I Compared 15 ETFs — You Really Only Need These 3
A few months ago I told you that you don't need ten ETFs. You need three buckets.
And the number one question people kept asking after that, over and over, was: okay, cool, but which ETFs go into each bucket?
So today I'm answering it. Fifteen ETFs. Five in each bucket. For every single one, I'm telling you what it's for and whether it's actually in my account.
Six of these fifteen are mine. Let's build it.
The Ground Rules
Before we start, I want to be upfront with you about something. You don't need fifteen ETFs. You don't need nine. I'm giving you fifteen because you should know what your options are and why I picked the ones I picked.
But at the end of this post, I'm going to strip the whole thing down and show you the three-fund version. One fund per bucket. And honestly? It does most of the job.
One more thing. You're going to see return numbers mentioned today. Look at the launch date behind every single one of them. Some of these launched in 1999. Some launched in 2022. A fund that's only ever lived through a bull market is going to look amazing next to one that ate the dot-com crash. That's not necessarily a better fund. That's picking a better portion of a calendar. So don't rank them against each other, and I'm not going to either.
Bucket One: Growth
This is the bucket that actually builds the money. Everything else here is a supporting character. If you get bucket one wrong, the other two don't matter.
Here are my five.
VOO. The S&P 500. Five hundred of the biggest American companies, and it costs you basically nothing in fees.
VTI is the same idea, but instead of five hundred companies, you own basically the entire U.S. market. Thousands of them. Here's the honest truth: over the long run, VOO and VTI do close to the same thing. Those extra small companies don't move the needle nearly as much as people argue about online. Pick one. You don't really need to own both.
SCHG. Now we're narrowing. This one leaves out the slower, cheaper companies and keeps the ones growing the fastest. VUG is Vanguard's version of that same idea. Choosing between SCHG and VUG is the same conversation. They're cousins. Owning both isn't diversification; it's just two of the same thing.
QQQ. The Nasdaq 100. The one we all know. This is the one I want to talk about, because it's the most famous fund in this whole post, and it's the one I'd think hardest about. It's a great fund, but the fees are also six times the cost of VOO, and the reason it's the Nasdaq 100 is that it's the Nasdaq 100 — a hundred companies, concentrated, and it's not designed to be diversified. That's the whole point of it. Just know that's what you're buying. Quick tip: QQQM is a lower-cost version of QQQ.
What I own here: SCHG and VOO. Two of the five. I really only need to own one, but I bought these before I came up with my investing buckets strategy. I'm deploying new money into SCHG currently, not VOO.
And why not the other three? VTI does what VOO already does for me. VUG does what SCHG already does for me. And QQQ — I've made a whole separate post about why I own QQQI instead of QQQ. That's not me saying those three are bad. It's me saying I already own their twin.
Bucket Two: Dividend Growth
Think stability. This bucket is not here to make you rich. It's here to make sure you don't panic. It's the foundation of my investing thesis.
And for me specifically, that word means something different than it does for most of you. I run multiple businesses. My income is not steady, it's not guaranteed, and nobody's sending me a pension. So this bucket's job is to be the boring thing that keeps paying while the exciting parts of my life are on fire.
Here are the five funds.
SCHD. You already knew that one was coming. Screens for companies that have paid and grown their dividend, keeps costs low, and pays a real dividend yield.
DGRO, the iShares version. It's broader, holds more companies, pays a bit less, and honestly it's a genuinely excellent fund that lives in SCHD's shadow on YouTube.
VIG by Vanguard. This one screens for ten straight years of dividend growth, which makes it the most conservative fund in this bucket. Lower yield, higher quality bar.
VYM, also Vanguard, and the opposite trade from VIG. Instead of screening for dividend growth, it just goes and buys the higher-yielding half of the market. More income today, less growth in the payment over time. That's an actual choice, by the way. VIG and VYM are the same company offering you two completely different philosophies. Do you want a smaller check that grows, or a bigger check that mostly stays put? There's no wrong answer, but there is your answer.
SCHY. SCHD's international sibling. Same screening idea, applied outside the U.S. I've been getting a lot of comments about this one, so I'll make a separate post about it soon.
What I own here: SCHD. That's it. One out of five. And I'll be honest with you, that number bugs me a little. Not because SCHD is the wrong pick; I think it's the right pick. But because this bucket has the most real choices in it, and I've made exactly one of them. It could be time to add some international exposure soon.
The Thing I Got Most Wrong About This Framework
Here's the part of this post I didn't expect to be writing.
A few days ago I built a test. Four rules, twelve income ETFs, everything scored out of four. And I ran my own funds through it right alongside everybody else's — I broke down the full results, including where my own funds failed, in a separate post.
