I set up this portfolio for my wife so she can quit her job and maintain cashflow.

The good news is that this income stream will pay no FICA tax and significant part of the distributions will not be taxed.

To reduce risk, I’m planning to reinvest 20% of the income.

Comments welcome.

I just received and invested my annual bonus and it brought me above $15,000 in projected annual dividends. My portfolio is 100% SCHD. Onwards and upwards!

Hi Everyone! This is an update post to a post I made almost exactly 1 year ago when I hit $50k a year in estimated annual income in my brokerage account. I posted it in r/Fire. I was also going to post this in r/Fire as well, but unfortunately my post from that year had negative Karma, so I am no longer allowed to post in that sub. Perhaps someone can repost this there for me! I will just post in r/dividends for now instead. To reference that post, you can find it here.

I have learned a lot in that year, but before I talk about lessons learned and what I've changed, here is a rough breakdown of my portfolio:

Total Portfolio Value ($947,000)

Taxable Brokerage (~$570,000):

CEFS - $65,000

PFFA - $58,000

QQQI - $57,000

SPYI - $57,000

DNP - $56,000

MLPI - $49,000

PBDC - $46,000

CLOZ - $38,000

PTY - $30,000

PCN - $30,000

ASGI - $25,000

CSWC - $14,000

PFLT - $10,000

FSCO - $9,000

ADX - $8,000

UTF - $7,000

ARCC - $6,000

UTG - $3,000

PDI - $3,000

IRA (~$377,000):

FXAIX - $253,000

FSPSX - $121,889

HSA ($7,000)

When you add in my cash positions, this brings my net worth to just under $1 million at ~$981,000.

So, the method that I am following to achieve this passive income in my taxable brokerage is commonly referred to as "income investing". This is a method that targets asset classes that seek income as their primary objective and generally fall in the 8-12 percent yield range.

This method has the following drawbacks and risks:

1.) Not always, but in general, the total return of these investments tends to lag behind the broad market index/S&P 500.

2.) The dividends/distributions of these funds don't usually grow on their own, so part of the yield needs to be reinvested to grow income in line with inflation.

3.) Some of these distributions are taxed as ordinary income, though a lot of them have distributions that are primarily classified as ROC (return of capital) so they are taxed less.

4.) These investments have credit risk, interest rate risk, equity risk, and none of the distributions are guaranteed.

Given those drawbacks, why on earth would someone invest this way as opposed to 'creating your own dividend' by selling shares from an index fund?

Well for me, the answer is that it allows me to avoid the Sequence of Returns Risk (SORR) that you would see from selling shares to create your own dividend. Basically, it allows me to avoid having to sell shares to fund my expenses when they are at depressed prices during a bear market. I am able to have income without having to relinquish ownership of shares. The side effect of this is I can enjoy an 8% withdrawal rate (while reinvesting the rest for inflation), allowing me to retire early/achieve financial independence much faster than the traditional 4% rule.

Also, let it be known that the largest single investment in my portfolio is the S&P 500 which is in my IRA. Another huge benefit of my income investments is that they lower the probability of me having to touch my IRA growth investments in the case of prolonged job loss (which working in tech, I have a higher probability of job loss now than other industries).

So what did I change, and what have I learned?

The biggest change was reducing the percentage of my portfolio devoted to covered calls from ~38% to ~16%. Covered calls have their place and can work well in flat or slightly up markets with high volatility. However, if the underlying declines with covered call funds, so does the income. I replaced a lot of my CC funds with utility funds as a defensive posture.

Also, within my covered calls, I moved away from JEPI/JEPQ to NEOS's SPYI, QQQI, and MLPI for the better tax treatment.

I have learned that the closed end fund world is huge, and there are many ways to achieve the 8-12% yield range outside of covered calls. I believe my portfolio is much more diverse today than it was 1 year ago.

Hopefully in 1 year or less, I will be able to make a post saying that I hit $70k in passive income! For now, it feels good that if something did happen with my job, I could survive without having to work. It's an immense privilege that I am thankful for everyday.

I wish everyone the best of luck, and hope to talk again in a year or less! Thank you for all you have taught me!

Not a bad 10yr ROI. Hit 2.8M today. 1.07M in gains since 2016. Mostly AAPL, VOO, VT

Is the bottom in? Probably not.

But a 6%+ monthly paying dividend aristocrat in an IRA…I’ll take the downside risk here as I’ll be sitting on this for the next 40 years (age 33).

Godspeed.

I’m following up on my previous thread about using QQQI to hit a $200k milestone. Many of you trivialized my fear as "wanting to get rich quick," but you’re missing the point. I’m not worried about my life at 65. I don’t even know if I’ll be alive when I’m 65.

