The Schwab U.S. Dividend Equity ETF (SCHD) invests in high-dividend-yielding companies that have grown and sustained their dividends. SCHD seeks to track an index that includes only companies that have paid dividends for at least 10 consecutive years.
For cash that can be invested for a longer term, the opportunistic tier is used to explore market opportunities that may be available in lower credit quality securities or further out on the yield curve. Stability and liquidity are weighed against these market opportunities, with the potential for higher yield but significantly less liquidity. These investments typically experience the highest volatility of the three tiers and typically have a target horizon of 12 to 24 months.
Not usually needed for day-to-day cash requirements, strategic cash is also called savings and investment cash. It can be used to potentially earn a higher yield with investments that help to preserve principal while retaining easy, though potentially more limited, access to funds. The focus is on seeking stability/liquidity and yield with moderate cash flows and modest volatility. The time horizon is typically 3 to 12 months.
Also referred to as everyday or operational cash, transactional cash is often used to purchase investments, pay bills, and manage daily expenses. Cash in this tier seeks stability, minimal volatility, and liquidity with frequent cash flows, and is short term—typically overnight to three months.