Your choice of guests for your interviews is just top notch. This was amazingly clear and insightful. Thank you for allowing your guests the time to answer and not talking over them. Also, thank you for spreading the topics across various sectors.
great video, and speaks to the mind shift I need in moving forward with regards to not obsessing over whether a stock is green or red. But focusing on the income over time. Not ignoring NAV but no longer live and die by it. I'm 68 days out from retiring and last week all my BDC's REITS and CEF's and covered call funds got slammed. But at the end of the week I realized none of my distributions are going to be cut so it doesn't matter that much in the end. The whole market is seeing red but I'm still making money. That is why love income investing.
Congratulations on your approaching retirement. A very exciting time! I agree that watching money being deposited into your brokerage account is nice during a correction.
This is honestly a dream come true. Steven Bavaria's book has been immensely influential on my way of thinking and investing. Thank you for having him on the show! 🎉
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Having a diversified portfolio is KEY; that being said my initial deposit of 120k has grown to over ~$710k in only just eleven months :)
If one is in their 40s and just started investing (have 401k from work). Should they just focus on growth/high yield ETFs since it will be too late for them to see real benefits with dividends?
This guy clearly knows his stuff. Felt like you could list any fund and he could rattle off the dividend yield, history, holdings off the top of his head! Great interview
As long as you independently research each investment before making a decision, I'm glad to hear the channel is useful for you. I hope to supply income investors with new ideas :)
@@armchairincomechannel I only invest in those that meet my further research. Personally, I think you have far too many in your portfolio but the choice is yours. I have only 20 in my taxable and another 20 in my tax exempt account. Thank you for that excellent video.
Always a treat to here Steve Bavaria, big fan and follower of his Income Factory for my portfolio, currently close to 11% yield. Thanks for the interview, a great service...love your channel! Keep up the great work!
Almost three months after this interview, this still stands as the most detailed, in depth discussion about income investing opportunities I have found within Steven Bavaria interviews on YT. Please consider having him back on to discuss in more detail the use of CEF Data and his process of researching a CEF or ETF choice for an income investing portfolio. Also how he diversivifies within the credit market. TY, your channel is an excellent source of sound information on income investing. I know you will continue your excellent content!
Thank you for your detailed feedback and suggestions. I do want to interview him again but I want to examine different material (not just interview him for the sake of it) and your ideas are helpful.
The flavor of the distribution also matters lot come tax time so when looking at CEFs I always dig into distribution details. A few CEFs make their distributions plans clear in their descriptions, such as NPDF for qualified dividends and muni CEFs for tax-free dividends; however, most CEFs do not make this obvious. I use the Fidelity CEF screener from there I can see that: RLTY distributions are about 80% return of capital and 20% dividend; XFLT is 100% dividend; and ASGI is about 65% long-term capital gains, 5% short-term capital gains, 10% dividend, and 5% return of capital. Thank you for publishing an another excellent interview. I've purchased Steve's book from Amazon and I look forward to learning more.
CEFs often use leverage and thus have high interest payments. But so do companies, only the SEC doesn’t require companies to so visibly post their leveraged interest payments. Leveraging is both a cost and an opportunity.
Great interview. I have been following Steven for a while and been building my own income factory in part do to his great work on SA. Thanks for sharing.
You're most welcome! I've watched many of your videos, and I used to work on cruise ships. Our asia travels follow similar patterns too. If you'd like to connect, my email is armchairincomechannel@gmail.com
I bought his book a year ago and I’ve always kinda thought your UA-cam videos and your investment style mirrored his approach. ( spend some and re-invest some to create a bigger stream ). Thanks for the video!
In this video, the guest talked about discount on CEFs and BDCs. Is there a resource or online tool where I can calculate which CEF or BDC is available at a discount? TIA
CEF discount information is available at CEFConnect and BDC discount information is available on Seeking Alpha as shown in this video: ua-cam.com/video/DcNs3H5gNeM/v-deo.html
I have found that the personalities of income investment individuals strike me as being much more honest, believable, trustworthy, logical and sincere compared to all the snake oil salesmen trying to CONvince me to buy AI and high risk equities. Thank you gentlemen for taking the time to produce such great content that can make a huge difference in our financial future.
Thanks for your feedback. Perhaps its because we're older and we aren't trying to bet the farm on the next big thing. I'm not trying to beat the market, just want to pay the bills.
I'm looking at retirement in a few years and am starting to research what I should be doing with my money. I love your channel and have learned much just in a few hours. This interview is outstanding! So much information for a newbie to the income investing approach. Wow! Many thanks for such a great channel.
Very informative. Your UA-cam channel a lot of different than many others and I seem to learn more without any flashy headlines ! Keep up the great work !! Thx
Thanks for your feedback. I try to create the videos I would want to watch. You won't see any "Crash is Coming" thumbnails on the Armchair Income Channel ;)
Very insightful video. I am glad to see a name given to an investing style I had been naturally migrating to but had not yet thought of it as a strategy shift. Now I can articulate the what and why. I also bought the book and have rewatched this video several times.
Thank you for this interview! Steven was great! His book is on my bedside table and I’ve read 90% of it. You are such a good interviewer and I was happy you asked about specific tickers. I’ll be looking at the ones I’m not familiar with.
Book is a few years old; current portfolios are in his Seeking Alpha group but you may be able to find some older articles/updates outside the paywall.
This assures that I am on the right way to build an healthy income stream with 37 instead of focusing only on capital gains. Love that interview. Thanks for the effort.
@@Dividendflywheel might be. I see it a bit as an individual risk vs. upside evaluation of what you want to achieve within a certain time. For me I can foresee my path with realistic numbers using a mix of income strategy and dividend ETF world approach. But this looks reasonable for me and might not work for others. I believe everyone needs to do some number crunching and compare it with their own level of uncertainty and risk to sleep well.
That was a real treat, you led the interview brilliantly and Mr. Bavaria was so generous in sharing his knowledge. Thank you! I now have work to do on XFLT 😂
AI.. this video is brilliant.. well done.. Steven is the master at this.. most of what I learned is from him, so Im really enjoying these inverviews.. the important thing is when he hits on the mix and the erosion/not spending.. its in line with our mantra.. well done..
Very good interview ! A great hour++ of armchair income plus a visit into the Income Factory ! I’ll order his books for next winter’s reading ! Continu your good works
Great interview. Seems to me some of the newer CC ETFs can accomplish the same kinds of results or arguably even better in many cases. Exciting times for the income investment sector.