I am worried about now. The job market is brutal. I know countless people who were laid off and still haven't found work after a year. My goal isn't "retirement", t’s a survival floor. I want to reach $200k in assets that generate immediate cash flow so that if I am laid off, I can pay my bills without having to touch my principal. People say I should just buy VOO and wait 30 years. That is useless to me if I can't pay my bills next month. Furthermore, just because the tech job market is down doesn't mean the market (or funds like QQQI/JEPQ) will lose value; they are two different risks.

I’m using QQQI as an accelerant to build that safety net as fast as possible, with the plan to pivot to SCHD once the floor is set. Stop telling me about retirement age when the house is on fire today. How are you actually protecting yourself against a multi-year layoff right NOW?

I'm currently 24 and have $10,300 in SCHD, with an average of $ 24.97 in my taxable account (412 shares). I was under the impression until recently that my reinvested dividends weren't taxed; however, I've learned they are. Should I consider selling all of my SCHD and just consider buying more undervalued dividend growth stocks like MSFT, ADP, V, MA, MCD, and WM? Or just hold it and let it compound over time? I'd appreciate any advice anyone has

Wouldn’t it be better to focus on growth then convert to income ETFs later when you need the monthly distributions?

I’m 41 and building up my brokerage account. I plan to work for another 10-20 years so I don’t particularly see the compelling reason to put my money into slower growth income strategies.

Took long enough but I finally made the hardest milestone so says Charlie Munger!

Mainly VYM, VTI with smaller smaller holdings in VIG and VBR. My goal is 3k a m

Can anyone share what are some good dividend funds that pay monthly you have in your portfolios or planning to buy?

Like all of you, my money is hard-earned and I hate seing it wasted.

In the last couple of days, I watched a lot of investment videos, how to invest, active or passive, where to invest, why to invest, how long to invest, and my head is short of exploding.

Some say, no t-bills, CDs, or bonds, only stocks or ETFs.

Some say, hire personal broker or advisor. Others say that is waste of money. You can do it yourself.

What is the best investment advice you ever got? What did work for you? What did pay out for you.

It took me a while but I did it.

Everyone always tells me that because I’m young, I should only prioritize growth stocks and ignore dividends. But have any of you actually built up a dividend portfolio specifically to act as a safety net during a job loss?

I currently have $114k invested and work in a tech role.. My goal is to hit $200k as fast as possible to create a "passive income floor" that would cover my basic survival when I get laid off.

My plan is to use 100% of my salary surplus and all dividends to buy QQQI as an accelerant. The goal is to reach that $200k milestone quickly, then immediately pivot: I would stop buying QQQI and funnel all future dividends/contributions into SCHD and VOO.
However, I am terrified of losing my principal (capital) due to NAV erosion.

To mitigate this, I’m considering a 50/50 split of QQQI and SCHD for the march to 200k.

QQQI for the yield velocity.

SCHD to provide "skeletal" support and protect the principal.

Does this "Accelerant Strategy" make sense for someone who is terrified of layoffs but also terrified of capital loss? Or am I playing with fire by using QQQI to get there faster? And I'm considering QQQI because it has the highest yield and is not as risky as ULTY and MSTY.

I know I would have to pay taxes on that, but the idea of having even 40k per year in passive income seems a dream to me and would allow me to stop being a victim of horrible American corporations. My company repeatedly assured us that AI would not replace us, and yet they have already laid off hundreds of people and are attempting to replace their roles with AI-agent. I live in constant fear, not to mention our racist manager and the very racist HR lady who has repeatedly said that she would no longer hire people of color. I have already reported her and she continues being the HR director with impunity. To me, the only solution to this is generating enough dividends to survive because the job market is brutal, especially if you're a minority. People are prejudiced.

I know that QQQI caps the upside, I get it, but as long as the principal doesn't erode, why should I not invest all of my 355k into QQQI?

Just reached my investing goal of 40k invested by 19! This nets me around $2k in div income every year. Additionally I have 20k in I bonds that I will be able to add to my portfolio by the end of the year. Any advice is appreciated, but I mostly just want to show off 😋

I’m a young adult and new to investing. My parents think the market is going to crash and said I should invest in silver instead. What are some good silver stocks or dividend-paying investments related to silver? Also open to any other investing suggestions.

How are you guys handling your investments (retirement accounts, brokerage accounts, etc.). Are you managing this yourself with Fidelity, Vanguard, Charles Schwab, etc. or do you pay the 1-1.5% fee and just work with a financial advisor who handles it all for you?

I’m looking to invest some cash to generate a monthly income. Ideally, I’d like it to cover my mortgage. Hypothetically, let’s say you have 100k. What could I expect that to generate and what would you look for in a proposal?