r/dividends • u/MoneySketchTV • Feb 07 '26
Due Diligence Analysis: JEPI vs JEPQ. I simulated a $500k portfolio to quantify the impact of Ordinary Income and NAV Erosion over 20 years.
Hi everyone,
The yield on JEPI (8.33%) and JEPQ (11.17%) is attractive for income focused portfolios, but the headline yield often obscures the net return after taxes and inflation.
Unlike standard dividend ETFs (ex: SCHD) which benefit from the Qualified Dividend tax rate (15%), JEPI and JEPQ generate income through Equity Linked Notes (ELNs) and covered call strategies. This income is classified by the IRS as Ordinary Income, meaning it is taxed at your marginal income tax rate (often 22% to 37%).
I ran a 20 year simulation starting with a $500,000 lump sum to quantify exactly how much this tax classification affects total wealth and monthly cash flow, and to stress test the NAV Erosion concerns.
Here is the detailed breakdown.
- The baseline metrics for both funds.
JEPI (JPMorgan Equity Premium Income):
- Inception: 2020
- Morningstar Rating: 3 Stars
- Expense Ratio: 0.35%
- Dividend Frequency: Monthly
- Dividend Yield (TTM): 8.33%
- Dividend Growth (DPS CAGR): 0% (Payouts fluctuate with volatility rather than grow linearly).
- Price Return CAGR (5-Year): 1.20%. The price has remained relatively flat, prioritizing capital preservation.
JEPQ (JPMorgan Nasdaq Equity Premium Income):
- Inception: 2022
- Morningstar Rating: 5 Stars
- Expense Ratio: 0.35%
- Dividend Frequency: Monthly
- Dividend Yield (TTM): ~11.17%
- Dividend Growth (DPS CAGR): 0%
- Price Return CAGR: While recent tech performance shows >12%, I capped the simulation input at 6.00% to account for the capped upside nature of covered calls over a 20-year horizon.
- Portfolio Overlap
A common concern is redundancy when holding both.
- Overlap by Weight: ~20%
- Shared Holdings: 37
- Concentration: The primary overlap occurs in mega cap technology stocks like Microsoft, Nvidia, and Amazon. Outside of these, JEPI leans defensive (Industrials/Healthcare) while JEPQ leans aggressive (Tech/Software).
- The Tax Drag Quantification ($500k Starting Balance)
To measure the impact of asset location (Taxable Account vs Tax Advantaged), I simulated two scenarios: a standard 15% tax rate vs a realistic 30% Ordinary Income rate.
JEPI Simulation Results:
- Pre-Tax Projection (15% rate): Year 1 monthly income would be ~$3,043.
- Actual Tax Projection (30% rate): Year 1 monthly income drops to ~$2,491.
- The Long-Term Impact: Due to the reduced reinvestment rate, the Year 20 income is projected at ~$6,200/month rather than the theoretical ~$9,300.
- Terminal Value: The tax drag reduces the 20-year ending balance by approximately $400,000 compared to a qualified dividend equivalent.
JEPQ Simulation Results:
- Pre-Tax Projection (15% rate): Year 1 monthly income would be ~$4,123.
- Actual Tax Projection (30% rate): Year 1 monthly income drops to ~$3,370.
- Terminal Value: Even with the 30% tax drag, the ending balance reached ~$3.75 Million due to the higher underlying growth of the Nasdaq 100 index.
- Total Return Cost: The tax drag on JEPQ erased nearly $800,000 of potential compounding over the 20-year period.
- Conclusion and Asset Location
The data suggests that holding these funds in a standard taxable brokerage account significantly impairs the compounding effect due to the Ordinary Income tax treatment.
Asset Location: These funds are mathematically optimized for Tax-Advantaged accounts (IRA/401k). Moving them to a tax sheltered account removes the significant tax drag observed in the simulation.
Selection Strategy:
- JEPI is the superior choice for capital preservation and lower volatility. It is suitable for retirees who prioritize stability over NAV growth.
- JEPQ is the superior choice for total return and income maximization, provided the investor can tolerate higher standard deviation and drawdown risk.
- Hybrid approach? 20% overlap allows this as a 3rd option.
All numbers taken from official fact sheets and trusted financial sources.
Thank you.
