Biggest Takeway: Using JEPQ in the Traditional IRA does two things: 1. Tax efficiency since most of the JEPQ distributions are taxed as "ordinary income," like the distributions from the Traditional IRA and 2. the Traditional IRA provides the flexibility of movement of funds to and from JEPQ to change the portfolio over time to meet your needs. I wish Jeff would have showed an example of the deployment of funds from any circumstance, into the specific buckets (Traditional, Taxable, and Roth IRA).
Hey Brett. Thank you for the feedback and I completely agree with you. I try to make the videos a reasonable length without overwhelming with too much information. I think a part 2 would be great for this one.
Thank you for all the encouragement Jeff. I will turn 48 in a month. I currently have 18k a year dividends from VOO, 16k a year from VTI, and 13k a year from schd. In the future, I want to build up my VYM and VYMI dividends to get 12k a year each from those.
Rational thoughts, seemless and simple transition of execution of material. You might just be the teacher we all needed but due to the crappy pay never had and my awareness of this is just now happening in my 50's from YT finance content you supply. Thanks again for another informative and mind blowing tutorial.
Thanks for the positive feedback Roy. I'm glad it is helping. It's never too late to get started with this stuff. You have plenty of time for the compound effect of a well set up portfolio to build your wealth & cash flow.
Excellent content as always, Jeff. As you disclose the details of your future approach, I can foresee a future video outlining 'Things I (will, will not do) as I prepare for Retirement". Might include expanded coverage of various topics like (no particular order): no bonds, SS claiming strategy, percentages of funds held in tax (able, deferred, free) accounts, ideal tax deferred amounts on hand heading into RMD years, etc. I cannot believe it, your content already blows away a lot of the basic stuff put forth by seasoned CFPs on other channels, in a ways that relates to the average investor without getting bogged down in the details. Well done...keep up the good work!
Nice update to the spreadsheet Jeff! And thanks for walking through the scenario of starting with JEPQ to create income while waiting for the qualified dividend snowball to grow.
Absolutely Eric. Thank you for the kind words. I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'. Right now, the list looks like this: 1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables, need to redo) 2) Add retirement dividend projector to Excel and Sheets 3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video) 4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
Great video. We are in the situation now you are planning for. We are 55 and 57 and just retired two months ago. We have a little more than $1M and are traveling the world. It can be done. We have enough in taxable accounts to get us to our first IRA in two years, and then the bulk of our money in 3 1/2 years. I have a different scenario for SS though. My SS is much higher than my wife's so I plan to wait until 65. That way it grows at 8% per year. We will take ours at 65 and 67. I am hedging my bet with it as I am everything else. 🤷🏻♂️
Very nice! Love it. Thanks for the comment. Also, great work to you and your wife for getting out of the rat race early! There are so many great ways to go about retirement planning.
Great video content and great explanation, thanks Jeff! Can you create future video on HSA investment strategy for millennial as I think investing on HSA account is a win win scenario.
Thank you for the feedback. I think that is a great idea! My wife and I have been using her HSA as an investment account for years. I made an older video about HSAs in general, but an update would be welcomed (:
Looks like a pretty good plan except for "one complaint" is counting on the MMfund for 5.20%. That YIELD will tank at the first sign of economy/inflation weakness. I have a chunk in MMfunds but am moving some to a high yield ETF like SPHY for relative safety and way more yield every mo. More than double the return of the MMF the past 15 mo.
Use the annual surpluses to pay the tax on roth conversions for that tax year. For example, a $1,000 surplus would pay the tax on a $8,333 Roth conversion for someone in the 12% tax bracket. Like Jeff says, everyone's situation is different, but its hard to argue against filling up the bottom two tax brackets with Roth conversions IF you can afford it.
Could not have said it better myself! In fact, I am planning on a part 2 of this series to talk about when / how to take the money, and how to max conversations to kiss the RMDs goodbye in the future (:
Great video! Love this spreadsheet with the additions. Can you add this version to the membership drive? I would love to play with this one. If you also would get a small pension (not inflation adjusted), am I correct in just adding a column beside SS column and then add those together for subtracting from the need column? Thanks Jeff! I hope you and your family are doing better. It's amazing the power of time (good and bad)...Financially (compounding) and life (helps with grief and gives us opportunity for experiences). Thanks for the video! Take care!
Thank you Darlene! Your kind words mean a lot. I will try to get this one out there this week. I need to make sure it works for multiple situations before I get it out there. I honestly just threw it together as I was going, so it doesn't win any beauty contests, but that's okay! You are correct in that you can add a pension to the SS area. I will make a video for the members as well showing how to use it (more focused and to the point compared to this video).
Hey Jeff, really liked this one, I think you had mentioned something similar in a different video but this broke it down well. I originally started investing focusing on getting dividends going but now I realize you can easily just get a giant traditional IRA going and when you need it flip on the dividends. This is encouraging to see what a million dollars can do since if my math is right and the future goes as planned I should have more than that come age 60.
Thanks for the kind words. This particular spreadsheet doesn't include the portfolio value. I do plan to make something that is more comprehensive in the future. I appreciate you becoming a channel member! Welcome to the community.
@@JeffTeeples Sounds great! Also I see the 2 columns PP/ year and PP / month in the spreadsheet. They don't seem to be part of the overall calculation... What do they represent?
