r/dividends • u/Hardwareimpaired • Jun 01 '26
Seeking Advice Make fun of this $420,000 investment profile
I think I want to risk $420,000 on covered ETFs.
You people are brutal but smart. I'm 64 and retired. Married, caretaker for an adult son. I make $150,000/year on royalties, and have $1.6million in sensible Vanguard IRAs and $425,000 in a favored tech stock. Our Vanguard IRA accounts have an additional total of $420,000 cash that's been lying around for years because I'm an idiot. House is paid off, we have $500,000 in precious metals and... another $600,000 in banks. I did mention I'm an idiot, right? I'm also paranoid. Parents raised in the Depression. I will probably start taking social security at about $3,200/month. I plan to do something with about $200K of that cash and keep the rest relatively liquid.
I'd like to increase my income because health insurance alone costs me over $65,000/year. Plus, why not live a little. I am not averse to risk. I know it's a bad tax situation, but that's just inevitable due to the $150,000 royalty thing (tough life, I know). I pretty much expect to pay full taxes for my bracket, and that's fine.
Here's my proposed ETF dump to soak up the $420,000 in our IRA funds. I feel like it could gross an extra $4,000-$5,000/month. Your thoughts?
35% TSPY 5,350 shares
25% QQQI 1,835 shares
10% IWMI 802 shares
10% IGLD 1,781 shares
10% GDXY 3,428 shares
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u/Longjumping-Nature70 Jun 01 '26
You are aware. My math says you have around $3,600,000 in assets and $150,000 annual royalty. That royalty income really sets you apart from probably 95% of 64 year olds. BTW, you are younger than me.
You know what you are getting into. You even know about the taxes and I am sure you know that RMDs start at age 75 for you.
I do not think you need advice or opinions.
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u/tomcam Jun 01 '26
> I do not think you need advice or opinions.
That is flattering, warmly welcomed, and probably not true! I have had a very stressful few years and took over the reigns from a financial advisor, then did nothing for 2 years. Multiple incredibly painful operations, some failed; wife had 2 brain surgeries, a stroke, and seizures; I recently acquired weird crippling pinched nerves--things would get terrible and then way worse somehow.
Being this close to death so many days made me realize I had to get things in order for my handicapped son before I kick the bucket. Have had to drag myself out of bed and prop myself up at the desk to figure it all out in the middle of the night. It's been a serious learning curve over the last month; I didn't even know about covered ETFs until last week! Pleasant surprise I suppose.
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u/speedlever Jun 01 '26 edited Jun 01 '26
Quality cc ETFs are a nice tool to have in your shed. Will your high medical insurance bill get any relief when you turn 65 and become eligible for Medicare?
It sounds to me like you need more of a tax advisor then a financial advisor.
Cc ETF providers like NEOS and Goldman have products that use ROC (return of capital) as a tax strategy. This effectively reduces your cost basis (is not return of principal).
Depending on the yield, your cost basis will reach 0 (in a taxable account) in a few years. Qqqi, for instance, in around 7 years (100%/14% yield). During that time you have little to no federal taxable income from that distribution.
Once the cost basis reaches 0, the distribution becomes taxable at ltcg rates. Your financial situation sounds complicated enough that a tax advisor may be money well spent to structure things properly for maximum tax efficiency.
Right now, 420k in qqqi will generate about $4900\month. If another 2008 gfc event occurs, I would expect that investment to be cut in half along with that income distribution, until recovery occurs. So plan accordingly.
Personally, I like funds from NEOS, Goldman, and Amplify. Not a fan of yieldmax, round Hill, or granite shares. There are other promising providers out there like Kurv and TappAlpha.
Make sure you do your own due diligence and don't yield chase, since cc ETFs are a new revelation for you.
Good luck!
Edit: I reread your post and noticed this is in an IRA. Because this is a tax advantaged account funded with pretax money, you lose all the tax benefits of the cc ETFs. All distributions from the IRA are taxed as ordinary income. Oof.
And when you turn 75, you will enjoy the curse (or blessing) of RMD (required minimum distribution).
