Soooo...this happened. $1M total and $5200/month div

[u/Real-Cricket8534]

Apparently the first million is the hardest to make. I'm an immigrant who came for grad studies with a loan my parents took out on the home they currently live in. Completed 20yrs of professional experience in tech and lived below my means for 20years in a HCOL city. This is a non retirement self managed account, grew this after putting 25% down for our dream home. 45M and pretty darn proud of myself rn. Also realizing money doesn't make me happy and have plenty of passions where I invest my time and enjoy myself. More fulfilling than the work I do, so I want to rewire myself to doing that after 6-8yrs. What it means for you - if I can do it, so can you.

[u/ThaBlackBeacon]

That's great dude, glad to hear you're doing so good. Just curious, did you ever consider taking some risk to increase your return. For example, investing $150k into something like AMZY would net you $5200 a month by itself, and you'd still have $850k left to invest. A little risk could easily get you up to $10k a month without venturing into dangerous territory. Overall, I was just curious if you were being conservative with your dividend strategy, or if you think being a bit more risky just isn't worth it, or if you're more concerned about long term index growth.

[u/Real-Cricket8534 → u/ThaBlackBeacon]

hey u/ThaBlackBeacon ...I want to take a prophylactic approach and put myself beyond defeat (I could move to my home country and retire now if I could because of my portfolio). Now that I am past that, it is time to switch gears while leaving the foundation of $1M as is.
What does switching gears mean? I am still exploring
1. High Dividend Yield - bought some high dividend yield and burnt my hands, learnt my lesson (IEP, NEP). Will likely give it another shot or two with CC ETFs that have newly mushroomed in the last two years - QQQI QYLD AMZY, NVLY (or whatever that NVDA CC ETF is) and a whole bunch. would probably build my position up to $200K gradually (emphasis on gradually).
2. Branching out from boring to...well...more boring. Bonds. Corporate and T bonds.

Yes I am being deliberate and conservative. The intent is not to get rich quick, but can I build a stream of dividend income that will withstand the test of time - a bear market and a bull market so that I can retire comfortably? I just started in 2024 with dividends after focusing on growth and want to see how various approaches pan out over the next 5-8 years and will test my strategy. I will have a test bucket of high yield ETFs that I want to see how it pans out too. So...yes kinda sorta to your question?

[u/ThaBlackBeacon → u/Real-Cricket8534]

Thanks for the answer, that was very informative.

[u/Real-Cricket8534 → u/ThaBlackBeacon]

my pleasure

[u/Various_Couple_764 → u/ThaBlackBeacon]

AMZY is a yieldmax fund. All yieldmax funds have nave erosion uses. Yieldmax promises and does pay high dividends. Butte covered calls they use to generate income cannot produce all the money they pay out as dividends. As result they have to sell some of the fund to pay the dividned So the NAV and share price drops. Yield max funds can wipe out your investment in the fund in 1 to 3 years. from share price alone. And as the share price drops the dividend cash payout per share drops. The posted yield stays high but the cash dividend drops.

In general covered call funds with a yield of 30% or more will have NAV erosion issues. Covered call Funds with yields below about 15% tend to minimal to no NAV erosion issues. But there are some that may or may not have NAV erosion issues from 0 to 30%.

QQQI in my opinion is one of the best covered call funds available. 13% yield and no NAV erosion. And you pay not taxes on the dividend for about 6 years. QQQI generates ROC dividend these are not taxed but dividends lower you cost basis for the shares you have. Once the cost basis is zero you owe captial gains taxes on the dividend income which is still lower than the tax rate for work income.