That is for the purchasing power per month or per year. It accounts for inflation to tell us what the money is worth compared to 2024 dollars in the future year. It dynamically updates based on the assumed inflation assumption (3% by default).
Good stuff and more food for thought for me @ 63, 1M, single, not sure when to start SS, sill working . Mostly regretting not prioritizing my Roth 401k and Roth IRA. I have been on board with SCHD, VOO and QQQM, but will have mull/DD over your DGRO and JEPQ ideas...
Very nice Karl! Thank you for the comment. I think you're doing it right and will be good to go long-term. Having income now will make waiting for SS worth it (most likely, still depends). This will enable you to roll with your lower yielding / higher growing mix when you retire (because the SS will create more base income, so you won't need the JEPQ of the words). I think I need to make a part two of this video about taking the money out, and converting traditional IRA to Roth IRA in retirement (I'll be doing a LOT of this, my Roth balance is pathetic right now).
Jeff, I love this video! In the taxable account, how do you move from VGT to SCHD once you are nearly 60 years old? Since you accumulated massive capital gains in VGT over the years, selling VGT and buying SCHD might require you to pay capital gains? Thanks!
Hey Carlos, thanks for the question! You will need to pay long-term capital gains when you sell VGT and move it over to SCHD (assuming you held the VGT for at least 1 year). The good news is, it will likely be taxed at 0% if you are retiring early and living with dividends. It will be taxed the exact same as qualified dividends from SCHD (or anything else) are. If you are in the 12% tax bracket or lower, 0% taxes will be paid. 22% and above will have you paying 15% taxes. It's not too bad. I'm building SCHD now in my taxable account to not have to worry about that (VGT is stashed in my IRAs).
@@JeffTeeples Thank you so much for your reply. Thank you for inspiring and educating us. I have learnt tons with your videos. Please keep it up! Do you have a video or planning to do a video on this topic? perhaps including strategy when/how to convert IRA to Roth with the same scenario having VGT in the IRA and converting to Roth IRA with SCHD or JEPI/JEPQ or DGRO?
Hi Jeff - This is your best video to date! I have already watched it three times! Your updated spreadsheet that includes social security payments is excellent! My wife and I will be retiring at different times and our social security payment will be different. Does this version of the spreadsheet or the next one allow for spouses that will be retiring at different times with different monthly payments? It would also be helpful if the total amount of funds in the retirement portfolio (traditional IRA, Roth IRA, Taxable Investments) was linked to total portfolio allocation in the spreadsheet, noting the variance. This would make it easier to see how much money was available to be allocated. When will this updated spreadsheet be available to subscribers?
Hey Bruce! Thank you for the awesome feedback. I appreciate it. I am going to add more flexibility to the spreadsheet for the social security income section. You also gave me a great idea for linking the amount available, and potentially for reinvesting the surplus. Although... With taxes and life things, I like to under exaggerate if anything. So maybe I'll leave that part unchanged. I'll clean it up and get it out there this week. That's my plan. This is pasted from another post to save a little time. ------------------------ I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'. Right now, the list looks like this: 1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables, need to redo) 2) Add retirement dividend projector to Excel and Sheets 3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video) 4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
Thank you for another great video, Jeff! I especially appreciate how you share your personal feelings about your portfolio choices and why. It helps me understand how applicable it is to my situation. So informative 👍🏽
Thank you Aurea! I try to make it as detailed as possible without getting too far on side tangents (: I had you and a few other members in mind with this one! Previous comments on the channel gave me the idea.
@@JeffTeeples Thanks Jeff. You truly are one of the best financial educators out there and it's a pleasure to support you. Besides risk, are there other concerns about keeping a chunk of JEPQ long term? A scenario we are considering is living off the dividends for 3ish years until SS at 62, then DRIP into a growth ETF. Should we then move our JEPQ position completely or stick with our DRIP strategy?
Hi Aurea. Thanks for the kind words! I appreciate you supporting the channel and I'm glad you get value from it. I wouldn't hold JEPQ unless I needed that cash flow in the near term. I think it's great, don't get me wrong, but I prefer the predictable dividends that grow consistently over time that are paid by things like SCHD and DGRO. As your portfolio value increases, I would sell JEPQ over time to put more into the dividend growers. This will help you stay ahead of inflation long-term. If the portfolio value tanks during a crash, that is perfectly fine because the cash-flow will remain the same or grow. At that point, anything you reinvest will buy more shares for increasing your future dividends. I do think you should move completely out of JEPQ over time IF you have the portfolio value that can support your lifestyle with a lower yield.
@@JeffTeeples Thanks so much for this. Distilling so much information about dividend investing into our retirement plan can be overwhelming...your encouragement is super helpful. I hope you and your family are doing okay.
Excellent Post as always!!! Thank you for the great information and scenario. I love when you go through the different possibilities using real numbers straight from the market. It helps me understand how to better run my personal retirement scenario. Please keep those videos coming!!!
All of our portfolio are in taxable & currently don't have any tax-advantaged accounts, would only the non-qualified dividends be taxed as earned income and the qualified dividends taxed at 0% if our taxable income falls under $80k MFJ. Would have to rewatch this video again to get a better understanding. Amazing breakdown all of us needed, wished I'd known before. Thanks!