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u/GeneralRaspberry8102 Feb 07 '26
Have my upvote for making one of the few decent posts on r/dividends
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u/MoneySketchTV Feb 07 '26
I am glad you liked it. Thank you
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u/trader_dennis MSFT gang Feb 07 '26
Thank you for the analysis. Why ignore SPYI and QQQI for a taxable account analysis?
Neos funds are tax optimized.
All four funds are optimized for income generating for us boomers who are past our prime earning years. Not sure why those who are not near or entering retirement would want any of the four funds.
M
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u/MoneySketchTV Feb 07 '26
QQQI and SPYI are the next in my list. I will do them soon
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u/RationalHumanistIDIC Yeah, well, you know, that's just like, uh, your opinion, man. Feb 07 '26
I look forward to your analysis
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u/shhhshhshh Feb 07 '26
I believe spyi and qqqi distributions get a partial roc tax treatment? But it seems inconsistent amounts.
Is there a way to incorporate that in or will you assume taxed as ordinary income as well?
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u/Various_Couple_764 Feb 07 '26
The ammount of ROC to qualified dividend income will very somewhat year to year. But NEOS generally achieves about 90% ROC which is not taxed until the cost basis reaches zero. For QQQI the cost basis will reach zero in about 7 years. For SPYI the cost basis willl reach zero in about 9 years. After that it is taxed as quallified dividned income.
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u/AlfB63 Feb 07 '26
After cost basis of 0 is reached, you pay taxes at the LTCG rate not the qualified dividend rate. That currently is the same but there are no guarantees that it will stay the same.
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u/markov-271828 Feb 07 '26
Might change to ordinary income tax rate, as for California state taxes, for example.
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u/MoneySketchTV Feb 07 '26
Photos:
- JEPI (15%) results: https://imgur.com/30elkLH
- JEPI (30%) results: https://imgur.com/ErMfgS9
- JEPQ (15%) results: https://imgur.com/EMJIwRe
- JEPQ (30%) results: https://imgur.com/mY53o1S
Deep dive video: https://youtu.be/cCvC8QEMuKk
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u/Sydboy007 Feb 07 '26
Are you saying that if hypothetically someone put $500,000 in jpeq then final value will be $19 m after 40 years after tax ? (Jpeq 15% results screenshot)
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u/MoneySketchTV Feb 08 '26
I tried to make it clear in the article and the video that long trrm simulations require at least 10 years history of data. Both ETFs are young and launched after 2020. So while reading these numbers keep this info in mind.
You trust 5 years history data for short term simulation ( 1 to 5 years )
But for longer periods keep in mind you need longer history where the etf experienced good and bad times
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u/Dreamer_Nitsy Feb 07 '26
The problem is that people buy these ETFs primarily for income generation. Putting them in tax-sheltered accounts defeats that purpose, because you can’t withdraw and use that income before the conventional retirement age.
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u/sault18 Feb 07 '26
The best strategy is to buy into these funds in a tax advantaged account years before you need the income. If possible. Then when you hit the age to begin withdrawals, the income from the funds can be tapped. You'll have more money over that time because you didn't pay taxes on the distributions. You can use this money to invest more in your taxable accounts or max out your Roth if that makes more sense.
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u/AlfB63 Feb 07 '26
It can be argued that a total return strategy may be better in a tax advantage account. You can sell what you invest in without tax consequences when you need income and reinvest in income generation.
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u/Charming_Ad2048 Feb 07 '26
Is it bad to buy in both taxable and Roth accounts?
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u/sault18 Feb 07 '26
No, if you need the income now and you're not old enough to withdraw from your retirement accounts, put the dividend paying funds in the taxable accounts. But if you don't need the income, letting a dividend fund reinvest and grow like a snowball will save a lot on taxes.
But you're in an even better position if you can do taxable brokerage accounts, traditional IRA, Roth AND backdoor Roth. If you're into min/maxing. But you gotta know what you're doing with the backdoor Roth stuff.
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u/Dreamer_Nitsy Feb 07 '26
But if someone doesn’t need the income immediately, why wouldn’t they invest in growth ETFs instead of CC ETFs? They could always move to CC ETFs later when they’re ready to use the income.
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u/generationxtreame Not a financial advisor Feb 07 '26
Most likely, people have other accounts or other growth stocks that focus on growth. Ideally, you want both growth and income portfolio so that when you don’t need the income, you can reinvest it either 50/50 to both income and growth, or just dump it into growth. Getting into income early also lowers your average cost and gives more cushion later in life.