I agree that the expanding number of choices for income investors is exciting. I like covered call funds too but they correlate to their index and I think its a good idea to also diversify into investments that don't do that.
Really enjoyed this video… I know of him almost bought the book but read some reviews that kept me from it saying it was hard to read. Your interview was much informative and in essence your doing it your way. Wondering if you will dive into any of those tickers…. all though you have to some extent. Thanks for this armchair
Shocked to realize all 4 of the equity funds he mentioned are among my largest positions (and I’m not really familiar with his work before this). I also recently switched from BIZD to PBDC because I compared them after noting you owned PBDC. From Cohen & Steers, my choice has been RNP but I’ll keep an eye on RLTY. Also my infrastructure choice has been UTF (because I figured out what Mr. Bavaria says: That Aberdeen has a history of stretching its yields). I’ll have to look into XFLT.
@@armchairincomechannel Yeah we do. We share about half our portfolios. Partly that’s because I’ve borrowed some of your ideas so thank you. I probably own a few more individual REITs than you do because they pay dividends below your range but I am looking for some capital gains as the Fed cuts rates. I also own a couple of pipeline MLPs-I believe you are Australian so I don’t know how complicated those might make your taxes. Which brings up another subject: There’s an Australia country CEF, IAF, that has a very nice yield and keeps trying to attract me. Any ideas about it?
Outstanding. I am a fairly recent subscriber to your channel and can only imagine that this is part one of a series of interviews, as long as you’re both agreeable to continue this as an ongoing conversation. Best of luck making this happen. I’ve been a net accumulator since the 90s and have also followed Steven on Seeking Alpha for years. Thank you kindly for this. I enjoyed your conversational style. Are you interested in writing a book too? Sorry if I missed a previous announcement.
Thanks for your feedback. Based on the response to this interview, I'm open to another one in the future if Steven is agreeable. No plans for me to write a book, I'm enjoying retirement and making some YT videos :)
@@armchairincomechannel I’m writing a book for my kids (and their kids, and so on - at this rate, it’ll be an audio or perhaps a video book). Thanks for the channel and best wishes for the upcoming conversations and future endeavors.
I bought his book and subscribed to your website but there was no way to ask questions so I'll try it on here. Really appreciate these interviews and information. Question: CONY and FIAT are based off of COIN via Yieldmax and today CONY pays 120% dividend and FIAT pays 89% Dividend. They both experience NAV erosion dictated by the movement in COIN. My question is, would it work to split funding 50/50 and wen 1 side is experiencing NAV erosion the other is improving and vice versa? Get the high dividend and protect the NAV erosion from the other instrument. Or purchase the high yield Instrument when the daily candle closes above or below for FIAT the 1 std deviation and hold until a close Below or Above the 1 std deviation
I don't hold any Yieldmax funds, nor do I own COIN, so I'm not really the person to ask regarding strategy for these types of investments. I like consistent income with no long term continuous NAV erosion. Generally, the underlying stocks far outperform the Yieldmax ETF's that follow them, and that margin seems to wide for me for the ETF's to make sense. I would also suggest comparing any Yieldmax ETF's to their equivalent on Kurv. I compared GOOY to GOOP and GOOP was ahead last time I looked.
@@armchairincomechannel Thank you for the reply, I will deploy my strategy with a small account and study the return. 68% of the time stocks trade within a 1 std deviation which is easily shown on a chart using Bollinger Bands and I have correlated that when the body of a daily candle on the common asset such as TSLA for (TSLY & CRSH) or Coin for (CONY & FIAT) then the High yield instrument has reached it's peak. So I am going to invest in both High yielding instruments when they are inside the 1 std deviation when one side of the 1std deviation has a daily close above or below I will sell the Loser and add to the winner :) I believe this strategy from back testing will blow the doors off of the underlying asset :) Small sample size but so far so good, 1 dividend distributed and up over 20%, without the dividend in 1 week and now time will tell if this is a winning idea or folly :)
Very nice interview. His Income Factory book had a big influence on my thinking. Glad he touched on CLO. Instead of XFLT, I like the pure play of CLO equity, e.g. ECC. But I think you may also like the various CLO debt funds, like EIC as he mentioned (focusing on BB traunch), CLOZ (BBB/BB), JBBB and JAAA.
Excellent interview-particularly appreciate the view on less transparent vehicles, like XFLT and the reassurance on BDCs with rates falling-the look back approach to lower rate years is useful. Thx
At the 28:42 mark in the video where Steve talks about Net Investment Income, what websites will have this information available for non-CEF tickers like PBDC
I haven't found a tool that provides data for non CEF tickers in a good format like CEFConnect. For NII, I use the BDC tool from systematicincomeinvesting.com/ . However, that's a paid subscription.
A few questions id like answered are how taxes impact the income factory, and how the income factory compares to equities that grow at 8-10% plus pay growing dividends.
A growth portfolio will be more tax efficient and offer a higher total return than an income portfolio. For these reasons, I pursued a growth strategy until retirement, then switched to the income approach. If you want to stick with growth during retirement then you'll need to figure out when to sell your stocks to pay for your bills. I don't like to do that, especially during bear markets like 2022.
Thank you so much for this Sir. I’m retiring early in 2.5 years and this type of information has been so helpful and eye opening. One question I have (I know you don’t usually cover taxes) but it would be awesome if you could cover some of the more tax efficient options for high yield. I know there are a few CEFs and some MLPs that can be good for a taxable account but your take on it would be invaluable! Thanks so much for everything!!!
Thanks for your suggestion. I try to point out the tax advantages of various funds where possible but I appreciate your suggestion to organize that information in a way that would be helpful.
BCAT is distributing 20% of the NAV; that doesn't seem sustainable. I haven't done a deep dive on it but the dividend looks unusually high so I'd want to know more before investing.
Really good episode. Always enjoy and benefit from the words of Steven Bavaria. Appreciated the discussions of ASGI, XFLT, and RLTY in particular. My I suggest having someone from Seeking Alpha's "High Dividend Opportunities" team on some time in the future. Thanks!
Great ideas which show how lucky US investors are to have access to such funds. As a UK investor neither of the platforms I use allows you to buy any of the 3 funds highlighted at the end. If you buy them outside the US do you also get hit by the 30% with-holding tax on dividends I wondered?