Thanks for the kind words. You nailed it. In your situation, the qualified dividends from a taxable account will be taxed at 0%. They are as valuable as income from a Roth IRA. Non-qualified dividends will be taxed at 12% (as if you had more 'regular taxable income'). That's not too bad either, but the qualified dividends are soooo juicy for MOST retirees at that 0% (:
Thank you for the positive feedback. I will clean up the spreadsheet and try to get a version out there this week. I still have it, but I will attempt to make it a bit more user friendly. I usually work on spreadsheet stuff (if life lets me) on Wednesday or Thursday. Right now I need to get a copy of the simple portfolio tracker I use out there in Google Sheets, along with this thing out there in both. Plenty more to come in the future. I plan to slowly grow the library of tools out there.
Thank you for the kind words Scott. It will be. I need to make a few changes to it before I put it out there (to make it user friendly and accurate for different scenarios). More to come. I'll copy/paste a comment below to save me some typing (: I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'. Right now, the list looks like this: 1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables of spreadsheet, need to update) 2) Add retirement dividend projector to Excel and Sheets 3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video) 4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
I'm glad! You can do it! No doubt about it. It's scary at first, because having someone else do it for you costs thousands of dollars in fees, and thousands more in holding actively managed funds (they get kickbacks, the funds objectively suck). You'll be happy with a great long-term strategy.
I don't quite understand the shorter term income etfs like JEPQ like I understand the function (short term income before the div growth of schd can out grow inflation/SS kicking in etc. in the example) I've heard that JEPQ can "erode" over time but I don't quite get it, any information you can share would be helpful. If you own 100 shares of jepq can you lose shares without selling? Or do people mean that the income might not be consistent. Sorry I am being unclear.
Hey Oldrin. You are not alone in being confused about covered call ETFs like JEPQ. The monthly payments will be all over the place with JEPQ because the premium income is created by covered calls. These will vary based on the market volatility. The yield is very high, but it is also unpredictable. I will say the underlying holdings are solid (based on the Nasdaq-100 index), so the price stays pretty steady unlike some other high yield ETFs that are yield traps (high yield because value falling). In a perfect world, we would have the portfolio value to not have to go with a higher yielding solution. SCHD and DGRO will consistently grow dividends (literally have never not done that in a single year of existence so far) because of the strategy used. It focuses on receiving qualified dividends the 'normal way'. The yield is lower, but the dividend will grow predictably over time. They are objectively better for cash-flow 'long-term', but your portfolio value will have to be really high to have 3.5% be enough yield to pay the bills. Usually, a hybrid approach is realistically needed.
GREAT video Jeff. The TEEP$ Method looks great. Always enjoy your videos and your excellent presentations. You make learning easy. Only problem - need more - lol. Be well. Prayers remain for you and your families peace.
Jeff, I joined, and have been working this spreadsheet based on my situation. Can you tell me where you get the CAGR information which is so critical to the growth factor of the portfolio? For example, I would like to add VYMI but I cannot find the CAGR from the Vanguard website.
Hi Jeff! Excellent video and exactly what I was looking for. Encouraging me to become a member :) Can I get your thoughts on a couple changes in the example portfolio. I have something very similar I am about to start DCAing into but plan to use DGRW vs. DRGO and I plan to use CGDV vs. VOO. Also, I plan to have only QQQM (or perhaps a lower % of TQQQ) vs. VGT. I am 53 and plan to be DONE working by 60 and maybe a little sooner. I have no taxable accounts except for a high yield savings fund with emergency fund. So, this DCA will be done inside my Roth IRA. Thanks for any thoughts.
Hey Jamie. I think DGRW is a fine replacement for a dividend (kind of a hybrid really between dividend and foundational). CGDV works for your foundational, and QQQM is awesome. I plan to add it to my growth soon as well (alongside VGT). If you dollar cost average into that portfolio over many years, and never panic sell when the market drops, you will very likely be looking good. You may need a bit more yield in retirement (SCHD, JEPQ, anything you like that is a comp) unless you have the portfolio value to cash flow on your current holdings. I think you have a great thing going!
Thanks for the feedback and the question. These funds are too new for me to have a strong opinion on. However, I am not a fan of the high expense ratios. I'll be watching them with a wait and see approach. I'm a tentative no from the research I've done so far.
Great video! I am turning 60 soon and will be retiring at 63. My wife, retired and 61, and I both have a decent 401K balance between us and would like to begin to align our funds similar to what you laid out in the video. Would you suggest rolling a decent portion of our 401K into an IRA now to get the process started, or just leave it as is until we need that money? The 401K funds are mostly in an S&P 500 index fund and 2030 Multi-Asset Fund. I will continue to contribute to the 401K until I am 63/retirement.
Thanks for the detailed feedback and great question. Some employers allow you to roll over your 401k to a traditional IRA before you leave. Others (all of mine) do not allow you to do so until you are no longer working there. It's fine to stay in the 401k as long as you're happy with a low-cost S&P 500 fund. The IRA will give you full control on exactly how the money is invested. As soon as you retire it is a good idea to roll it over to a rollover IRA and get your system set up. But no rush before that.
It's not tooooooo bad to have in a taxable account as long as your taxable income stays in the 12% bracket (which will be true for most new retirees pre SSI).