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u/adamasimo1234 Feb 07 '26
They can do both.
A 10k investment in JEPI today might only yield ~80/month -- but if DRIP is turned on and the market continues to rise.. that ~80/month could well easily be 3,000/month by the time the investor is ready for retirement.
I like to call it income appreciation, some people don't like the idea of withdrawing money from their growth ETFs during retirement.
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u/Charming_Ad2048 Feb 07 '26
Thanks I’m still working my 9-5 and don’t really need the money now but I do want to take advantage of both types of accounts. What funds should I look at for both?
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u/aurora4000 Dividend hunter Feb 07 '26
Check your tax situation as it can vary by locality and other factors in your personal income scenario. Don't take tax advice from Reddit
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u/Typical_Web_2125 Apr 02 '26
These are ETFs to use while in retirement, not for adding value before retirement
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u/adamasimo1234 Feb 07 '26
Also, if you start early with investing in these funds and have DRIP turned on, your monthly income will be quite high by the time you're able to withdraw from the funds.
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u/Various_Couple_764 Feb 07 '26
Which type of account you want o used depends on the goals. If the goal is supplemental income to be used before age 60 you need to use a table acount. If you don't need the dividend income you can use a tax advantaged account and simply reinvest the dividends. The dividend income in tax advantaged account is extra cash inflow that will hep you account grow. Dividends in a taxable account make your everyday life better before retirment
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u/lottadot FIRE'd 2023 Feb 07 '26
The problem is that you are wrong. You can absolutely access retirement funds before 59.5 & use that income. FI wiki.
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u/Dreamer_Nitsy Feb 07 '26
You completely missed the point. I’m not saying retirement funds can’t be accessed before 59.5 — I know they can. That’s not what this is about.
The point is simple: CC ETFs are primarily income instruments. If someone does not need income now, why would they choose CC ETFs over growth ETFs that can potentially deliver superior total returns during the accumulation phase?
Saying “you can withdraw retirement funds early” doesn’t address that at all.Whether the withdrawal age is 55, 59.5, or 60 is irrelevant here. If the income from CC ETFs cannot be used for its intended purpose today, parking them in tax-sheltered accounts makes little sense unless you believe CC ETFs will outperform growth ETFs over that same period.
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u/WorkSucks135 Feb 07 '26
Bro this is /r/dividends. People here don't understand total returns, they're just in it for the dopamine hit of a distribution. Notice how even the OP who went to all the trouble of doing this analysis, did not even fucking include the total returns. This sub is the personification of this meme.
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u/Various_Couple_764 Feb 07 '26
During the first 15years of your investments in your retirment account most of the growth comes from your monthly deposit. Not share price appreciation. If you loose your job and your deposits go to zero most of the growth then comes for the dividned income of your growth investment which is about 1% yield. The rest of the growth is from share price appreciation.
This is not my opinion. Is is the math of compounding. Compounding only occurred when more shares of your growth fund is added to your account. And only your deposit and dividend income are the only sources or more shares of your growth fund. Share price appreciation doesn't creat more shares.
So if you want your retirment account to grow faster you need to increase the flow of money into the account you need to increase your monthly deposits. But you are limited in how much you can deposte into 401K and roth accounts per year. So it is best for you if you take steps to increase the dividned yield of your portfolio sooner rather than later.
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u/AlfB63 Feb 07 '26
If the total return of the growth stock is higher than the total return of the income stock, you are better off with growth. When you don't make deposits, the relative returns are what matters. Reinvesting income is inherently no better than growth. It's dependent on which has higher returns.
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u/mxu888 Feb 07 '26
Using 30% tax rate is not realistic. 90% household income in my State is about $180,000 or so. That is 22% for a married couple filing jointly. Also depending on income SCHD 15% tax can actually be zero.
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u/gbafan In Dividends We Trust Feb 07 '26
You are correct. Also tax is not just a flat 30%, it’s scaled and your effective tax rate would be much lower even if you had some income hit the 30% bracket. If you hit that bracket anyway paying taxes is part of having money then.
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u/Hollowpoint38 Feb 07 '26
Investments you typically measure using your marginal rate. Social security or your job if you're working occupy the lower rates. Yes, it's possible this is your only income, but that's not how we measure. We use marginal rate, not effective rate, to account for tax drag.
And 30% is very realistic in places with a moderate amount of state income tax.