The withholding amount varies by country. For example in Australia its 15%. Having said that, generally its best for Non-US tax residents to check with an accountant in their country that's experienced in filing US tax returns. If you file a US tax return you will pay the actual amount due (withholding is just an estimate). The actual amount due is usually less than the withholding amount, which means you would receive a refund for the differece.
Excellent interview. Help me out please. Many of the popular CEFs have a downward trend NAV. I understand "math is math" and I'm not concerned with growth. If I can get an 8% distribution for 20 years and it is completely net of any capital gains, then I don't care. However, when a fund that is 20 years old has lost half of its value, I can only wonder what it will be worth in another 15 or 20 years and what will happen if its NAV approaches $0. The topic of NAV erosion has been beat to death but I really have not read/heard anything that eases my concern. Thanks for your help.
NAV erosion is an important consideration. Some funds suffer from it at launch and then flatten out. Some suffer from it but only under certain economic conditions (like a hike in interest rates). So its important to consider the fund in relation to what's happening with the economy and the market. There aren't many funds that pay high yields and appreciate under all market conditions. If the NAV is on a consistently downward path then I avoid it.
Wow…I really learned a lot about this video. Thank you so much for those great questions!!!! But one thing that I concern me is their high expense ratio.
Expenses are very confusing for funds with leverage because the interest gets mixed into the number. It's even more confusing for BDC funds because some of the expenses of the BDCs themselves are mixed in with the management fees of the portfolio manager. For example, PBDC's management fee is less than 1% but you have to read the prospectus to know that...it's not clearly explained on the home page.
Another great video. I watched it in three sittings due to my time allotment and to make sure I soaked it all in. Do you personally subscribe to the Income Factory? Thank you so much for all you do, it's been a life saver for me since retiring last November!
It was long and I could have talked to him for another hour but you have to stop somewhere. I just joined "Inside the Income Factory" on a monthly subscription and I'm researching some of his picks. Congrats on retiring last November, that's fantastic!!!! Feel free to join the conversations in the FB group...I don't mention it anymore in the vides because its growing all by itself. Here's a link: facebook.com/share/u3gHAmv58TszyRwz/
Good interview. My son who was employed in the "big ticket" division of one of the biggest banks in the U.S, has had some time to assist me when looking at BDC's and applying his expertise to this sub sector. A few of them are interviewing him due to 20+ years underwriting across 5 banks. Some of his observations are interesting. One, BDC's have much ore flexibility in "working out" non preforming clients than banks. I think he referred to it as somewhat cutthroat( a compliment) when compared to what banks can do. He really likes ARCC but is very wary of the amount of loan money coming into BDC's in general and is concerned that that much money chasing new loans leads to BDC's taking on increased risk due to competition.He has had me cut back by 1/2 my exposure to BDC's that have had significant share price appreciation such as CSWC, MAIN and HTGC and sell way above their NAV. He also really didn't like TRIN. Anyway, keep up the good work, a loyal fan.
Thanks for your feedback and insight into your son's experience. Not all BDC's make a great investment so it's important to be selective based on quality and pricing. I've cut back on the same BDCs as you over the past 6 months because of their valuation.
Here are the funds and the exact moment they're discussed :) 43:33 Quick take on RLTY from the Income Factory Portfolio 46:24 Quick take on XFLT from the Income Factory Portfolio 50:56 Quick take on ASGI from the Income Factory Portfolio
Wow two incredible income investors speaking together, amazing. Bet theres going to be some portfolio updates coming this week!! RLTY XFLT EIC looking really juicy
Hi! For the last section (reinvesting), can you walk me through the rationale? Is this for risk reduction (if so, how), or is it for growth of the overall portfolio in effect to grow the dividend payout to match inflation expectations? Simplistically thinking, if you are "only" spending the income (divs) and there is not an increase or decrease in portfolio value, you are already ahead of the 4% Rule strategy which depletes the portfolio over a 30 year period, right? Thanks!
I reinvest a portion of my income for 2 reasons. 1/ To stay ahead of inflation. Many income stocks don't grow their income consistently. 2/ To mitigate risk. The risk for an income investor is dividend cuts. By reinvesting a portion of the income across a diversified portfolio of income investments, I'm constantly increasing the cashflow which means that if there is a dividend cut, it will be a reduction from a higher number than if I spent all the income.
@@armchairincomechannel Thank you, makes sense! Just curious, have you ever backtested your income portfolio against 2020 market? Most of the funds look to have Beta's that would suggest low to moderate volatility. Still working though your Playlist here!
I'm glad you want to listen to them! Thanks for the idea. I include and reference a lot of charts and diagrams but perhaps audio would still be useful. No immediate plans to create a podcast but I'll keep it in mind.
Wonderful interview, I've been a longtime follower of yours and really respect your picks, wondering why you don't have xflt in your portfolio since Mr. Bavaria touts it so highly, do you plan on adding it? Thanks
I'm looking into it. Steven has a long list of investments and that's one of the candidates I'm researching for my own portfolio. Our portfolios aren't identical but we share a very similar investing philosophy.
hey armchair! would you think a 50% div growth 50% fixed income like in this video (and some of your funds as well!) would be a good approach? to start building it 10 years before using the dividends
The time horizon is the most critical question. Check out a channel called "dividend growth investing" he talks about his core and satellite strategy with time horizon
I couldn't say when you should start an income approach; it's different for everybody. In general, over a long time horizon and while you have a paycheck, growth is more tax efficient and delivers higher total returns. The closer you get to retirement, the more value there is from income and its reduced volatility. Growth requires that you sell when the market is up, and there's some random timing associated with your retirement date (you might be unlucky and retire at the start of a bear market). So its risky to assume you can simply sell all your growth stocks the day you retire, because you don't know what the market will look like.
So in researching the income investing Steven does I came across some articles warning of the risks of private credit. Meaning private credit is unregulated and largely not properly rated for quality by places like moodys. What are your thoughts on that?
I can't really address a broad question like "How risky is private credit?" because there are so many elements to risk and so many types of private credit. If we're talking about BDC's, they're regulated by the SEC and subject to rigorous financial reporting standards. Some BDCs have histories going back 20 years, so there's plenty of data to review. As for Moody's rating, some BDC's are rated. For example ARCC. Here's a link: finance.yahoo.com/news/ares-capital-corporation-moodys-announces-133906256.html I have an interview with a BDC fund manager scheduled for January and will address this topic with him. Thanks for asking.