I don't think that's a bad idea at all. I guess I should say, it depends on how much yield you require to pay the bills. For example, if you had a huge portfolio, you could get by with something like QQQM / VOO / SCHD as a nice mix. That 2% yield may be enough. If the value needs a little more dividend kick to cash flow to your needs, then your set up is nice. So the answer to these things is always 'it depends' on your goals and situation. But you are looking good assuming you need more cash flow now for paying bills.
I don’t need the dividends at the moment I’m looking for growth in about 2 to 3 years from now. I will need to use some of the dividends to pay my bills.
I think having some VOO / QQQM / VGT (not necessarily all) isn't a bad idea. Your core holdings are great, but not the best for 'growth' if that is part of the objective. Again, I'm not saying your mix is bad at all, it really just depends on your goals and risk tolerance.
I unfortunately got started investing later in life (46 years old) so I am hitting it hard for the next 14 years. Maxing out my Roth and 401k every year. In order to make it up I’m also investing $5000/month into my taxable account. So that account will probably be my biggest bucket by the time I retire. Would you still hold VOO, VGT and SCHD in the taxable account? Or go all in on SCHD there? (Just to not have a huge taxable event later) Thank you Jeff. Absolutely love your channel!
Thank you for watching and for the great question. With 14 years remaining, I would put it in the balanced mix and late that thing compound. You have plenty of time to get this thing rolling! When you need to sell some VGT and VOO some day to get the higher dividend paying holdings, you will very likely have to pay 0% taxes on the long-term capital gains. You won't have regular income at this point (if retiring), and as long as you keep your income in the (what now is) 12% bracket, you'll be able to sell the long-term capital gains and pay zero taxes. You can do it over a couple years. Long-term capital gains and qualified dividends are the best with taxes Especially in retirement!
Thank you for the kind words. I hope these videos are helping people. I can't get tooooooo into the weeds of everything on each video (already getting longer lol), but I try to cover the basics.
One question though that's bugging me 😊 how sustainable is the cagr increase every year I get it when the etf was founded, but let's say in in 10-15 years it will reach 10% ? Will that be sustainable?
I'm not sure about this one. Time will tell. So far, the last 3-5 and 10 years have been amazing for CAGR. The 1 year isn't great. We will see how it plays out. My HOLD Factory (individual stocks) have a 3 and 5 year dividend CAGR of 18% (: So it's not impossible to sustain. But 'everything' could drop a bit in the next 10 years. I still think these investments will be 'comparatively impressive'.
After Social Security kicks in, and you change to more growth, how do you perceive this portfolio will do in down markets? And will you go to more cash during that time, or just ride it out?
I think the portfolio will do better 'long-term' with more growth ETFs like VGT and QQQM, but it would be a lot more volatile. Going from $2M to 1.3M is not out of the question in a down turn. I would be okay with that, and if anything would try to trickle some of the dividends back into the portfolio when it crashes. My goal is to have enough dividends to cover 100% of my lifestyle. When the market crashes, generally speaking, the dividends will remain the same or even be increased. I would only make adjustments if that failed to be the case. But I'm 99% sure the dividend growth will outpace inflation in any market with the ETFs I roll with. SCHD and DGRO are built to grow dividends. Even VGT, QQQM, and VOO have consistently outpaced inflation with dividend growth for many years. I would always be open-minded. I would make sure I'm producing 25% more than I needed AFTER buying more growth. I will play it fairly safe, but not growth free, in retirement.
Thank you for answering these questions. One hedging technique that could be used on an ETF like QQQM is to add a collar when it goes below the 50 day moving avg. Collars are cheap, but this requires more monitoring which you may not want to do. Thanks again. I really learned from this video.
Thanks Oldrin. These ones are tough to make because everyone has different goals and portfolio value. Thank you for your continued support of the channel.
Average growth of VOO is 10%-11%. Dividends yield is only 4% and they can drop. One will certainly come out ahead by putting 100% of the money in VOO (or VGT + SCHD which is better that VOO as you have pointed out) say. So what is wrong with doing this? This is also much simpler than having multiple investments. Your thoughts?
I think you have a great idea. Thanks for the comment. I hope to do what you said when I retire. However, the yield is very low. Let's just take VOO for example. With the 1.37% yield, you would need $4,379,562 dollars to create $5,000 a month to pay bills (from my example). That is unrealistic for the vast majority of people. Thus, the higher yielding set up from the video. If you have enough to avoid needing things like JEPQ for cash flow, you're in a great position (:
@@JeffTeeples It would have been great to throw in this scenario for comparison! In case you want some dividends, then try VGT + SCHD which is better than VOO as you have said. Thanks Jeff. You are the calmest person on the internet 🙂
Thank you for the question. I'm not a fan of SVOL. The 1.16% expense ratio will cost six figures over a long period of time. Shorting is never a smart play (in my opinion) long-term either. Set floors are important. It has performed very well from a cash flow perspective, and even solid from a total return standpoint as well (even with falling price), but I do not have high hopes for the sustainability. We'll have to check back 5 years from now.
Hey Rob! Yessir. That is where I get the dividend CAGRs from. I love Seeking Alpha. Sometimes it will have a weird number for CAGR here and there, but it's great overall.