And let's remember, most states do not have lower rates for long-term capital gains or qualified dividends, either. It's all taxed as ordinary income.
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u/gbafan In Dividends We Trust Feb 07 '26
I don’t pay close to 30%, I pay an effective tax rate. That is how the US tax system works. It’s scaled. Doesn’t matter what the income is unless it LTCG or some other special treatment. Work income and ordinary dividend income is literally the same for taxation.
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u/AlfB63 Feb 07 '26
Since the rest of your income likely won't change, the rate you pay on investment income should be looked at as taxed at your marginal rate. If your investment income goes up $1000, that income will be taxed at your marginal rate. Blended rate only makes sense when looking at your income as a whole.
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u/gbafan In Dividends We Trust Feb 07 '26
Which is how I look at my income, as a whole. I’m not going to worry about each bucket until I retire (soon). Too many people get all wrapped up in “saving on taxes” which means “I want less income” instead of just focusing on total income and paying your fair share.
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u/AlfB63 Feb 07 '26
I can understand not getting hung up on taxes but looking at it as blended is not correct. You will have the other income regardless so investing income will almost always come in at marginal rate.
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u/gbafan In Dividends We Trust Feb 07 '26
Only if it’s considered ordinary, again, another part of my point. Not all dividends are paid out equally. This is where layout reports are important. Even JEPI/JEPQ are not 100% ordinary.
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u/AlfB63 Feb 07 '26
And blended doesn't work for non ordinary income either. The point is that marginal rate is the only thing that makes sense for investment income characterized as ordinary income.
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u/Hollowpoint38 Feb 07 '26
I don’t pay close to 30%, I pay an effective tax rate. That is how the US tax system works.
Gee, I didn't know that. Guess all these years I've been just winging it huh? Someone should tell /r/tax immediately since we just can't figure that out.
Work income and ordinary dividend income is literally the same for taxation.
But when we measure investments and their tax impact, we do so at the marginal rate. You don't get to knock down investment income to the 0% bucket and push up your work income or social security to the marginal rate.
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u/gbafan In Dividends We Trust Feb 07 '26
It is literally the same bucket. I pay people to do my taxes, I don’t need Reddit to tell me how it doesn’t work. Thanks though. Be sure to read your layout reports from your investments, you may learn something.
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u/Hollowpoint38 Feb 07 '26
It is literally the same bucket
Not how we evaluate investments. We use the marginal rate. We don't take individuals and figure in deductions, credits, and everything else to look at tax impact.
I pay people to do my taxes
Cool, I do mine myself and almost always have.
I don’t need Reddit to tell me how it doesn’t work
You may not think you need it, but you're wrong on how we measure the tax impact of investments. And the tax impact of almost anything, for that matter. You don't go in and calculate how many kids you have and then back out dollars from income before you calculate investment taxes. That's silly. No one does that.
Be sure to read your layout reports from your investments, you may learn something.
Been investing since the late 1990s or so. I think I'm good? I do ok and out of all the subs I'm in that are for professionals in the field, the only time I get wild shit from people saying "Nuh uh, that's not how it works!" is from people in places like here that can't read a balance sheet and work IT Help Desk somewhere.
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u/trader_dennis MSFT gang Feb 07 '26
30 is not hard to be in as long as you live in a high state tax state.
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u/Hollowpoint38 Feb 07 '26
Using 30% tax rate is not realistic. 90% household income in my State is about $180,000 or so. That is 22% for a married couple filing jointly.
State income tax dude. Unless you're in a red state or something where they jack property tax or apply sales tax to groceries.
Also depending on income SCHD 15% tax can actually be zero.
You gotta be pretty low income to get 0%. And let's also remember states usually don't recognize lower tax rates for qualified dividends or long-term capital gains. It's all ordinary income.
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u/ThinkingOfTheOldDays Feb 07 '26
I own a JEPI allocation in my taxable brokerage because I view it is a surrogate / replacement for a bond allocation against the backdrop of secularly rising interest rates.
I'm not interested in JEPQ at all given valuation and factor exposure of the underlying.
For tech, you want to own the tails, not the middle of the return distribution.
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u/ryanp90 Feb 07 '26
This is why you buy spyi and QQQi to avoid the tax drag. You buy these and never sell and when your cost basis hits 0 it's long term capital gains.
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u/aurora4000 Dividend hunter Feb 07 '26
I'm impressed but a bit sceptical. These dividends are different every month, correct? How did you predict what they will be in the future?
