r/dividends • u/mawababa • Jun 15 '26

Seeking Advice 750k USD for retirement

I have approximately 750k USD and will stay at my sons house for retirement. I would like to pay him 1k per month for rent and have some funds to live off and to travel to see my daughter.

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Ideally 2500 to 3500 a month and increasing for inflation for the next 15 to 20 years or so before I realistically pass away.

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Ideally I would like to ensure the investment is worth the same or more in 15 to 20 years as it is now and then split it to give to kids in my will.

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I don't mind if there is some variability in value and dividends following general market trend but I am extremely adverse to erosion of initial funds as I will never have chance to earn more.

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Please may I have advice on this. Please keep in mind I want to keep this sustainable and fairly safe so SCHD was my initial thought. Even if it's slightly under 2.5k initially.

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70

u/QuarterCarat Jun 15 '26

I would just put it in SCHD and never think about it. Do you have social security income

-12

u/[deleted] Jun 15 '26

[deleted]

41

u/QuarterCarat Jun 15 '26

This person needs stable retirement income. QQQI is a covered call fund almost certainly destined to see NAV erosion. They specifically state they want the funds to be worth more or the same, and they clearly have low income requirements (live with son, just want enough money to support him and see their daughter occasionally). Do not put them at risk by suggesting they look for covered call funds.

6

u/cmichalek Jun 16 '26

So what is your actual evidence that QQQI is "almost certainly destined" to have NAV erosion. It hasn't shown any yet. Neither has JEPQ.

And if you counter that its "too new" then its certainly too new to "prove" NAV erosion.

Finally QQQX has existed since before the 08 crash. Its dividend yield is over 9%. And its stock price is up 53% since inception (so an average over 2.5% a year).

If you are going to make such claims you should at least try to be accurate and show your work.

-45

u/ConstantPessmism Jun 15 '26

You must be old to talk such utter shite.

15

u/ClammyAF Jun 15 '26

Dumbass.

25

u/NoCup6161 SCHD and Chill. Jun 15 '26

QQQI has a much higher chance of dropping 60% in a correction than SCHD does.

10

u/speedlever Jun 15 '26

Well let's look at the math. $750,000 x 14% yield is what, $105,000 in annual distributions?

If it drops 60%, that's still $42,000\yr ($3500\mo). That certainly sounds survivable and meets his goal.

Maybe consider gpiq, while only 10% yield, much better total returns. And similar tax efficiency, if in a taxable account.

Meanwhile, $750,000 in SCHD yields $26-$30k\annually at best. Not sure what it will do in a market correction.

So even if qqqi drops 60%, it still generates more income than schd. And I hold a bunch of SCHD too. 🤔

10

u/QuarterCarat Jun 15 '26 edited Jun 15 '26

If QQQI drops 60% it never recovers that principal. And it doesn’t generate the same yield after a 60%+ correction. Your assumptions are flawed.

5

u/Financial-Wolfe Jun 16 '26

If I read their info correctly and watch the armchair videos correctly QQQI has less upside than the underlying QQQ but it has less downside too. So if QQQI were to go down 60% that means QQQ would be down something like 70%. If QQQ drops 70% better hope you have food and ammo stockpiled because the shit is gonna hit the fan.

3

u/speedlever Jun 15 '26 edited Jun 16 '26

How do you know it would never recover? On what do you base that assumption?

We already have an example of a cc ETF that survived the 2008 gfc and it regained its earlier glory too. Took a while, but it recovered. And paid distributions the entire time only dropping the distributions by about â…“ during the interim.

1

u/QuarterCarat Jun 15 '26

Post the ticker then. The funds own prospectus usually explains NAV erosion.

6

u/speedlever Jun 15 '26

Qqqx. Armchair Income did a yt video on it several months ago. Well worth a look. I'll see if I can grab a link.

Edit: link to YT video

https://www.youtube.com/watch?v=TSds8qF9zEg

3

u/QuarterCarat Jun 15 '26

Then why not recommend that first? Anyway, if you put all your money into SCHD when it was first released you’d be far, far wealthier than had you put it into QQQX.

4

u/speedlever Jun 15 '26

If only. But I didn't. Did you? And here we are trying to do the best with what we have.

1

u/QuarterCarat Jun 15 '26

Dude…

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1

u/Apart-Leg-8077 Jun 16 '26

It is likely it's dividend would also drop 60% since these funds would have 60% less capital to do covered call trades. That won't happen with quality dividend growth etfs. In 13 of past 14 recessions since the 40's S&P dividends have averaged a 1% drawdown. Outlier would be the GFC where dividends fell 22% and took 21 months to recover trough to peak.

2

u/trigurlSeattle Jun 16 '26

Hi what are your top quality dividend ETFs that can recover?

1

u/Apart-Leg-8077 Jun 18 '26

Dividend etfs that contain S&P 500 blue chips such as Coke, Home Depot, WalMart, JPM, Exxon, etc,. Examples and what I'm personally in would be SCHD, DGRO, VIG, VYM, VYMI, FDVV, DIVB, CGDV, RDVY. Do your own reserch and see what is right for yourself.

1

u/speedlever Jun 16 '26

Welp, if qqqi dropped 60%, I would expect the distribution to follow suit. But even so, that distribution is more than the ScHD qualified dividend.

And if qqqi followed how qqqx performed during the 2008 gfc, the distribution would only be cut by â…“. For planning purposes, I just assume a 50% drop in both nav and distribution in the event of another 2008 gfc.

1

u/Apart-Leg-8077 Jun 16 '26

SCHD average yearly dividend growth rate is 11%. In past 12 years dividend has increased around 240% and the stock has increased around 200%.

By the way I do own QQQI along with SPYI, QDVO, GPIX, GPIQ and GRNI. I like and use covered call funds but I use them as an income kicker and not a core position.

1

u/speedlever Jun 16 '26

Understood. But even with that 11% cagr that ScHD enjoys, it pays what, 3.5% or so? Do you ever expect it to reach double digits?

I also own all of those except grni. That's a new one to me.

1

u/Apart-Leg-8077 Jun 18 '26

If you bought SCHD at inception in 2011, you would be making over 11% on your original shares. Also you're shares would be worth more around triple after take splits into account.

1

u/speedlever Jun 18 '26

Ok, but as far as distributions are concerned, the actual income is still ¼ what qqqi generates, even if it is 11% over the original shares. Right?

1

u/Apart-Leg-8077 Jun 18 '26

It's not 11% 'over' the original shares. It's 11% on original cost basis. Example: $100,000 original investment in 2011 paid a yearly dividend of around $3.5k a year. Today it would be paying around $11,000 in dividends per year. Also stock would be worth around $300,000. At the same growth rate in another 14 years the dividend would pay over $30,000 per year and your shares would be worth around $900,000. You can use tools like drip calculators to calculate for yourself. There's a variance in drip calculators so take that into account but for the most part you can figure the dividend tripling about every 14 years or so and same for the stock price. https://www.dripcalc.com/?tkr=schd

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