Trying to figure out my tax problem. My RMD’s will start before my spouse retires do to our age difference. Your video was well thought out but based on both of you retiring together. Any thoughts with regards to a 10 year gap in SS benefits while I’m forced to withdraw in the higher tax bracket. 😢
Thanks for the comment and question. In a situation like this, you will inevitably be in a higher tax bracket until your spouse retires. However, it isn't a bad thing. As soon as they retire, you'll likely want to fill up the 12% tax bracket each year (by pulling out or converting as much of your traditional IRA as you can while staying in the 12% bracket). If you have a LOT of money in the traditional, you could consider filling up the 22% bracket as well. It depends on your situation. Either way, be sure to keep piling money into your investments (:
What are your touts about taking your sis at 62 and putting it directly in to jepq and drip the dividends for 5 years and then taking distributions if needed
I think that's a great move as long as you are in the 12% tax bracket (which 90% of people will be) with your 'income' in retirement. Taking SSI at 62 and putting it into JEPQ is great. I think JEPQ has great underlying holdings and a nice dividend yield. Something to consider is that the income it produces will count as ordinary income. It's as if you made more money at your job. Whereas SCHD qualified dividends, for example, will not add to your 'income'. SCHD will be taxed at 0% and JEPQ will be taxed at 12%. But that is okay as long as you stay in that tax bracket (and don't sneak into the 22% bracket). Then you can live on what you need while reinvesting the rest into more JEPQ (or other ETFs to add some qualified dividends as a 1-2 punch).
Hi Jeff, when you said schd voo and vgt are also qualified dividends. Is there anything i have to let my accountant know or it is automatically applied?
Hey Roxanna. Great question. The forms you receive from your online broker each year will break it down by category. Your accountant will have everything they need without you saying anything.
@jeff teeples do you think it makes more sense to have my 401k mirror my Roth IRA which has qqqm, schd, splg.. or would it be better to have schd as my only holding in my 401k
Hey Darrell. I think it makes more sense to have your mix of QQQM, SCHD, and SPLG in both. This is assuming you are still adding to the portfolios and haven't retired yet. If you do need the cash-flow NOW, then SCHD will likely make more sense.
I appreciate the feedback! I am going to try to get more stuff out there as time goes on. It's funny because my job was making spreadsheets that were so complicated that most would say 'Excel can do that'? But I like my personal spreadsheets simple and easy to use. It's a weird balance. I'll try to get some more complex stuff out there.
I'm pumped to share the full holdings out there. My screeners and spreadsheet scoring will stay with my best friend and I for the time being, but I'll put all holdings out there each month, and some cool stats about them.
@@JeffTeeples That's great. I'm currently mostly an ETF investor following in a similar pattern to your 3 funds. But I want to learn more about picking individual companies for when I actually retire. So this is just another part of my education.
Ok members I want to start a new name for us. I vote for "Teepleheads" with all due respect to Jack Bogle. Jeff is the everyman's Bogle. Great job as always Jeff.
Please correct me if I'm wrong - you need the $1.0M (or so) at 62 to make it work. You can't take it and keep working full-time. I mean, you can, but you get penalized for it.
Hey Kent. You are correct. If you are still working at 62 and taking SS, you will lose $1 of benefits for every $2 you earn over $22,320. This is the case until you reach 65 years old. If you are not retiring early, you'll want to wait on taking social security. Assuming you're earning a solid amount of money.
Great scenario! I hope in 30 years when I’m 60 I can live off of just qualified dividends. If living off SCHD dividends fully, is there a need to include VOO or a growth ETF instead of just taking the SCHD dividend growth? Or is it more of if something happened to SCHD dividend and a percentage of the portfolio needed to be sold?
Hey Ben. Great questions. I think it is nice to have a balance of value and growth, personally, in all scenarios. However, SCHD is a great 'one ETF to retire on' because of the way it screens companies for quality balance sheets instead of 'only dividends' like many of the other dividend ETFs. It has a bond-like high floor (don't say that to traditionalists, they freak) with some growth of the stocks. It's floor isn't as stable as a bond, and its price doesn't shoot up like a growth ETF, but it's a nice safe option that self updates with 100 quality companies, based on value, each year. I would still have 'a least a little' VOO or VTI, and VGT or QQQM in the portfolio. Especially when you are younger. It will likely exceed the total returns of SCHD over a long period of time (if never selling during the hard times). But SCHD is one of the few that I think is safe to retire on exclusively. There are so many great ways to go about this.
@@JeffTeeples Thanks, I am only holding 10% of SCHD in my Roth IRA currently. I still have around 30 years before I plan to retire at 60. I will probably bump it up to 20% at age 36 and maybe 30% at age 40. In my 401k I’m just following the S&P 500 due to limited investments. So I have a long time before SCHD is a major part of my portfolio.
Thank you for the feedback and the question. The answer if the dreaded 'it depends' (: But, yes, many people could retire on 500k invested. Especially when social security income kicks in. A pension or other forms of income are a nice bonus as well, but are not required. The portfolio will likely need to shoot for a high dividend yield to make up for the lower value compared to one with 1M or higher. But it is absolutely doable.
Great video as always Jeff! I have a question if you don’t mind sharing. How many years have you been investing VOO, SCHD, VGT, etc? And how long did it take for you to get to 1 million? And did you put a lump sum into VOO or other ones to start? And about how much do you invest into each every month? Thank you so much! I know you are a proof since you already reached over one million! 👏 I really appreciate your advice and thoughts.