Thank you for the reply. I subscribed and will watch the video in January. I realize private credit comes with a level of risk. My concern is that without regulatory guardrails is it too risky. New York Times just posted an article about this. Thanks for the arcc info. Its on my watch list.
I've ordered a copy of Steven's book, but I'm curious - does Steven address the high fees on some of these funds? I see that #XFLT has fees of 8.49% including management fees of 2.82%. That seems pretty steep. Thanks!
I haven't done a deep dive on XFLT but just took a quick look at the website. Common shareholders pay a management fee of 1.7% which is still pretty steep. The fees section is quite complicated! xainvestments.com/funds-funds-floating-rate-alternative-income-trust-xflt/
It sounds like you calculate your investment yields only at current prices vs looking at yields at cost. If the dividend the same, but if price is up (or price increases faster than dividends)... why exit when yield on cost is still the same or better?
If it started at 10% and thru price appreciation dropped to 6% but you can take the whole thing and reinvest at 10% again on a similar fund-why not do it to earn more $$.
Opportunity cost. My goal is to maximize income, not to have the highest yield on cost. If I buy a stock with a 10% yield and it goes up in value x10, then the yield will only be 1%. I could sell it and buy new 10% yields and multiply my income by 10. In retirement, income is more useful to me than appreciation.
@@armchairincomechannel It's your choice, but just as discussed previously, you inject more risk, and run the chance its a dividend trap on the new investment. Take JEPQ as an example... last year it was throwing off 11%+ yield and today it's a tad more than 8%. If it climbs to $60+ and yield is ~7%... would you exit for something else to chase a min 8% yield? I don't know for myself, but knowing I'm making 11% off my initial investment sounds pretty good.
➡ My #1 Research Tool: Seeking Alpha ($30 Coupon +Free Trial): armchairincome.link/SeekingAlpha
Does the premium membership include the income factory?
Your choice of guests for your interviews is just top notch. This was amazingly clear and insightful. Thank you for allowing your guests the time to answer and not talking over them. Also, thank you for spreading the topics across various sectors.
Glad you enjoyed it! Your feedback is helpful. He knows more than me so I figured he should do most of the talking :)
Yes, Nate is on point. Thank you so much. I also got his book in Audible and halfway through. Will get me a hard copy next.
great video, and speaks to the mind shift I need in moving forward with regards to not obsessing over whether a stock is green or red. But focusing on the income over time. Not ignoring NAV but no longer live and die by it. I'm 68 days out from retiring and last week all my BDC's REITS and CEF's and covered call funds got slammed. But at the end of the week I realized none of my distributions are going to be cut so it doesn't matter that much in the end. The whole market is seeing red but I'm still making money. That is why love income investing.
Love this!
48 days out from retiring for me!!!!!!!!!!!!!!!!!!!!
Freedom is approaching!
Congratulations on your approaching retirement. A very exciting time! I agree that watching money being deposited into your brokerage account is nice during a correction.
This is honestly a dream come true. Steven Bavaria's book has been immensely influential on my way of thinking and investing. Thank you for having him on the show! 🎉
I don't get to make dreams come true very often so today is a good day :) Thanks for sharing that!
I have a 3 fund portfolio but I have finally decided to invest in ETFs, alongside. I’m looking at SCHD, VOO, XLK or SCHG.
Great picks! I like XLK and SCHD equally!
@@MHousley thank you! Actually would it be silly to have both?
None of those are high yield funds, but if your goal is growth, they're solid.
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Having a diversified portfolio is KEY; that being said my initial deposit of 120k has grown to over ~$710k in only just eleven months :)
If one is in their 40s and just started investing (have 401k from work). Should they just focus on growth/high yield ETFs since it will be too late for them to see real benefits with dividends?
This video may become an income investing classic!
That's high praise! Thanks for the positive feedback.
This guy clearly knows his stuff. Felt like you could list any fund and he could rattle off the dividend yield, history, holdings off the top of his head! Great interview
He was a joy to interview and we could have talked for hours!
@@armchairincomechannelplease feel free to create longer videos
My retirement investments are divided in half. Half income factory and the other half Armchair Income. Both approaches are solid!
As long as you independently research each investment before making a decision, I'm glad to hear the channel is useful for you. I hope to supply income investors with new ideas :)
@@armchairincomechannel I only invest in those that meet my further research. Personally, I think you have far too many in your portfolio but the choice is yours. I have only 20 in my taxable and another 20 in my tax exempt account. Thank you for that excellent video.
40? I only have 1.
A "college-level" video. Yes, I took notes & yes, I bought the book. Life Changing.
Thanks for your feedback. So happy to hear it had a positive impact :)
Always a treat to here Steve Bavaria, big fan and follower of his Income Factory for my portfolio, currently close to 11% yield. Thanks for the interview, a great service...love your channel! Keep up the great work!
Thanks for your feedback and kind words of encouragement, I appreciate it!
Almost three months after this interview, this still stands as the most detailed, in depth discussion about income investing opportunities I have found within Steven Bavaria interviews on YT. Please consider having him back on to discuss in more detail the use of CEF Data and his process of researching a CEF or ETF choice for an income investing portfolio. Also how he diversivifies within the credit market. TY, your channel is an excellent source of sound information on income investing. I know you will continue your excellent content!
Thank you for your detailed feedback and suggestions. I do want to interview him again but I want to examine different material (not just interview him for the sake of it) and your ideas are helpful.
The flavor of the distribution also matters lot come tax time so when looking at CEFs I always dig into distribution details. A few CEFs make their distributions plans clear in their descriptions, such as NPDF for qualified dividends and muni CEFs for tax-free dividends; however, most CEFs do not make this obvious. I use the Fidelity CEF screener from there I can see that: RLTY distributions are about 80% return of capital and 20% dividend; XFLT is 100% dividend; and ASGI is about 65% long-term capital gains, 5% short-term capital gains, 10% dividend, and 5% return of capital.
Thank you for publishing an another excellent interview. I've purchased Steve's book from Amazon and I look forward to learning more.
You make a good point about the breakdown/tax treatment of the distributions. Thanks for sharing.
XFLT has total expenses of 8.5%. How does that factor into your decision making?
CEFs often use leverage and thus have high interest payments. But so do companies, only the SEC doesn’t require companies to so visibly post their leveraged interest payments. Leveraging is both a cost and an opportunity.