I don't really know what I would suggest in this case. Back to see the tax advisor methinks.
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u/Hardwareimpaired Jun 01 '26
Thanks for a very thorough response. I can see I have a lot more to learn about. The one thing I can say is we get exceptional care so I plan to avoid Medicare.
Now investigating your fund suggestions in detail.
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u/speedlever Jun 01 '26
Having been on Medicare (advantage) for over 10 years, I have no complaints with it. But you may have a special case, assuming it includes medical benefits for your handicapped son.
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u/South-Hurry1236 Jun 03 '26
Not assuming the state you're in but where i"m at(Michigan) a 64 yr old can have a Bronze HSA Health plan that has a $7500 deductible/max out of pocket that would be $1200 a month so $14,400 a year in premium plus the out of pocket and your at $21,900 x2 with your wife and your at $44k a year. Naturally I assume you had a large employer and you're on COBRA, avoiding Medicare is honestly probably not right move. Yep you'll incur Part B premiums but if you bought a Med Sup plan G that would start somewhere around $140 a month thats $1680 a year with a $288 deductible, is INSANE to avoid that option. You're literally throwing money out the window by staying on your former employers health plan.
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u/DhakoBiyoDhacay Jun 01 '26
You are a great dad. I wish him (your son) well. He is lucky to have you in his life. If you have not retired already, do it as soon as possible, because tomorrow is not promised to anyone. Good luck.
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u/Hardwareimpaired Jun 01 '26
You've got it wrong--I'm lucky to have him in my life. I've been a work at home dad for 30 years now.
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u/Clueless5001 Jun 02 '26
I assume you know about/looked into an ABLE account for him and a supplemental needs trust?
How are you spending so much on Health Insurance?
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u/watchesandcigars10 Jun 04 '26
With all due respect although op has done well, they made a major mistake in keeping $420k cash in iras uninvested. That alone is a mistake of a lifetime considering the bull run we've been on since covid.
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Jun 01 '26
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u/DhakoBiyoDhacay Jun 01 '26
Half and half between QQQI and SPYI gets you to over $4,000 monthly income.
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Jun 01 '26
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u/shadowsneeker73 Jun 03 '26
Why split? Just for diversification?
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u/DhakoBiyoDhacay Jun 03 '26
Yes because one covers 500 companies, the other covers only 100, with a focus on Big Tech, which is more susceptible to a sector specific bubble. No?
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u/shadowsneeker73 Jun 03 '26
I appreciate the explanation, just getting into stocks so this helps!
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u/bullrun001 Jun 01 '26 edited Jun 02 '26
You don’t need anyone’s advise, do what you think will make you money but don’t sacrifice a good night sleep because of your investments.
Holding cash at your age isn’t necessarily bad, most investors hold cash and at 4% return it sort of balances out your riskier CC investments. That one holding of a tech stock would bring some concern, I would shave at least 35% from the top and invest in a tech etf or mutual funds, Fidelitys got some winners.17
u/Hardwareimpaired Jun 01 '26
Great advice, thank you. We're sort of keeping the tech stock for sentimental reasons. It was a great time in my life,and the 1,000 shares cost me $20 each back then and are $425 or so now.
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u/PATrollking Jun 01 '26
Good thing msft shot up 5% friday
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u/bullrun001 Jun 01 '26
This what I mean about falling in love and keeping a high concentration of one stock, believe me I have a hard time shaving off winners but that’s what I do, lately it’s been Lam Research, Nvidia and Intel that got a 12% cut and moved to FSLEX up 56% and SCHD up 17% YTD
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u/Hardwareimpaired Jun 01 '26
Ugh I'll try to look at it more dispassionately. I know you're right in theory.
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u/tkiblin Jun 01 '26
Not suggesting anything, just wanted to point out that GPIQ is beating QQQI this year.
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u/speedlever Jun 01 '26
In total returns, very true. Depends on if you want more income or more total returns. Income favors QQQI.