Here's what came out of that test. Three funds scored a perfect four out of four. SCHD. DGRO. SCHY. All three of them are in bucket two. Not the income bucket, which doesn't see much capital appreciation, but at least it pays.
Think about what that actually means. I built a test to find out which income funds are legit, which ones are paying you money the companies actually earned instead of quietly handing back your own capital. And the funds that passed weren't the ones with the big flashy yields. They were the cheap, boring, dividend index funds sitting in the bucket nobody makes YouTube thumbnails about.
That's the thing I got most wrong about this framework when I built it. I called bucket two "stability," like it's the safety blanket. The seatbelt. The thing you put up with.
It's not the seatbelt. On the only objective test I've ever built, it's the bucket that won.
So if you take one thing out of this post, take that one. The boring bucket is not the compromise. It's the part that works.
Bucket Three: High Income
And I know exactly what you're thinking. If bucket two just won, why do I own more funds in this bucket than in either of the other two?
Because they're not competing. That test measured one thing: whether the money a fund pays you is money it actually earned. Bucket two wins that outright, and it isn't close.
But bucket two pays me a small check. Bucket three pays me a big one, every month. And like a lot of you, I'm trying to actually live off my dividends one day.
Here's what you need to understand. One of those buckets is better. The other one pays bigger. Those are two different statements. And if you only ever say the first one, you end up with a portfolio that's technically excellent and doesn't pay your bills.
So bucket three is not for growing your money. It's for producing cash flow, which is a different job and requires different funds.
Here are the five.
JEPI by JPMorgan, S&P-based, sells options for income. This one gave me the single biggest surprise of that four-rule test. Its payout and the amount it actually earns are almost the same number. That's rare. Most funds in this category have a huge gap between those two numbers. JEPI basically doesn't.
JEPQ, the Nasdaq version of JEPI. Higher yield, same structure, same firm.
QQQI and SPYI. The NEOS funds, soon to be Goldman Sachs. QQQI is a Nasdaq 100 covered call option fund; SPYI is the S&P version. Both offer bigger payouts than the JPMorgan pair, and they're built with a tax treatment that's genuinely interesting if you hold them in a taxable account. They're also the most expensive funds in this entire post by a wide margin.
GPIQ, the Goldman Sachs Nasdaq income fund. I'll say the same thing here I said in my ranking post: a big chunk of what this one pays out isn't earned income, it's return of capital. Your own money, coming back to you, with a notification attached. Know that before you buy it.
What I own here: QQQI, SPYI, and JEPQ. Three out of five. Most in any bucket, which, if you were paying attention a few paragraphs ago, is a little bit funny.
My Actual Split
So now the question is: how much goes in each one?
Before I tell you my numbers, remember we all have a different investing DNA and situation, so your numbers will be different. Right now I'm investing forty percent in the growth bucket, fifty percent in the dividend growth bucket, and ten percent in the high-income bucket.
The split isn't a formula. It's a function of two things: how far you are from needing the money, and how steady the rest of your life is.
If you're thirty and you've got a salary hitting your account every two weeks, your bucket three should be small or empty. You don't need cash flow. You just need time. Every dollar you put in bucket three at thirty is a dollar not compounding in bucket one, and you will feel that in twenty years.
I'm not thirty, and I don't have a salary. That's the entire reason my bucket three looks the way it does. My allocation is an answer to my question. Yours should be an answer to yours.
The Simple Version
I promised you the simple version, so here it is.
If you took all fifteen of these and had to keep one per bucket — three funds total, that's the whole portfolio — here's where I land.
Bucket one: VOO. Not because it usually beats the others. Because it's the broadest, it's the cheapest, and it's the one you're least likely to talk yourself out of during a bad year. The best fund is the one you'll actually hold. It's even the one Warren Buffett recommends.
Bucket two: SCHD. It scored four out of four on my own test; it's cheap, and the income it pays is income the companies actually earned.
Bucket three: JEPQ. Of the five income funds here, it's the one that scored highest on the four-rule test at three out of four, and it costs about half what the NEOS funds cost.
Three funds. VOO, SCHD, JEPQ. That's a complete portfolio. Growth, stability, cash flow.
Why I Don't Just Own Three
So why don't I just do this myself, since I own six funds and not three?
Because I built my account over years, in different accounts, with different money, at different times, and some of those positions have gains I'm not going to trigger a tax bill to clean up. My portfolio is a history of decisions, not a design.
Yours doesn't have to be. If you're starting today, you can just start with the design.
Watch the full video above, or on YouTube: https://youtu.be/MD4W74Qf90o