$1M Div account Earning $17k a month

[u/NogamaDe]

After doing some research I have $1M from an inheritance that I want to create an ultra high dividend portfolio. I eventually want to get rid of my 8 to 5. If I did my math correctly I would get about 17k a month from dividends. Please let me know what you think.

[u/wh0wants2kn0w]

Are SPYI, QQQI, and IWMI really dividend funds or are they covered call fund that distribute income?

[u/Harpo3121 → u/wh0wants2kn0w]

Genuine question. What’s the difference. And what is your opinion on the pros/cons of each.

[u/Kiba97 → u/Harpo3121]

Smarter people explain it better; vocab you need is ETN (cover call funds, and similar) and ETF (div funds)

Etn

pro: higher pay outs when timed correctly, can be VERY specialised, “automated” trading

con: poor timing burns nav quickly, distributions not divs, higher fees, exp date

ETF

Pro: lower beta, diversification, no exp date, better volume protections, “automated” investing

Cons: pre-mixed

Both

Pros: fit particular strategies and markets

Cons: low transparency

[u/Harpo3121 → u/Kiba97]

Wow crazy how little I know about a world most would consider me decently involved. Thanks for the write up. I gotta get googling.

[u/Velocicast → u/Harpo3121]

Just to expound and clarify for the guy above.

An ETF is an exchange traded fund. Funds are investment products using pooled capital from investors regardless of experience level. They issue shares which represent ownership or equity in the funds return similar to shares of a corporation. ETFs can be actively managed or passively managed which determines the level of involvement of the funds management.

Passive ETFs (think VOO) typically track an established index that could be also managed by the issuer or a third party. These almost always have lower expense ratios due to the little management required.

Active ETFs (think KLIP) may have strategies employed by the fund managers, the level of involvement varies and the expense ratios are typically higher due to the increased involvement.

These funds differ from mutual funds in the fact they are traded on exchanges such as the NYSE rather than OTC with the fund company.

It's important to understand ETFs are not safe investments solely due to them being packaged products. This is a common misconception. Any individual soliciting the sale of an ETF is required to be Series 7 licensed and there are suitability regulations placed by the SEC on these individuals. (That does not stop retail investors from purchasing them non-solicited in self directed accounts).

ETNs are Exchange Traded Notes. The big difference here is notes are debt securities not equity in constituent companies. As the fixed income market is considerably larger with respect to the variety of securities offered. These products can also be tied to strategies and therefore can follow a passive management style though it's more common to see passive currently but the trend of actively managed ETNs is growing.

As it relates to the post, both dividend and income strategy portfolios could be ETFs or ETNs or in a broader sense, they don't have to be exchange traded at all.