Great interview. I have been following Steven for a while and been building my own income factory in part do to his great work on SA. Thanks for sharing.
You're most welcome! I've watched many of your videos, and I used to work on cruise ships. Our asia travels follow similar patterns too. If you'd like to connect, my email is armchairincomechannel@gmail.com
@@armchairincomechannel I’ll drop you an email!
Really enjoyed that interview. Please have Steve on again, I must get his book too. Loving the channel and making my way through the past vids.
Thanks for your feedback and suggestion, glad to hear its helpful!
Steve Baveria book is responsible for opening my eyes on this style of investing. I am very much looking forward to watching your interview
He opened my eyes too. Thanks for sharing that and I hope you enjoyed the interview.
I bought his book a year ago and I’ve always kinda thought your UA-cam videos and your investment style mirrored his approach. ( spend some and re-invest some to create a bigger stream ). Thanks for the video!
Occasionally I'll realize that some of the phrases I use came from reading his articles many years ago.
Bar None, Greatest investing video I have ever watched. Highly recommend his book The Income Factory
Thanks! You just made my day :) Glad you liked it.
THANK YOU!! Excellent interview with Steven. So glad you were able to make this happen. Cheers!
Glad you enjoyed it. He was great to talk to.
I've followed the income factory for a few years now
Glad you interview him
That makes two of us. Thanks for the feedback!
What a gem of an interview! Well done, Armchair.
My pleasure. Glad you found some value from it. I enjoyed making it!
YES! YESS!! YESSSS!!! This goes in my favorite videos list
In this video, the guest talked about discount on CEFs and BDCs. Is there a resource or online tool where I can calculate which CEF or BDC is available at a discount? TIA
CEF discount information is available at CEFConnect and BDC discount information is available on Seeking Alpha as shown in this video: ua-cam.com/video/DcNs3H5gNeM/v-deo.html
Nuveens CEF connect is free. Just look it up
I have found that the personalities of income investment individuals strike me as being much more honest, believable, trustworthy, logical and sincere compared to all the snake oil salesmen trying to CONvince me to buy AI and high risk equities. Thank you gentlemen for taking the time to produce such great content that can make a huge difference in our financial future.
Thanks for your feedback. Perhaps its because we're older and we aren't trying to bet the farm on the next big thing. I'm not trying to beat the market, just want to pay the bills.
I'm looking at retirement in a few years and am starting to research what I should be doing with my money. I love your channel and have learned much just in a few hours. This interview is outstanding! So much information for a newbie to the income investing approach. Wow! Many thanks for such a great channel.
Thanks for your feedback. Comments like this are great motivation to keep making more videos :)
Very informative. Your UA-cam channel a lot of different than many others and I seem to learn more without any flashy headlines ! Keep up the great work !! Thx
Thanks for your feedback. I try to create the videos I would want to watch. You won't see any "Crash is Coming" thumbnails on the Armchair Income Channel ;)
Excellent video. Steven was a major influence in my income investing journey.
That makes 2 of us. Even though our portfolios don't mirror Steven's exactly, the philosophy is valuable.
Very insightful video. I am glad to see a name given to an investing style I had been naturally migrating to but had not yet thought of it as a strategy shift. Now I can articulate the what and why. I also bought the book and have rewatched this video several times.
Thanks for your feedback, and glad it was helpful. Income isn't as exciting as growth so it gets overlooked.
@@armchairincomechannel but as Steve says . . . I sleep a lot better :)
Thank you for this interview! Steven was great! His book is on my bedside table and I’ve read 90% of it. You are such a good interviewer and I was happy you asked about specific tickers. I’ll be looking at the ones I’m not familiar with.
Book is a few years old; current portfolios are in his Seeking Alpha group but you may be able to find some older articles/updates outside the paywall.
I appreciate your kind feedback, thanks! Glad it was helpful.
Agreed. Books by nature are out of date as soon as they're published but the concepts are eternal.
This assures that I am on the right way to build an healthy income stream with 37 instead of focusing only on capital gains. Love that interview. Thanks for the effort.
Capital gains are wonderful, but income pays the bills!
The requirements for accumulation phase might be very different from the de-cumulation phase. Best wishes
@@Dividendflywheel might be. I see it a bit as an individual risk vs. upside evaluation of what you want to achieve within a certain time. For me I can foresee my path with realistic numbers using a mix of income strategy and dividend ETF world approach. But this looks reasonable for me and might not work for others. I believe everyone needs to do some number crunching and compare it with their own level of uncertainty and risk to sleep well.
Thank You for this. Your channel is more valuable to me (and my retirement plan) than CNBC
That's high praise! I really appreciate your kind words :) Glad its helpful.
I’ve been buying dividends for a few years. Now I can learn more about it from Steven
Thanks for sharing. He has some good insights on income investing.
That was a real treat, you led the interview brilliantly and Mr. Bavaria was so generous in sharing his knowledge. Thank you! I now have work to do on XFLT 😂
That makes 2 of us. He gave me some homework...the good kind!
AI.. this video is brilliant.. well done.. Steven is the master at this.. most of what I learned is from him, so Im really enjoying these inverviews.. the important thing is when he hits on the mix and the erosion/not spending.. its in line with our mantra.. well done..
Thanks! I appreciate the feedback. I like his approach too.
I am a great fan of Steve Bavaria, so you having organised a one on one interview is OWESOME......thanking you once again for your time and effort 👍
Glad you enjoyed it! He has influenced my thinking.
Very good interview ! A great hour++ of armchair income plus a visit into the Income Factory ! I’ll order his books for next winter’s reading ! Continu your good works
Thanks for your feedback and I'm glad you enjoyed it :)
Great interview. Seems to me some of the newer CC ETFs can accomplish the same kinds of results or arguably even better in many cases. Exciting times for the income investment sector.
I agree that the expanding number of choices for income investors is exciting. I like covered call funds too but they correlate to their index and I think its a good idea to also diversify into investments that don't do that.
Great Video, congrats for having such a competent guest on your channel
Glad you enjoyed it! He was a pleasure to talk to.
Amazing guest and interview!
Glad you enjoyed it. I could talk to him for hours.
All i can say is wow! Loved you're guest. Excellent content that could never be considered JUNK no pun intended.