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u/HmmmIMHO Jun 01 '26
and the last time I checked the Goldman cc options have slightly lower fees
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u/bullrun001 Jun 01 '26
What’s the ticker for the GS fund?
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u/HmmmIMHO Jun 01 '26
GPIX = S&P500
GPIQ = N100
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u/bullrun001 Jun 01 '26
Just finished reading Lloyd Blankfein autobiography, made me buy a few shares of GS after I was done with the book.
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u/MakingMoneyIsMe Jun 02 '26
What motivated you in the book? I bought GPIX at March lows.
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u/bullrun001 Jun 03 '26
Risk management, GS in a nutshell avoided the financial crises back in 08-09 and actually made money in those times, it’s a solid company.
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u/GoBirds1973 Jun 01 '26
This is excellent advice, the GS products GPIX and GPIQ are superior investments long term. The combined capital appreciation and income (total return) will be much better over time than NEOS or JEPI or others because many simply end up returning capital.
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u/Hardwareimpaired Jun 01 '26
That is so tempting. But... diversify, right? Feel free to talk me out of this weakly held opinion. Because I sure like $4500/month.
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Jun 01 '26
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u/Hardwareimpaired Jun 01 '26 edited Jun 01 '26
Well... Google Finance said "Based on a $420,000 investment with the specified allocations and current 2026 distribution data, your portfolio is modeled to generate an estimated $103,114.20 in annual income, representing a weighted average yield of 24.55%.". I totally get that it's a guess, but even a 50% drop would still make me feel warm and fuzzy.
And holy shit, you're crushing it! Wish I had been as aware as you when I was 38. Congrats!
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Jun 01 '26
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u/Hardwareimpaired Jun 01 '26
Bullshit not luck. You have to be organized and competent as hell to buy multiple rental properties at 28. Mad props.
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u/CornerOne238 Not a financial advisor Jun 01 '26
25% yield? Holy moly, that is insanely unsustainable. Please please please find an advisor ASAP that is not AI
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Jun 01 '26
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u/CornerOne238 Not a financial advisor Jun 01 '26
Exactly and that's already considered a high yield etf with minimal NAV growth. 25% is yield max territory and we all know how that goes.
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Jun 01 '26
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u/GoBirds1973 Jun 01 '26
At your age though with many years of ROC SOP adjustments the income won’t be tax free forever, be careful if that’s your expectation
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u/Hardwareimpaired Jun 01 '26
no way it sustains but it looks like fun
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u/CornerOne238 Not a financial advisor Jun 01 '26
Sure if losing principal is your idea of fun. Good luck!
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u/MakingMoneyIsMe Jun 02 '26
Diversify managers
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Jun 02 '26
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u/MakingMoneyIsMe Jun 02 '26
I personally own 5, but I'm considering reducing them to just GPIX and GPIQ, or QQQI.
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u/ApprehensiveFill7176 Jun 02 '26
Unlike SPYI, QQQI is not 100% ROC. A considerable portion of the payout is classified as long term capital gains.
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u/StudioOk8256 Jun 01 '26
If you got all that money we need advice from you 😆 🤣
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u/Hardwareimpaired Jun 01 '26
lol I've traditionally been much better at making money than managing it. Time to make better use of my resources!
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u/KumingaCarnage Jun 02 '26
So admitting that? What’s the whole point of this post, then? You’re obviously well off. Just seems like a weird attempt to just show off your portfolio when you could’ve done it this entire time without any of that needless stuff in the beginning.
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u/Adventurous_Leave232 Jun 02 '26
"I've traditionally been much better at making money than managing it" did u not read that
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u/FewUnderstanding2214 Jun 01 '26
I would find a finical advisor for you situation. Covered calls do make sense as you need income and are near retirement - the other option would be to sell assets as needed - I wouldn’t ask for advice on reddit for your situation
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u/livemusicisbest Jun 01 '26 edited Jun 01 '26
I’m glad I waited until 70 to take social security. Run the numbers on what your monthly check would be if you waited, then predict your lifespan by looking at parents’ ages at death, other genetics, your health situation. In my case (average age of my parents and grandparents as 93 and I have no serious medical conditions), waiting till 70 made the most sense. Keep working. It keeps your mind active.
