bigjom jom / Shutterstock.com One of the most important things to remember is that if you want to build up wealth, it's different than retirement income, and if you're on the former side, you want to start accumulating money now. If you're trying to live off your portfolio now, volatility can become highly personal, as a 20% drop in the market over time isn't a buying opportunity, it's actually the money you need for rent and living. Quick Read A 20% market drop threatens retirees who rely on portfoli ...

Core Insights - The stock market, particularly the S&P 500, has shown strong performance with a 16.5% increase this year and over 20% returns in the past two years, significantly exceeding its long-term average of 10% [1][2] - Concerns are rising about potential market slowdowns due to high valuations and the possibility of an AI bubble, prompting some investors to seek safer investment options [2] Investment Options - The Vanguard High Dividend Yield ETF offers a yield of approximately 2.5%, more than double the S&P 500 average of 1.1%, and is diversified with 566 stocks, reducing exposure to individual stock performance [4][5] - This ETF has a low expense ratio of 0.06% and limited exposure to the tech sector, which constitutes only 13% of its holdings, with financials and industrials making up around 35% [6] - Over the past five years, the Vanguard ETF has shown a share price return of about 68%, increasing to 96% when including dividends, with a beta of 0.85 indicating lower volatility compared to the market [7] WisdomTree U.S. High Dividend Fund - The WisdomTree U.S. High Dividend Fund provides a higher yield of 3.4%, significantly surpassing the average S&P 500 stock, though it has a higher expense ratio of 0.38% [8] - This fund contains 365 stocks with only 3% exposure to the tech sector, while healthcare, financials, and consumer staples account for nearly 60% of its holdings [9] - The fund has a beta of 0.74, indicating even lower volatility, with a stock price increase of 56% over the past five years and total returns of around 89% including dividends [10] Investment Strategy Considerations - The choice between the two ETFs may depend on individual risk tolerance; the WisdomTree fund may be preferable for those wanting to minimize tech exposure, while the Vanguard fund may appeal to those seeking potentially higher returns [11] - Both funds are suitable for investors aiming to generate recurring cash flow and reduce risk in the stock market [12]

Core Viewpoint - Vanguard High Dividend Yield Index ETF (VYM) has approximately $75 billion in assets, indicating its popularity among investors, but it may not be the best dividend ETF available [1] Group 1: ETF Overview - Vanguard High Dividend Yield Index ETF is an exchange-traded fund that pools investors' money for management [2] - The ETF aims to track the FTSE High Dividend Yield Index, which includes companies with high dividend yields and a history of above-average dividend payments [4][5] Group 2: Investment Strategy - The FTSE High Dividend Yield Index identifies dividend-paying companies on U.S. exchanges and selects the top 50% with the highest yields [5] - The ETF holds around 580 stocks, providing wide diversification across dividend stocks [7] Group 3: Performance Metrics - The current dividend yield of the ETF is 2.6%, which is better than the S&P 500 index but lower than some other dividend-focused ETFs [8] - The expense ratio of the ETF is low at 0.06%, comparable to other higher-yielding dividend ETFs [8] Group 4: Selection Process Concerns - The ETF's selection process does not differentiate between well-managed and troubled companies, focusing solely on yield [9] - This could result in a portfolio that includes both high-quality and poor-performing companies [9] Group 5: Alternatives - Schwab U.S. Dividend Equity ETF (SCHD) is presented as a better alternative, offering a yield of approximately 3.8%, notable diversification, and a focus on financially strong companies, with a similar expense ratio of 0.06% [11]

Group 1 - The Vanguard High Dividend Yield Index ETF (NYSEARCA: VYM) has shown strong performance over the past year [1] - The ETF is currently overweight in the financial sector, which may negatively impact its net asset value in a scenario of federal fund rate cuts [1]