here but you're buying a piece of the entire U.S. large cap market and letting compounding do its thing. 15–25% into $SCHD. This is where the snowball starts to form. $SCHD is a dividend ETF that holds high-quality U.S. companies with strong cash flows and a history of growing their dividends. The play here isn't just the yield it's the snowball. Even buying one share a week, those dividends start reinvesting, which buys more shares, which pays more dividends. It's slow at first and then it isn't. My friend genuinely didn't realize how powerful that compounding loop becomes over a 10–15 year window, especially because he's only 24 years old! The rest into $VT or $IWM. This is where you get either global diversification (VT covers the entire world market, not just the U.S.) or small cap exposure through IWM. We talked about VT specifically as a hedge — with rate hikes still in play and AI volatility creating some uncertainty in U.S. growth names, having exposure to international markets gives you a buffer if domestic equities go sideways for a period. His biggest concern was missing out. He'd heard stories about people loading up on single stocks and making life-changing returns and didn't want to be the guy who just "bought index funds." I had to break that fear down a little. The truth is most people who go all-in on individual stocks without a foundation underneath them end up giving back the gains or holding through drawdowns they weren't prepared for emotionally. The foundation isn't what limits your upside — it's what keeps you in the game long enough for the upside to arrive. Once his core is built and he understands how his portfolio moves, there's nothing stopping him from putting a smaller portion into individual names he believes in. But you build the floor before you start going for the ceiling. Everyones situations are different and that's why I would like to hear from some of you on what your "foundation" in your portfolio is. How are you allocating your capital? The breakdown if you want to steal the framework: ✅ Emergency fund first — at least 6–12 months of expenses in your HYSA before investing a dollar 📈 VOO (~60%) — broad market core, set it and forget it 💰 SCHD (15–25%) — dividend compounder, reinvest everything, let the snowball build 🌍 VT or IWM (remainder) — global hedge or small cap exposure depending on your outlook
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David Monroe@d0p3y71 · 2h
I like SCHD but it’s not my ride or die. I have it in my tax account to offset my tech stocks and it’s a very small amount of my investments. I don’t know about the other stocks but Avantis is a great group of EFTs that I am enjoying like mad. They are dividend funds so when they sit idle I make money. Our philosophy is very different- I had all my tech investments first and then built the defensive line. I’m still banking on tech to blow me up. Let the market dip away - my investments are rock solid
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