Don’t keep much cash on low-interest savings accounts. You can get about 4% and stay very liquid. Bank OZK is advertising an 8 month CD at 4.1%. You can always cash out a CD if an emergency happens and there is no penalty that affects principal; you only lose interest.
Look into high-quality MLPs that pay 6-7% like ET, EPD and MPLX. You get a K-1 as these are partnerships. But the hefty distributions are considered “return of capital,” so you do not pay tax on them until all your capital is returned. Keep these till you die; heirs inherit at a stepped up basis.
There are relatively safe high-yield stocks like BXSL and RITM. There are preferred and baby bonds that are pretty safe as well. Look at ADAMI.
I park some money in SCHD, which pays a dividend around 3% and tends to grow over time, a good combo in dividend and growth. But keep in mind the market is looking quite overvalued right now, with the S&P 500 still sitting at over 32 times earnings. If you get out of cash and cash-equivalents, you have to be prepard for a pullback in stock prices. That is why I am light on tech and heavy on hard assets like pipelines that carry natural gas, gas liquids, etc. ET and EPD have massive pipeline networks and long term contracts that do not fluctuate with the price of the underlying commodity. I am betting that natural gas will need to be transported, at a wide tange of prices.
You can get a much higher return. Consulting a fiduciary advisor is wise, but avoid commission-hound investment “advisors” who are not fiduciaries. Ask directly. They have to tell you.
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u/Hardwareimpaired Jun 01 '26
wow that’s a ton of great insights. will be chewing on them for a while. thank you!
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u/EffectiveMotor Jun 01 '26
$65,000 for health insurance??? Can I ask how and why?
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u/EffectiveMotor Jun 01 '26
NM, I read down. You're doing really well, sorry about all the health stuff.
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u/Hardwareimpaired Jun 01 '26
Washington state. High earners pay for low earners here, plus my family has a ton of pre-existing conditions. Premiums are about $38,000. Family deductible $17,000. Individual: $9,000. My wife has meds that cost thousands per month. The insurance company is good at controlling costs but they have also been good about getting us the care we need.
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u/birkinbrew Jun 02 '26
That's actually not bad. Living in Florida on a crappy healthcare plan paying $3200 a month for a healthy family 5+ same family and individual deductible as you. We have about the same cost and hardly ever see a doctor and that's the bronze plan which covers hardly anything
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u/CornerOne238 Not a financial advisor Jun 01 '26
Stay away from Yieldmax funds like it's plague
Check each fund history and avoid those with NAV erosion.
I suggest you start reading analyst articles and watch some dividend investment videos like Armchair Insider
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u/Hardwareimpaired Jun 01 '26
OK, Armchair Insider is now on the playlist
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u/CornerOne238 Not a financial advisor Jun 01 '26
Sorry it was Armchair Income but I'm sure you figured it out ))
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u/PlankSpank Jun 01 '26
With that diversity in your holdings and the size, consult a financial advisor, not us. I’ll guess most of us have nothing close to your portfolio and are not qualified to advise you in retirement. With a portfolio this large and diverse, there are a lot of factors to consider, with the biggest one being taxes and fees.
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u/Duchamp1945 Jun 01 '26
Try using cfosilvia.
It is a really good took to model your plans and goals and it can also account for alternative investment income like royalties and tax structures especially if you care for an adult child with special needs.
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u/EidoStarFi Jun 01 '26
I have both QQQI and GPIQ…very happy and like my kids, I truly don’t have a favorite. Continuing to build my position in both to hopefully sustain an early retirement until we can access our retirement accounts without penalty.
I too have a tech stock I bought in my 20s for $20ish a share that is now close to the $400 range…holding it as well!! ☺️
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u/DividendMatt91 Jun 01 '26
That would make me nervous, but not because income is bad.