Glad you enjoyed it :)
Really enjoyed this video… I know of him almost bought the book but read some reviews that kept me from it saying it was hard to read. Your interview was much informative and in essence your doing it your way. Wondering if you will dive into any of those tickers…. all though you have to some extent. Thanks for this armchair
Thanks, glad you enjoyed it. There will be some diving :)
Another solid video. Very happy to have found your channel, this is so in line with my thinking as well. Thank you very much.
Birds of a feather....thanks for watching and commenting (again).
@@armchairincomechannel welcome !!! thank you !!
Thanks. I already have the book. I started down this road after reading the book.
He has influenced my investing too. Thanks for sharing that!
Shocked to realize all 4 of the equity funds he mentioned are among my largest positions (and I’m not really familiar with his work before this). I also recently switched from BIZD to PBDC because I compared them after noting you owned PBDC. From Cohen & Steers, my choice has been RNP but I’ll keep an eye on RLTY. Also my infrastructure choice has been UTF (because I figured out what Mr. Bavaria says: That Aberdeen has a history of stretching its yields). I’ll have to look into XFLT.
We share a lot in common! I have UTG but am constantly eyeing UTF, same for RNP, RQI, RLTY, etc.
@@armchairincomechannel Yeah we do. We share about half our portfolios. Partly that’s because I’ve borrowed some of your ideas so thank you. I probably own a few more individual REITs than you do because they pay dividends below your range but I am looking for some capital gains as the Fed cuts rates. I also own a couple of pipeline MLPs-I believe you are Australian so I don’t know how complicated those might make your taxes. Which brings up another subject: There’s an Australia country CEF, IAF, that has a very nice yield and keeps trying to attract me. Any ideas about it?
I signed up for Seeking Alpha through your link. Thanks!
Thanks! I think you'll find it useful :)
Loved this. You are a great interviewer. Nice work👍
Glad you enjoyed it, and thanks for the feedback. Steven was a pleasure to interview.
Wow! Excellent Interview and information. Thank you so much!
Glad it was helpful!
I've read this guy's book, and it's nice to see his views on these things.
Thanks for sharing that, and glad you enjoyed the interview.
Super interesting interview
I enjoyed the conversation too. Thanks for letting me know :)
Outstanding. I am a fairly recent subscriber to your channel and can only imagine that this is part one of a series of interviews, as long as you’re both agreeable to continue this as an ongoing conversation. Best of luck making this happen.
I’ve been a net accumulator since the 90s and have also followed Steven on Seeking Alpha for years.
Thank you kindly for this. I enjoyed your conversational style.
Are you interested in writing a book too? Sorry if I missed a previous announcement.
Thanks for your feedback. Based on the response to this interview, I'm open to another one in the future if Steven is agreeable. No plans for me to write a book, I'm enjoying retirement and making some YT videos :)
@@armchairincomechannel I’m writing a book for my kids (and their kids, and so on - at this rate, it’ll be an audio or perhaps a video book). Thanks for the channel and best wishes for the upcoming conversations and future endeavors.
Just bought Steve's book the Income Factory 🏭
Hope you enjoy the read. He was a pleasure to interview.
Just got Steven's book and in the process of reading it now!
Updated portfolios are in Seeking Alpha group - as the book is a few years old.
Good point. By definition, any funds discussed in a book will soon become outdated. However, the philosophy is eternal.
Terrific! The value of the book is in the ideas more than the funds mentioned at the time it was published.
Great interview. Read his book last year and it changed my whole perspective.
Wow, that's fantastic! He had a major impact on me too.
I bought his book and subscribed to your website but there was no way to ask questions so I'll try it on here. Really appreciate these interviews and information.
Question: CONY and FIAT are based off of COIN via Yieldmax and today CONY pays 120% dividend and FIAT pays 89% Dividend.
They both experience NAV erosion dictated by the movement in COIN.
My question is, would it work to split funding 50/50 and wen 1 side is experiencing NAV erosion the other is improving and vice versa?
Get the high dividend and protect the NAV erosion from the other instrument.
Or purchase the high yield Instrument when the daily candle closes above or below for FIAT the 1 std deviation and hold until a close Below or Above the 1 std deviation
I don't hold any Yieldmax funds, nor do I own COIN, so I'm not really the person to ask regarding strategy for these types of investments. I like consistent income with no long term continuous NAV erosion. Generally, the underlying stocks far outperform the Yieldmax ETF's that follow them, and that margin seems to wide for me for the ETF's to make sense. I would also suggest comparing any Yieldmax ETF's to their equivalent on Kurv. I compared GOOY to GOOP and GOOP was ahead last time I looked.
@@armchairincomechannel Thank you for the reply, I will deploy my strategy with a small account and study the return.
68% of the time stocks trade within a 1 std deviation which is easily shown on a chart using Bollinger Bands and I have correlated that when the body of a daily candle on the common asset such as TSLA for (TSLY & CRSH) or Coin for (CONY & FIAT) then the High yield instrument has reached it's peak.
So I am going to invest in both High yielding instruments when they are inside the 1 std deviation when one side of the 1std deviation has a daily close above or below I will sell the Loser and add to the winner :)
I believe this strategy from back testing will blow the doors off of the underlying asset :)
Small sample size but so far so good, 1 dividend distributed and up over 20%, without the dividend in 1 week and now time will tell if this is a winning idea or folly :)
Very nice interview. His Income Factory book had a big influence on my thinking. Glad he touched on CLO. Instead of XFLT, I like the pure play of CLO equity, e.g. ECC. But I think you may also like the various CLO debt funds, like EIC as he mentioned (focusing on BB traunch), CLOZ (BBB/BB), JBBB and JAAA.
Glad you enjoyed it and thanks for sharing some of your favorite tickers!
Great youtube moment!! Thanks to both
It was weird to read his ideas for so many years and then finally talk to him!
Great video I have watched 20 of yours best yet much thanks God Bless
Glad you enjoyed it, and thanks for watching so many videos. You may need glasses after that!
Excellent interview-particularly appreciate the view on less transparent vehicles, like XFLT and the reassurance on BDCs with rates falling-the look back approach to lower rate years is useful. Thx
Thanks Jim, glad you found it interesting.
At the 28:42 mark in the video where Steve talks about Net Investment Income, what websites will have this information available for non-CEF tickers like PBDC
I haven't found a tool that provides data for non CEF tickers in a good format like CEFConnect. For NII, I use the BDC tool from systematicincomeinvesting.com/ . However, that's a paid subscription.