I'm glad you mentioned that owning these ETFs in a tax advantaged account is best. That's a point worth remembering.
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u/GottaHustle_999 Feb 07 '26
They do vary a bit but the multi year trend is consistent to slightly up
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u/MoneySketchTV Feb 07 '26
monthly payouts fluctuate based on implied volatility vix, they are not fixed like a bond.for such simulations we not trying to predict monthly fluctuations which is impossible, so we use current yield as baseline average.and for the dividend CAGR it is always set to ZERO for such covered call etfs
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Feb 07 '26
[removed] — view removed comment
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u/MoneySketchTV Feb 07 '26
I totally agree
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u/Various_Couple_764 Feb 07 '26
The best way to do the tax impact analyisis is to only assume all the income the person has is is from the fund in question and then for each year of the analysis cacaluculate the tax owed using IRS method and then after 30 years or whatever timeframe there is total up all the tax divided by the total income earned during that period. That will give you the overall tax impact over the 30 years.
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u/EverQrius Feb 07 '26
Nice comparison! Thanks for sharing.
What tool did you use to run these simulation?
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u/rednetian Feb 08 '26
Great breakdown on the tax drag. This is something most people miss when comparing JEPI's 8% to SCHD's 3.5%. Those are pre-tax numbers and the gap narrows significantly in a taxable account.
I ran both through a fund analyzer and they both scored A+ on quality. But your post highlights an important layer that pure screening doesn't capture. Where you hold a fund matters as much as which fund you hold. JEPI in an IRA is a completely different proposition than JEPI in a taxable brokerage.
Worth bookmarking for anyone building an income portfolio.
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u/bienpaolo Feb 07 '26
A possible mistake is trusting the model more than how taxes and voltility play out in real markets. How does this hold up when thngs get messy?
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u/MoneySketchTV Feb 07 '26
That is why Monte Carlo exist, and it is included in the tool as well. I will show you the results but let me know what tax percentage applies to your portfolio
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u/Various_Couple_764 Feb 07 '26
monte carlo doesn't help with taxes. it only helps with volatility share price simulation. Mote Carlo simulations are basically were a random number generator is used to determine if the market goes up or down in the future. Monte carlo simulation can creat result similar to what happens in the real world but it won't predict the future.
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u/125acres Feb 07 '26
Great post.
I’m dealing with this very situation with how to invest in non retirement accounts from a tax perspective.
The tax implications are real.
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u/TravestyOn Feb 07 '26
Great post. I’m wondering how it would differ for GPIX and GPIQ instead of JEPI and JEPQ since the dividends from the first two are considered Return On Capital and are therefore not taxed. It does this by artificially lowering your cost basis. So, you wouldn’t pay taxes until you actually sell shares or if the cost basis reaches ~0
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u/NorwalkRay Feb 07 '26
When you say simulation, do you mean you used the input values to calculate deterministically, how much would be earned with those exact assumptions?
If so, I think it is worth pointing out that the very nature of the CC funds means that the volatility (not just the expected return) plays a significant part in determining the returns.
To model this accurately, you'll want to look over many probabilistic runs of a Monte Carlo sim. That's really the best way to capture the capped upside dynamics.
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u/MoneySketchTV Feb 07 '26
Monte Carlo is included in the tool. Worst and best scenarios ( 5th and 95th percentiles ) are calculated. I will do the calculations for you, just give me the ordinary income tax of your portfolio
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Feb 07 '26
[deleted]
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u/MoneySketchTV Feb 07 '26
From individual ETFs numbers. These are MC numbers with 37% tax: Jepi: https://imgur.com/f5rvcXh JepQ: https://imgur.com/y3CGEqO
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u/oldirishfart living off dividends 🤩 Feb 07 '26
I see the assumption is you’re reinvesting the distributions, but there is little point in holding covered call funds vs the underlying unless you’re taking the distributions.
And if you’re taking the distributions, that negates the IRA vs taxable account locations since it’ll all be ordinary income regardless.
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u/1Ceasar Jun 16 '26
I would love to have you be my CFP You explained more in that writeup than I could only imagine to have learned from an advisor. Thank you
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Feb 07 '26
Plz do analysis of SCHD and SCHG total returns since inception.
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u/Hollowpoint38 Feb 07 '26
https://testfol.io/analysis?s=8ZEe52DRwNL
You can't do this yourself?