Hey Jane. That is a great question, and I don't mind at all. I'm 42 years old now and I first hit $1M on 03/25/2022. This was VERY short lived. It wasn't until 03/31/23 that I hit $1M again after the rough 2022. I got as low as $887k in that window. I'm not a weird that has this memorized, haha, I'm looking at my spreadsheet as I reply. I was about to turn 40 when I first hit the milestone. I started investing in 2010 when I got my first 'real' job that wasn't in a warehouse. I was a late bloomer, didn't start college until 23. It was all VOO for the first couple years, and then I added VGT, and finally SCHD joined the mix. I have been dollar cost averaging into my target allocations (buying the lowest one with each new dollar) for years now. It's boring, but it works very well.
@@JeffTeeples Hey Jeff, that's awesome! Congrats! So it only took you about 10 years or so to get there! That's very impressive! Thank you so much for sharing that. Really appreciate your info and advice. Do you have them mostly in your regular taxable account? I am guessing you probably put more and more money each month by dollar cost averaging, right? I will try to follow your advice and hope I can get there in 15 years or so!
Hey Jane. The majority of our funds are in retirement accounts. Taking advantage of the generous company matches and pre-tax contributions has been a big part of the strategy. I think the taxable accounts are about $500k or so at this point. The only 'new dollars' invested are to max out my wife's 401k and her HSA. She has better benefits than I did, but I made quite a bit more money (I quit to start this channel, more interested in helping others). Now we invest in JEPQ to help pay the bills (taxable account, need it in real time) along with her paycheck that doesn't go to 401k or HSA. We have a mortgage and 2 small kids. We maximize every tax advantage account as much as possible. I wish I knew this stuff better when I was younger (: But it's never too late to get it building!
@@JeffTeeples Thank you so much Jeff! It's so nice of you to want to help others and give me your smart advice. I really appreciate that and can't thank you enough. Thank you for making your videos and helping us. I believe you channel will grow fast :) I see. I thought for the retirement accounts, usually we don't have choices to pick the stock we want like VOO or others, other than picking like large cap or small cap or bond or target date funds. The downside of 401k is that you have to reach to 59 and a half to take your money right? or else there is penalty? From my understanding. For maxing out the tax advantage accounts, do you mean the Roth IRA and 401k from the job and HSA? or other traditional IRA account too? Sorry I have so many questions since I am still learning and still have a lot to learn lol. I hope you don't mind answering. Thank you so much! Would you tell me more about the benefits of investing in JEPQ and how that can help you pay your bills? is it like selling the covered call? I remember watching one of your video talking something about that.
Hey Jane. Thanks for the kind words and great questions: There is a 10% penalty for early withdrawals before 59 1/2. You can max a traditional *or* Roth 401k with $23,000. In addition to that, you can max a traditional *or* Roth IRA with $7,000 per year. Both can have more added if you are 50 or older. It is important to note that IRA and 401k have separate limits. It's great to take advantage of both in a given year. And, you can also do the HSA as well. JEPQ has a high yield of 9.92% in the trailing twelve months (TTM). It also pays on a monthly basis. For example, I received $883 dollars this month. This is on my $99,400 of JEPQ I have (as of today, 2,000 shares of it). That produces a lot more cash-flow 'now' to help pay bills than SCHD does. But SCHD is better long-term cash flow because it grows the dividends over time. JEPQ is a high yield, but it is a bit more random (doesn't grow with consistency).
First, I would like to say I enjoy your channel and I appreciate you. I am retiring next month and my situation is roughly similar to this scenario. I have a pension and also a traditional, Roth, and taxable (all mostly VTI) I would like to get more dividend income by reallocating money into schd. My question is about having dividend funds in the traditional IRA. I am 100% VTI in my traditional IRA. Since all withdrawals from a traditional IRA (whether they are from dividends, capital appreciation, or the original principal) are taxed the same as income, what is the benefit of say schd in my traditional than VTI if VTI has a higher total return? My thinking is it's better to have my dividends taxed as qualified dividends in my taxable account. Thank you
Thank you for watching and for the comment. You are spot on! There is no advantage of any income type (qualified dividends, interest, ordinary dividends, short-term gains, long-term gains) in a traditional IRA. It is all taxed as ordinary income when you take it out anyway. You want the best total return. SCHD is awesome in your taxable account for the benefits of qualified dividends. I will say one reason to have high yield in a traditional or Roth IRA is that it will allow you to control your income flow better than the 4% rule (selling your holdings to pull the money out). If the market is up or down, you wont care. The dividend yield will stay the same or increase (99% of the time) so you know you can turn dividend reinvestments off and send it directly to your checking as a withdrawal. It allows you to 'never sell shares' (therefore steadily increasing your value over time naturally). But you are right. At the end of the day, there is no 'advantage to qualified dividends' in a tax protected account.
With funds in a traditional IRA, is it possible to turn off dividend reinvestment and have the dividends go into a settlement fund within the traditional IRA? I'm using Vanguard.
I don't use Vanguard, personally. I love how clean E*Trade is and that is my platform of choice. For me, I move the dividends over to a money market the day they are paid. It is not automatically done for me, but I'm okay with that. Plus I get 5.29% (:
Love the video! At 15:22 , you start talking about DGRO compared to SCHD, and how you think it will grow more than SCHD long term. As a new investor with 30+ years until retirement, do you think it'd be wiser to invest into one over the other? My goal is to maximize income and portfolio as a whole, and most of my money is in my Roth IRA account. Thanks!