A few questions id like answered are how taxes impact the income factory, and how the income factory compares to equities that grow at 8-10% plus pay growing dividends.
A growth portfolio will be more tax efficient and offer a higher total return than an income portfolio. For these reasons, I pursued a growth strategy until retirement, then switched to the income approach. If you want to stick with growth during retirement then you'll need to figure out when to sell your stocks to pay for your bills. I don't like to do that, especially during bear markets like 2022.
Thank you so much for this Sir. I’m retiring early in 2.5 years and this type of information has been so helpful and eye opening.
One question I have (I know you don’t usually cover taxes) but it would be awesome if you could cover some of the more tax efficient options for high yield. I know there are a few CEFs and some MLPs that can be good for a taxable account but your take on it would be invaluable!
Thanks so much for everything!!!
Thanks for your suggestion. I try to point out the tax advantages of various funds where possible but I appreciate your suggestion to organize that information in a way that would be helpful.
@@armchairincomechannel thanks a lot I probably just missed it! Keep up the quality work. I for one greatly appreciate and enjoy it!
Excellent Interview !!
Any takes on BCAT & ECAT ? And how can we calculate their interest coverage percentage ? Much appreciate any input
BCAT is distributing 20% of the NAV; that doesn't seem sustainable. I haven't done a deep dive on it but the dividend looks unusually high so I'd want to know more before investing.
@@armchairincomechannel definitely would wait for your deep dive video on it Thanks for feedback :)
Thanks! Great interview! Learned alot
Glad it was helpful!
Thanks
You're most welcome :)
Bravo! love this interview. Very informative. More stuffs like this please.
Thank you! Will do!
Really good episode. Always enjoy and benefit from the words of Steven Bavaria. Appreciated the discussions of ASGI, XFLT, and RLTY in particular.
My I suggest having someone from Seeking Alpha's "High Dividend Opportunities" team on some time in the future.
Thanks!
I enjoyed the discussion with Steven. Thanks for the suggestion about HDO :)
Great session, and great book
Glad you enjoyed it :)
Great interview. Thank you both.
Glad you enjoyed it!
Great guy, have his book
He was a pleasure to interview. Thanks for your feedback :)
I need to learn from this man!!
That makes 2 of us :)
Great job getting Bavaria. ❤
Thanks! He was a joy to interview.
Very interesting. Thanks a lot.
You are welcome!
Excellent interview & content - thank you
Glad you enjoyed it! Thanks for the feedback :)
Great interview, thank you!
Glad you enjoyed it!
Man i wish you guys went from another hour! 😉
Great interview
I appreciate that comment :) He was great to chat with.
Yes. A part 2 or 3 would be appreciated. His insights (and experience) are priceless @ 58:57 generating more income when the market was down
Excellent video! I would have liked to heard a question like "What are your 3 most undervalued investments at Current Prices?
That's a good suggestion. I hope to interview him again one day.
@@armchairincomechannel You can always use it for other interviews.
Wow - such a great video. Thank you as always for your insights…you truly make a difference!
You are so welcome!
Incredibly valuable conversation thank you
Glad you liked it! He was great to chat with.
Great ideas which show how lucky US investors are to have access to such funds. As a UK investor neither of the platforms I use allows you to buy any of the 3 funds highlighted at the end. If you buy them outside the US do you also get hit by the 30% with-holding tax on dividends I wondered?
The withholding amount varies by country. For example in Australia its 15%. Having said that, generally its best for Non-US tax residents to check with an accountant in their country that's experienced in filing US tax returns. If you file a US tax return you will pay the actual amount due (withholding is just an estimate). The actual amount due is usually less than the withholding amount, which means you would receive a refund for the differece.
Yes very very good info and video.
I’m 51 and trying to catchup and not get caught up in the highp
Glad you enjoyed it! I agree, there's plenty of hype out there and I try to avoid it too.
Fantastic interview.
Glad you enjoyed it :)
Excellent
Thank you so much 😀
Did the Apollo Tactical Income Fund that was mentioned merge into MFIC (MidCap FIC)?
Yes. I don't know if it has gone through officially yet, but that's the result of the merger.
Excellent interview. Help me out please. Many of the popular CEFs have a downward trend NAV. I understand "math is math" and I'm not concerned with growth. If I can get an 8% distribution for 20 years and it is completely net of any capital gains, then I don't care. However, when a fund that is 20 years old has lost half of its value, I can only wonder what it will be worth in another 15 or 20 years and what will happen if its NAV approaches $0. The topic of NAV erosion has been beat to death but I really have not read/heard anything that eases my concern. Thanks for your help.
NAV erosion is an important consideration. Some funds suffer from it at launch and then flatten out. Some suffer from it but only under certain economic conditions (like a hike in interest rates). So its important to consider the fund in relation to what's happening with the economy and the market. There aren't many funds that pay high yields and appreciate under all market conditions. If the NAV is on a consistently downward path then I avoid it.
Wow…I really learned a lot about this video. Thank you so much for those great questions!!!!
But one thing that I concern me is their high expense ratio.
Expenses are very confusing for funds with leverage because the interest gets mixed into the number. It's even more confusing for BDC funds because some of the expenses of the BDCs themselves are mixed in with the management fees of the portfolio manager. For example, PBDC's management fee is less than 1% but you have to read the prospectus to know that...it's not clearly explained on the home page.
@@armchairincomechannel thank you for the info
Another great video. I watched it in three sittings due to my time allotment and to make sure I soaked it all in. Do you personally subscribe to the Income Factory? Thank you so much for all you do, it's been a life saver for me since retiring last November!
It was long and I could have talked to him for another hour but you have to stop somewhere. I just joined "Inside the Income Factory" on a monthly subscription and I'm researching some of his picks. Congrats on retiring last November, that's fantastic!!!! Feel free to join the conversations in the FB group...I don't mention it anymore in the vides because its growing all by itself. Here's a link: facebook.com/share/u3gHAmv58TszyRwz/
Good interview. My son who was employed in the "big ticket" division of one of the biggest banks in the U.S, has had some time to assist me when looking at BDC's and applying his expertise to this sub sector. A few of them are interviewing him due to 20+ years underwriting across 5 banks. Some of his observations are interesting. One, BDC's have much ore flexibility in "working out" non preforming clients than banks. I think he referred to it as somewhat cutthroat( a compliment) when compared to what banks can do. He really likes ARCC but is very wary of the amount of loan money coming into BDC's in general and is concerned that that much money chasing new loans leads to BDC's taking on increased risk due to competition.He has had me cut back by 1/2 my exposure to BDC's that have had significant share price appreciation such as CSWC, MAIN and HTGC and sell way above their NAV. He also really didn't like TRIN. Anyway, keep up the good work, a loyal fan.
