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You don’t need many ETFs to retire. Most ETFs are built with diversity across many sectors. Some people pick one ETF and exclusively invest in that fund, but former financial advisor Humphrey Yang recently outlined some of the only ETFs you need in retirement. He suggested a high-yield ETF and a tech ETF that can help investors in their golden years.
Schwab U.S. Dividend Equity ETF
Yang recommended the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) due to its diversified portfolio of dividend stocks. This fund has lower volatility than most funds and stocks, and while it likely won’t outperform the S&P 500 during bullish cycles, it offers an attractive 3.62% SEC yield. Since it’s a Schwab ETF, it also has a low expense ratio, which only comes in at 0.06%.
This fund caters to retirees who want some cash flow but don’t want to shoot for the moon at the risk of seeing their nest egg crash. It’s filled with blue-chip dividend stocks that have been distributing cash to investors for decades. The fund has almost 100 equity holdings and allocates 42% of its capital into its top 10 holdings.
The energy sector is the most represented industry, making up more than 20% of SCHD’s total assets. Consumer defensive, healthcare, and industrials are the other three sectors that each make up more than 10% of the fund’s total assets. Almost 90% of the fund’s total assets are in value stocks, with more than half of its capital in large-cap value stocks.
Invesco QQQ Trust ETF
The Invesco QQQ Trust ETF (NASDAQ:QQQ) also made it on Yang’s list of top ETFs for retirees. This fund has a 0.18% expense ratio and a 0.45% SEC yield. You end up ahead with cash flow, but dividends aren’t the main selling point for this ETF.
This fund focuses on high-growth tech stocks that can beat the S&P 500. The Magnificent Seven make up a large portion of this fund’s total assets, and almost half of its total assets are in its top 10 holdings.
The fund puts almost 90% of its capital into large-cap stocks. This portfolio construction limits volatility, but you can still expect QQQ to be more volatile than the average fund. It has more than 100 holdings and allocates 51% of its assets into the tech sector. Communication services and consumer cyclical are the only other sectors that each make up more than 10% of the ETF’s total assets. QQQ has an annualized 20.5% return over the past decade, demonstrating resilience and the ability to outperform most benchmarks.