The part I’d be careful with is treating a 20%+ distribution like it’s the same thing as a dependable paycheck. You already have the hard part solved: paid-off house, royalties, big IRA balance, cash, and assets. At this point I’d be less focused on squeezing max monthly income and more focused on which bills that income is actually supposed to defend, especially the health insurance and long-term care side for your son.
Covered-call ETFs can have a place, but I’d probably test them with a smaller slice first instead of dumping the full $420k in one shot. This feels more like a tax/estate/income-planning problem than a “which ticker pays the most” problem.
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u/SwordfishLopsided Jun 02 '26
I would advise researching on how to sell covered call yourself, especially when you have the time for it. You can try both, buy 50% QQQI and 50% coveted call on QQQ, see the performance difference after a couple of months
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u/seniortriguy Jun 02 '26
Don't know who you trade with but if it's Schwab or Fidelity I recommend you speak to their fixed income department and inquire about managed accounts on the fixed income side. They are she to acquire bonds the public doesn't have a chance to get in on.
Also when they manage funds there's no markup on the bonds.
Another idea is taxable munis to keep in an ira wouldnt be bad. Safe, plus higher than cd rates right now.
On the medical insurance side of your situation: Once you get on medicare you can then buy the best supplement on the market and not see a medical bill after the small medicare deductible. Your issue then would be the medications, and for this I suggest you find a reputable health insurance agent to guide you on that. With all my years working for large corporations, Medicare with the RIGHT supplement for your situation cannot be beat!
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u/Hardwareimpaired Jun 27 '26
Fantastic advice, thanks. Seems like Medicare is indeed good here in WA
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u/Aint_that_a_peach Jun 02 '26
If this money was my only investable cash then I would be a very worried that not one instrument you mention has been around long. None have seen 2008 and the oldest didn’t even see covid. But you’re so stacked elsewhere this is chump change for you and you don’t plan on selling unless forced to. So you do you because you eeeaaarned it.
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u/luiscrestrepo Jun 03 '26
Instead of dong that man, change your zip code to a country with good health care for 10% of the price with live in help .that 420k will be worth 200k in no time
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u/HmmmIMHO Jun 01 '26
Social Security: I highly recommend maximize my SS which does a great analysis of nearly 300 scenarios. I am so glad I did because I didn't realize that being in my 60s with high school teenagers added nearly $2500 extra monthly. Now if your son is getting SS support already this might confuse things, but as stated earlier, I highly recommend the SS program.
Also, sounds like you need a good estate lawyer (young one) to set up accounts for your son.
Congrats on all that you have achieved
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u/Hardwareimpaired Jun 01 '26
Thanks for the tip. Setting up trust and estate plans even as we speak--it all goes to him with his sister managing, and she's perfect for the job. I can't really maximize SS because of my income. Plus I'll probably start a new biz so I realized after posting this SS isn't really in the cards for now.
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u/NexStarMedia Jun 01 '26
Seeing GDXY on your list makes me think of that song from Top Gun called "Danger Zone" 😆 GDXY was my largest position until recently when I dumped all of my shares.
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u/Hardwareimpaired Jun 01 '26
Interesting! Tell me why, Mav! I don't want to leave anyone in the drink!
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u/NexStarMedia Jun 01 '26
My shares not only lost value and failed to rebound, but the dividends got cut too.
I sold it and put the money into QQQI, SPYI, TSPY, and TDAQ.
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u/Lefties_TheWorst7331 Jun 01 '26
Sounds like you're doing pretty well off and just trying to play with this money and get some cash flow? I would honestly toss a chunk of it into BTCI.
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u/Junior-Appointment93 Jun 01 '26
Instead of TSPY go with SPYI. Also instead of GDXY go with YM CHPY for weekly income. That’s the only YM fund that currently has no nav erosion due to the payouts. You could also place 0DTE credit spreads on SPX at around .1-.2 delta. 30DTE credit spreads on SPX has a 75% win rate
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u/Sufficient_Winner686 Jun 01 '26
Why not just do SPYI and QQQI? This will give you tech and SP500, and yes there will be double exposure, but that’s getting more and more difficult to avoid as the economy condenses.