Thank you for watching and for the comment. This is a great question. I don't know what will happen without a crystal ball, but here is what I 'think' is likely when we zoom out 30 years. I think SCHD will continue to pay a higher dividend yield than DGRO. It screens OUT companies that are amazing, but are not in the top half of dividend yield from a screener it runs. For example, AVGO got the boot. It brings in more value companies with a higher yield. DGRO, on the other hand, is okay with the lower yields as long as the dividend growth and payout ratio are there. I think DGRO will slowly get a better yield on cost over many years (technically, SCHD has been better over the past decade for this, but I don't think it always will be). I think SCHD will provide a more stable floor and higher yield for new buys, while also growing reasonably well. I would probably go with a mix of the two. They are both great, and it gives you better coverage of 'the dividend market'. They actually only have a 20% weighted overlap, which is extremely low for 'like category' ETFs. This makes them a nice combo.
@JeffTeeples Thank you for the reply! That is a great point about the overlap, or pack thereof. I currently am doing roughly 50% of VOO, 30% VGT, and 20% SCHD. Might break up the 20% SCHD to be 10% DGRO and 10% SCHD though.
I wonder if you are taking in to consideration that the deficit on your first two years in your last account is deducted from your $1,000,000.00 EACH MONTH, meaning that you WON'T get the same amount of dividends for the next 24 month - or more. The strategy will work in the long run, But taking $18,500.00 to $19,500.00 out of your accounts over the first few years will have a BIG effect in coming years. I mean, you could sell one share from each stock EACH MONTH and make up the other $250.00 out of cash, But you may not want to do that. You could sell 3 of your VGT or 3 VOO shares EACH MONTH and make the rest out of cash, but it may take you a bit longer to get on the green side of things.
Hey Rick. Thank you for the comment. I think you are thinking of the traditional '4% rule' that is advised by many. In my scenario, there is zero selling of the holdings. The predictable dividend payment and growth is strictly cash-flow. If you have 4,000 shares of SCHD (or whatever holding) you will have that many forever, or more, as you reinvest surplus. So the market value (which goes up long-term when we zoom out) means nothing in this dividend retirement. It's all about the per share dividend cash flow. You are correct in that many of the dividends pay quarterly. So a 'monthly' $5,000 of dividends may technically be a quarterly $15,000 of dividends. It will require some budgeting and planning to 'make it' $5,000 a month.
Hi Jeff, will you be posting the modified version of Dividend Projector used for this video on OneDrive? Also, how do I change stock symbols used on the 2nd tab, the stock table? Thanks/John
Hey John, thanks for the questions. I will be posting this out there, along with a video tutorial of how to update it. The video I have out there now will show how to add stock symbols. It is under the OneDrive link under 'Spreadsheet Video Tutorials'. I will put an updated video out there for this new retirement spreadsheet as well.
@@JeffTeeples Thank you Jeff for the response. What do you think of the combination of SPYI and QQQI in lieu of JEPQ. I recognize these are both relatively new, and the expense ratios are higher but the approach seems to be sound vs. JPM's ELN's.
Thanks for the question. I don't have a lot of thoughts about SPYI and QQQI. It is too early. I do not like the expense ratio for sure, but plan to watch these to see how they perform. I'm not a fan after quick research, but I don't have a quality opinion formed beyond the basics. JEPQ is a very rare play for me. Normally I require 10+ years of history, great methodology, low expense ratio, and great comparative performance before investing in an ETF. I just needed good cash flow, and I love the Nasdaq-100 as the underlying index. The low expense ratio of 0.35% (for an actively managed fund) is appealing. But the price preservation is the HUGE difference I see in JEPQ vs other high yield selections. I think it will grow steadily indefinitely (albeit not as much as QQQM).
I have one more question. Sorry. Right now, I have a managed account that is over 500k in a taxable account (I think purposely, very complex mix, stocks, bonds, bond funds, mutual fund and ETFs with mediocre returns!!). If I'd sell everything to be able to get to me managing my own ETF's, it would be huge capital gains. Do you have any ideas on resources to help efficiently navigate this? I get the feeling from the managers that it needs to be complex to "protect" my assets. I think it's so they keep me locked in with them.
Hey Philip. Thanks for the question. It is definitely to keep you locked in. You nailed it. They are incentivized by kickbacks to have you in actively managed mutual funds. I have reviewed countless portfolios and I have never, not once ever, seen on be set up to even sniff the returns of the market, net of fees. You're on the right track! The taxes aren't as bad as they are made out to be. Here is the battle plan when you take over your accounts: 1) Anything in tax protected accounts can be sold immediately with zero tax implications. 2) For your taxable account, I would do the following (not advice, but very common practice): a) Sell all losses right away regardless of how long the asset was held. This lowers your taxable income. b) Sell all long-term capital gains as well. This is all tax lots (holdings) that have been owned for at least 1 year. These will be taxed at a very favorable long-term capital gains tax rate. c) For short-term unrealized gains, you have a decision to make. If the holding is REALLY bad, just sell it. It adds to your taxable income, but it is normally worth it (will depend on your situation). If the holding isn't terrible, you can wait until it is 1 year old before off loading it.