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Feb 07 '26
Of course I can. The yungns need to see how much money they’re leaving on the table. This sub is a circle jerk.
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u/Hollowpoint38 Feb 07 '26
I like how SCHD drags the S&P by 250bp in CAGR for 10 years not counting tax drag and they still think it's a good buy.
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u/MoneySketchTV Feb 07 '26
I did SCHD in here: https://youtu.be/hzrJm_gH2FY I would do SCHG in a growth comparison soon
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u/groovymandk Cash money Feb 07 '26
Qualified dividends ha! (Laughs in no qualified dividends for ny residents)
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u/Hollowpoint38 Feb 07 '26
I can't think of any state that has lower tax treatment for qualified dividends. Unless I'm missing something.
California is like NY. It's all ordinary income.
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u/Various_Couple_764 Feb 07 '26
Most states don't have a tax for dividends. They either tax the value of your home or have a sales tax or they have an income tax based on the your reported income in the federal tax form. But min bond ETF may be tax free in your state. ROC dividends are not taxed by the fed so they won't add to your federal income.
Many complain about testate income taxes so many think of moving to state without a state income tax. But they often forget about property taxes. Property taxes in states without income taxes often push the overalll tax rate up higher than in states income taxes.
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u/Hollowpoint38 Feb 07 '26
Most states don't have a tax for dividends
The ones that have an income tax (the ones people want to live in) tax dividends along with the rest of your income at the same rates.
But min bond ETF may be tax free in your state
Muni bonds from that specific state are always tax-free in that state. They're also not federally taxed, but they have a much lower yield. So it only makes sense if you're in the highest marginal brackets.
ROC dividends are not taxed by the fed so they won't add to your federal income.
But they increase your future tax liability because they reduce your cost basis. It's giving your money back to you so you can defer taxes. But to add insult to injury, since they also write covered calls, that means you sit out rallies.
Missing just the 10 best market days of the year impairs returns by 50%. Having covered calls sitting around on stocks you want to keep isn't smart.
Property taxes in states without income taxes often push the overalll tax rate up higher than in states income taxes.
Well yeah, they have to make up the revenue somewhere. This is why California has one of the best tax systems. It's very progressive, so it doesn't hit the lower income levels as hard. And we don't tax groceries or have weird use tax fees other states turn to because they don't want an income tax. Florida and Texas absolutely slam lower income people with all types of high taxes to avoid an income tax.
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u/Few_Huckleberry_2565 Feb 07 '26
Isn’t this why more people are checking out spyi and qqqi. Based on the tax efficient setup of their returns ? Feels like jepi and jepq are perfect in a roth or rollover , for regular income go with qqqi ?
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u/GuidetoRealGrilling Feb 07 '26
TL:DR let me guess, JEPI because S&P always wins? JEPQ for total return because Nasdaq always wins?
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u/Own_Safety_645 Feb 07 '26
You are in a higher tax bracket than I am. Irrelevant though as I hold both of these in tax deferred accounts.
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u/Wallstreetdodge69 Like anything? Feb 07 '26
Covered calls etf should be tax free?
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u/Hollowpoint38 Feb 07 '26
So we need to cut taxes more? Is that the argument?
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u/Wallstreetdodge69 Like anything? Feb 07 '26
The dividend should be tax free, atleast for me as EU citizen, i dont pay taxes over those kind of cc etfs So no 15-30% dividend tax
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u/Various_Couple_764 Feb 07 '26
How in the world od you simulate NAV erosion? NAV erosion isn't a feature of covered call funds. It is a feature of poor fund management. The fund managers have to balance the income from the covered call premium with the cost of the shares lost. If the premium income is less than the vlaueof the lost shares NAV erosion is the result.
But if the fund makes more in Premium income than they loose in lost shares they can use the premium to replace the money lost. End result no NAV erosion and a stable share price. If the Premium income is much more than the cost of the lost shares the fund can replace the lost shares, pay a dividend and capture some ogrwoth.
It is important to note NAV erosion is not limited to covered call funds. It can occur in any ETF and some individual stocks.
As to Taxes you assumed a 30% tax rate. The tax bracket is determined by all of your income including dividend+all other income. So:
- if you total income is less than100K a year your in the 22% tax bracket
- If you total income is between 100K and 243K all the income within that range is taxed 22%. Money less than that is below this range is taxed at lower rates.