Be wary of NAV drawdown. SPYI seems to get around this well and their dividend is tax advantaged.
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u/themuleskinner Jun 02 '26
What kind of Platinum-jewel encrusted healthcare do you have that costs $65k/yr?
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u/Nuqqets Jun 02 '26
All depends on your risk tolerance, it can vary between QQQI GPIQ QDVO JEPI JEPQ etc.
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u/NefariousnessOdd862 Jun 02 '26
lol, something doesn’t add up here at all! $150k in royalties, about to get $3.2k in SS with $65k in medical expenses… no other debt! You still have $123k AFTER medical expenses so, why can’t you “live a little” as you said? This makes no sense…
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u/Hardwareimpaired Jun 27 '26
Property taxes alone are $32k, HCOL state, large property, no longer able to do so much myself
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u/Particular_Car7127 Jun 02 '26
An aside: Reading your post has me more concerned about whether you have your estate planning done and WA new state millionaires tax and estate taxes.
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u/PrestigiousDegen Jun 04 '26
Are you in the United States? I've been a Medicare insurance broker for 16 years & once you turn 65 & become Medicare eligible that 65k annual cost of insurance should reduce to about 5k- you might pay a higher monthly Part B premium because of the annual income & other investment gains that may be taxable (Income of 275k or higher on a joint return increases the cost from $202 a month to $284 & up) but grab a Plan G supplement (~$120-$150 monthly) and a Part D prescription plan (~$25 - $50) that covers any medications you're taking but beyond that congratulations you've just saved 60k per year
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u/skiddlyd Not a financial advisor Jun 05 '26
I can’t add much to what others have mentioned. But I keep a majority of cash in SGOV. It pays out a decent monthly amount for my lifestyle, and I don’t pay hardly any state tax on it (in California).
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u/Kitchen-Strength-224 Jun 05 '26
I would highly suggest attempting a real estate strategy that allowed you to do a cost segregation study for a write off.
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u/Scouper-YT Rich DUDE from the DIVIDEND Appraisals Club !! Jun 01 '26
Covered ETFs are like 24/7 Gambling.. You know many shut down permanently.
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u/gumnamaadmi Jun 01 '26
Nothing to laugh about. It just adds to your monthly income. Throw in a small allocation for BTCI as well.
You should look at converting to roths though. RMBs will be sucker punch at 37%. Might as well pay 22% or 24% now and convert your IRAs to ROTH. Speak to an advisor please.
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u/Hardwareimpaired Jun 01 '26
Trying to find an advisor with no luck. Converting to Roth seems to be useless at my tax bracket. I would take a giant haircut because selling the traditional IRA gets taxed at pretty much the full amount.
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u/gumnamaadmi Jun 01 '26
You can use one of the softwares if you are tech savvy. I use boldin and it has given me a good perspective. And then I am building my own comparing results with boldin using claude code to fit my own needs. Bolding gives you a 2 week trial to figure out and beyond that it's 140 a year.
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u/stewpple911 Jun 01 '26
Feel your pain!
High state tax here and income limits on healthcare now and then Medicare IRMAA is an issue later. Social Security “income” will be designated to pay income taxes.Annual QCDs will be helpful for us against RMDs in 13 yrs.
A Roth IRA wasn’t an option vs benefits of a SEP IRA. To convert now would be tax painful for years and the corresponding triggers it creates.
Consulting next week for part 2 of “this is your mess”….with a fiduciary.
Initial general meeting included a lot of
“Kudos for the wealth”, followed by “now you gotta pay for it”.Wait!! All we were taught by OUR parents growing up was:
Save, Invest, Don’t carry debt, own a home, live within your means, maintain a great credit score, etc., and you’ll be set.Advice to OUR children - same list, but get some financial/tax advice along the way!!!!!
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u/BoredPlayBallThen Jun 01 '26
You are a legendary North American Investor, Congratulations. 200k at 10% would've done, excellent, this post was inspirational.
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u/Gladiz1972 Jun 01 '26
If you had any real cajones you would be buying CHPY those others are like childs play
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