Thanks for your feedback and insight into your son's experience. Not all BDC's make a great investment so it's important to be selective based on quality and pricing. I've cut back on the same BDCs as you over the past 6 months because of their valuation.
What are the 3 funds?
Here are the funds and the exact moment they're discussed :)
43:33 Quick take on RLTY from the Income Factory Portfolio
46:24 Quick take on XFLT from the Income Factory Portfolio
50:56 Quick take on ASGI from the Income Factory Portfolio
Wow two incredible income investors speaking together, amazing. Bet theres going to be some portfolio updates coming this week!! RLTY XFLT EIC looking really juicy
Glad it was helpful and thanks for sharing your reaction.
Enjoyed the interview thanks
I enjoyed the chat with Steven too. Thanks for letting me know :)
This @57:34 is a brilliant strategy. There’s F U money for employment security. This is like an F U portfolio to stock market volatility. 😊😊
Thanks for the feedback. I didn't name it with those exact words but glad it was helpful :)
Hi! For the last section (reinvesting), can you walk me through the rationale? Is this for risk reduction (if so, how), or is it for growth of the overall portfolio in effect to grow the dividend payout to match inflation expectations? Simplistically thinking, if you are "only" spending the income (divs) and there is not an increase or decrease in portfolio value, you are already ahead of the 4% Rule strategy which depletes the portfolio over a 30 year period, right? Thanks!
I reinvest a portion of my income for 2 reasons. 1/ To stay ahead of inflation. Many income stocks don't grow their income consistently. 2/ To mitigate risk. The risk for an income investor is dividend cuts. By reinvesting a portion of the income across a diversified portfolio of income investments, I'm constantly increasing the cashflow which means that if there is a dividend cut, it will be a reduction from a higher number than if I spent all the income.
@@armchairincomechannel Thank you, makes sense! Just curious, have you ever backtested your income portfolio against 2020 market? Most of the funds look to have Beta's that would suggest low to moderate volatility. Still working though your Playlist here!
Great interview
Thanks for taking the time to let me know. Glad you like it.
I appreciate this. That guy is smart.
I think so too. Thanks for watching Norman!
Good talk 👍
Glad you like it :)
Would it be possible to get your videos in podcast form so theyre easier to listen to in the car?
I'm glad you want to listen to them! Thanks for the idea. I include and reference a lot of charts and diagrams but perhaps audio would still be useful. No immediate plans to create a podcast but I'll keep it in mind.
Wonderful interview, I've been a longtime follower of yours and really respect your picks, wondering why you don't have xflt in your portfolio since Mr. Bavaria touts it so highly, do you plan on adding it? Thanks
I'm looking into it. Steven has a long list of investments and that's one of the candidates I'm researching for my own portfolio. Our portfolios aren't identical but we share a very similar investing philosophy.
Fantastic video.
Glad you enjoyed it
hey armchair!
would you think a 50% div growth 50% fixed income like in this video (and some of your funds as well!)
would be a good approach?
to start building it 10 years before using the dividends
The time horizon is the most critical question. Check out a channel called "dividend growth investing" he talks about his core and satellite strategy with time horizon
Why not? You can mix and match all kinds of strategies.
I couldn't say when you should start an income approach; it's different for everybody. In general, over a long time horizon and while you have a paycheck, growth is more tax efficient and delivers higher total returns. The closer you get to retirement, the more value there is from income and its reduced volatility. Growth requires that you sell when the market is up, and there's some random timing associated with your retirement date (you might be unlucky and retire at the start of a bear market). So its risky to assume you can simply sell all your growth stocks the day you retire, because you don't know what the market will look like.
So in researching the income investing Steven does I came across some articles warning of the risks of private credit. Meaning private credit is unregulated and largely not properly rated for quality by places like moodys. What are your thoughts on that?
I can't really address a broad question like "How risky is private credit?" because there are so many elements to risk and so many types of private credit. If we're talking about BDC's, they're regulated by the SEC and subject to rigorous financial reporting standards. Some BDCs have histories going back 20 years, so there's plenty of data to review. As for Moody's rating, some BDC's are rated. For example ARCC. Here's a link: finance.yahoo.com/news/ares-capital-corporation-moodys-announces-133906256.html I have an interview with a BDC fund manager scheduled for January and will address this topic with him. Thanks for asking.
Thank you for the reply. I subscribed and will watch the video in January.
I realize private credit comes with a level of risk. My concern is that without regulatory guardrails is it too risky. New York Times just posted an article about this.
Thanks for the arcc info. Its on my watch list.
I've ordered a copy of Steven's book, but I'm curious - does Steven address the high fees on some of these funds? I see that #XFLT has fees of 8.49% including management fees of 2.82%. That seems pretty steep. Thanks!
I haven't done a deep dive on XFLT but just took a quick look at the website. Common shareholders pay a management fee of 1.7% which is still pretty steep. The fees section is quite complicated! xainvestments.com/funds-funds-floating-rate-alternative-income-trust-xflt/
It sounds like you calculate your investment yields only at current prices vs looking at yields at cost. If the dividend the same, but if price is up (or price increases faster than dividends)... why exit when yield on cost is still the same or better?
If it started at 10% and thru price appreciation dropped to 6% but you can take the whole thing and reinvest at 10% again on a similar fund-why not do it to earn more $$.
Correctamundo.
Opportunity cost. My goal is to maximize income, not to have the highest yield on cost. If I buy a stock with a 10% yield and it goes up in value x10, then the yield will only be 1%. I could sell it and buy new 10% yields and multiply my income by 10. In retirement, income is more useful to me than appreciation.
@@armchairincomechannel It's your choice, but just as discussed previously, you inject more risk, and run the chance its a dividend trap on the new investment. Take JEPQ as an example... last year it was throwing off 11%+ yield and today it's a tad more than 8%. If it climbs to $60+ and yield is ~7%... would you exit for something else to chase a min 8% yield? I don't know for myself, but knowing I'm making 11% off my initial investment sounds pretty good.