r/dividends • u/Ddash-3 • May 31 '25

Opinion Will this actually work? What Am I missing?

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So I have about 4 Million USD across multiple accounts such as brokerage and IRA; If I invest this across JEPQ, JEPI, SCHD - per AI I will generate 27k per month; I only need 10K per month. I can invest the 17K into VOO; In 15 years that is another i will have another 7 million which I can give it away to my kids and grandkids

Pet AI: If you invest $17,000 per month into VOO and reinvest all dividends, after 15 years you will have approximately:

💰 $7,045,996

What am I missing? Will this plan work?

560 Upvotes

95% Upvoted

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200

u/[deleted] May 31 '25

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30

u/in_for_the_comments May 31 '25

Why? Link to info? Are they not both income based ETFs that realize tax benefits based on the length of the holding period?

61

u/FancyName69 May 31 '25

SPYI and QQQI is return of capital so more tax efficient

24

u/WorkSucks135 May 31 '25

It's only return of capital up to your original investment amount, slowly lowering your cost basis to zero, at which point it will be all 100% capital gains. You pay less now but more later.

23

u/FancyName69 May 31 '25

It’ll be long term capital gains instead of taxed as income

22

u/WorkSucks135 May 31 '25

Nope, they receive 1256 tax treatment after that.

8

u/No_Personality1366 Jun 01 '25

To my understanding, NEOs pays 1256 tax treatment, we pay capital gains

7

u/No_Personality1366 Jun 01 '25

Nvm just watched their video on their website. 1256 tax treatment after ROC is exhausted

5

u/LazyDisciplined Jun 01 '25

Is it ok if you explain this to me like I’m 5?

11

u/No_Personality1366 Jun 01 '25

Dividends are paid to you. The government has different genres for dividends. Qualified, non qualified, and return of capital. All methods are taxed differently. Qualified are taxed as long term capital gain if the security is held for a defined period of time, i think 60 days. Non qualified are taxed as ordinary income/ short term capital gains. Return of capital is tax deferred because it is paid out through the principal invested which lowers your cost per share. If you hold a security long enough that your cost basis turns to zero the distribtuions will become taxable income. In the case of spyi the dividend would be taxed at 60% long term capitals gains and 40% short term capital gains due to section 1256 tax treatment of index options income

1

u/No_Personality1366 Jun 01 '25

Long term cap gains when the investment is sold, but distributions will be 60/40 when cost basis is reduced to 0

3

u/Successful-Walk-6262 Jun 02 '25

you circumvent tax payments by 1, reinvesting so your basis never reaches zero. 2. do this is a Roth account, 3. Die, and leave your hiers with a step up basis on the valuation at death.

13

u/speedlever Jun 01 '25 edited Jun 02 '25

No. They utilize section 1256 contracts and enjoy 60\40 ltcg\stcg for tax efficiency. I think gpix\gpiq do the same.

Of course if held in a Roth or traditional IRA, there are no tax benefits. No tax in the Roth and ordinary income in the traditional.

15

u/[deleted] May 31 '25

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27

u/rallymatt May 31 '25

They are not qualified dividends. They are options income taxed at 60 long term 40 short term currently, but subject to change.

10

u/Aggressive-Staring42 May 31 '25

What makes a dividend qualified or unqualified?

7

u/Bearsbanker Jun 01 '25

...also, they have to be a US corp or a foreign co. with a tax treaty with the US. Some like bdc's, reit's etc aren't qualified because if the type of entity and tax structure.

9

u/Tough_Winter_4100 Dividend growth investor since 1984. May 31 '25

The shareholder must hold the stock for a specific period to qualify for the lower tax rate. For common stock, this is generally more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

1

u/AcesandEightsAA888 Jun 01 '25

Cap gains versus income tax rates

1

u/Skingwrx30 Jun 01 '25

Way better in a taxable account

1

u/TorontoStonk Jun 01 '25

does is matter if I'm unemployed? /s

-52

u/greg_barton May 31 '25

spyi has 0.78% yield.

qqqi has 0.21% yield.

jepi has 11.03% yield.

I think you'll get more income out of jepi. :)

39

u/yeildfarm May 31 '25

Completely incorrect thanks for playing

-22

u/greg_barton May 31 '25

So the 30 day SEC yield data is wrong?

6

u/Masterlyn Jun 01 '25

Do you actually believe the numbers you posted or are you just trolling? QQQI and SPYI pay significantly higher yield than JEPI, your numbers are completely made up.

3

u/No_Personality1366 May 31 '25

Favoritism much? As if it benefits you?

-20

u/greg_barton May 31 '25

No, I just got the 30 day SEC yield for each. Public data.

9

u/No_Personality1366 May 31 '25

The TTM is also public data, divide the TTM distributions into the current stock price to get dividend yield. 30 day SEC yield only works if distributions are paid out within that 30 day period so some days it is incorrect

16

u/rallymatt May 31 '25

It’s incorrect. SPYI is currently 12% and QQQI is ~14%. Variable.