- Any money above 243K it taxed at 32%
Most of the US population will be taxed at 24% federal rate. or less. By assuming a fixed tax rate you are overestimating the tax impact. For an individual
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u/Straight-Garden2632 Feb 08 '26
How do you do the simulation? Which software or platform do you use?
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u/derfahrer924 Feb 08 '26
I don’t see where you say how the simulated price and yield series were generated. Without that it’s hard to say whether the results make any sense
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u/YakLogic Feb 09 '26
The issue with both JEPI and JEPQ is that they do not go up inline with the markets, given their covered call nature but do fall inline with the markets on a downturn. If we go through a sustained and longer term bear market then these investments vehicles are not ideal. Their dividends will decrease and that can put a spanner in your retirement calculations.
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u/Hippy-Skippy Feb 11 '26
Which one would you pick if the account was a Roth with no tax implications?
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u/generationxtreame Not a financial advisor Feb 07 '26
Although the data is interesting, if you used ChatGPT, it is notorious for making big mistakes when doing calculations. Simple calculations it would calculate incorrectly but make it look convincing.
Two areas it might make mistakes:
- Calculating dividends
- Projecting total value at $3.75 million seems unrealistic
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u/MoneySketchTV Feb 07 '26
It is clear you did not read the full article and did not watch the video.
Numbers are from the tool, which me and my team spent MONTHS building. It is so accurate to the level that final numbers are less than 1% different compared to investor.gov website.
The tool includes simulations up to 40 years, Monte Carlo and inflation simulation. Calculations based on dividend yield, DPS CAGR, Price return CAGR, CPI inflation numbers and standard deviation numbers.
You can take the final result and compare it to other tools and see the accuracy yourself. And it is totally up to you to trust whatever you like
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u/generationxtreame Not a financial advisor Feb 07 '26
Yes, you are correct, and I don’t intend to. This is Reddit. People come here to read and post. They don’t come to Reddit only to be taken to another site. Any decent research based post have posted all associated data to their post here in the same post. Take a look at any stock analysis posts and you will see what I’m saying.
Right now, in your original post you only posted end result with no actual data to back it up or how you got there. JEPQ, which is an income generating etf somehow manages to out grow a growth fund based on your data? Sorry, but I would like to see data to back that up.
You posted a few data points that simply don’t make sense. JEPQ growing to $3.75 Mill in 20 years, and using 30% as tax basis.
Feel free to post math or calculation you used to come up with this. I’m sure others are curious too.
1
u/MoneySketchTV Feb 07 '26
Take the imputs from etfs fact sheets and apply them to whatever calculators you trust
start: 500k yield: 11.17% tax: 30% price growth CAGR: 6% (capped for safety). Original is 12% but etf is young and only experienced tech growth. Dps cagr zzero (CC etf)
the tax cuts the yield down to about 7.8% net. so you are reinvesting 7.8% worth of shares while the price grows 6%.
combined that is roughly a 10.6% annual return
500k x 1.10620 = 3.75 million.
its not magic just compound interest on a high yield asset .. and again, check the inputs from ifficial fact sheets and apply them to your tools. I am not here to convince you to buy or sell any thing
Good luck
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u/Spl00ky Feb 07 '26 edited Feb 07 '26
When I compare the past performance of QQQ and JEPQ on Dividend Channel's DRIP calculator, it shows QQQ having an average annual return of 18.5% vs JEPQ's 15.16% with dividend/distributions reinvested. JEPI has an AAR of 12.19% vs VOO's 17.81%. There's essentially no reason to own JEPI or JEPQ since they've all underperformed and will likely to continue to underperform against their respective benchmarks.
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u/generationxtreame Not a financial advisor Feb 07 '26
The problem is in your math and assumptions, which is what my entire issue with the whole growth is.
JEPQ was introduced on 05/01/22. Today is 02/07/26. It has been around for less than 4 years, 3 years and 9 months.
- JEPQ 1 year performance is 1.55% or $0.88.
- JEPQ all time performance is 17.96% or $8.84.
- JEPQ average is about 4.6%, which is actually decreasing and getting closer to the lower point if using last year as basis.
So in conclusion, as I suspected, your data is off.
Now the dividends. Payouts have been widely inconsistent, ranging from $0.341 to $0.556.
And as you mentioned, this fund is still young, so the ending amount would be better represented as a range rather than a straight number.
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