Thanks Paul! I try to keep them as simple as possible. There are so many variables to consider. The spreadsheet does its best to knock out the heavy hitters.
Hey David, thank you for joining. That is awesome. I am going to get that spreadsheet out this week (I hope). I need to make a couple adjustments to make it better for 'multiple scenarios'. I didn't realize it would be such a hit!
Not sure how to contact you to ask questions, so pardon me for doing it here. Have you checked out the new ETF released 5/1 Calamos S&P 500 Structured Alt Protection ETF - May (CPSM)? If not, can you and give us your thoughts on it, please?
Hey Mark. Thanks for the question. Here is the perfect spot to ask. Also, thanks for being a member, I see that shiny badge (: I don't know anything about that ETF yet. I will keep it on my watch list. I see it uses the S&P 500 as its underlying holdings. I like that! And it will use FLEX options to produce cash flow. I'm interested to see how this works out! Oh no, as I was researching, I just saw one of my few golden rules broken. It's over 50 basis points on the expense ratio. 69 (nice) basis points. I'll still check it out, but unless it is AMAZING, it will be a default no for me. Expense ratios are the best long-term results predictors for 'like type' ETFs. It's one I'm a bit of a stickler about.
Right now, I have someone managing my accounts but and in the process of managing my own. All my managed accounts have international exposure, they say for diversification. You never seem to include them. Why?
Hey Philip. Thank you for the question. I don't think it is a bad decision to have international exposure. I will say I fall 'more' on the late John Bogle and Warren Buffett side of believing in the US market. The US market does a lot of worldwide business, and I'm comfortable with that for now. However, I'm always watching VXUS to see how international is doing. I will be late to the party when things flip, but I will not miss it altogether. Having VT (total US stock market and international mix) over my mix would have costed me ~$500k opportunity cost historically (I track this because I'm weird, and because Bogleheads' are so aggressive lol). But it can, and will, flip eventually. I think it's a dangerous game to completely ignore international markets. But, it is a matter of opinion on when, how much, and why to invest in it.
Roxanna! Thank you (: I appreciate it! There will be a part 2 coming out on this topic this coming Sunday. I'll talk more about the process of withdrawing funds to live on in a tax efficient manner. Stay tuned (:
haha, glad I could help. International will have its time again eventually. I'm always watching VXUS. I have chosen (correctly) to stay away for the past decade. When the tides turn, I'll be a little late to the party. I'm okay with that, we can't have it all (:
Hey Tony. I keep all the spreadsheets from the videos out there for the members. There will be a Google sheets version as well as an Excel version for each. This one will be put out there this week. Sometimes there is a little lag of me getting them ready.
@@JeffTeeples thanks! this video was helpful! In the future could you make a more precise video similiar to this that shows which buckets the funds are coming from the taxable and retirement accounts? It was a little difficult for me to follow, maybe colors on each bucket could be helpful thanks!
Thank you for the question. I put all spreadsheets (Excel) and Google sheets out for the members of the channel. This one isn't out there yet for either, as I need to make a couple tweaks to make it scalable for multiple scenarios. I'm hoping to have it out there by Thursday of this week.
@@JeffTeeples is there a link to these sheets? Thanks so much for doing this. Your channel is very educational and has high valued contents and deserve to have more subscribers. :)
The spreadsheets are shared with the members of the channel. My goal is to not have to 'sell out' and take on sponsorships that don't make sense with the channel to make money in the future. All videos will always be free for all. The way I'm trying to bridge the gap of leaving my six figure job to start this channel is with the memberships. There I have a variety of spreadsheets, including my portfolio tracker and my individual stocks that I hold (I call it the HODL Factory). It is $2.99 per month for the membership, and completely optional. The videos will always be here.
Thank you for the positive feedback Stephen. I think I need a part 2 (Brett's comment below) to explain specifically how to withdraw the money in retirement & plan for the taxes.
I agree with this. JEPQ is a GREAT bridge that has quality underlying holdings and high yield. BUT, if the cash flow isn't needed NOW, I prefer a mix of SCHD / VGT / QQQM / VOO more. It really depends on the need. I think low yielding, high growing funds are the way to go IF the portfolio value supports it.
I agree. In fact, I'm a big believer that taking out more than 0% is a poor idea. This scenario never sales a share. I'm not an advocate of the 4% rule, personally. Even though it 'usually' will math out. I'm a never sell, and control dividend flow investor. I prefer the lower yield and higher growth holdings. However, it depends on what the portfolio value and goals are.
I choose to invest that $1 per week instead of splurging on a new razor. That is $52 per year, or $4.33 per month. At 10% growth, that razor costs me $27,404 over 40 years. Oh, and I get to have a sexy beard as well. It's like getting paid to be beautiful.
Biggest Takeway: Using JEPQ in the Traditional IRA does two things: 1. Tax efficiency since most of the JEPQ distributions are taxed as "ordinary income," like the distributions from the Traditional IRA and 2. the Traditional IRA provides the flexibility of movement of funds to and from JEPQ to change the portfolio over time to meet your needs. I wish Jeff would have showed an example of the deployment of funds from any circumstance, into the specific buckets (Traditional, Taxable, and Roth IRA).
Hey Brett. Thank you for the feedback and I completely agree with you. I try to make the videos a reasonable length without overwhelming with too much information.
I think a part 2 would be great for this one.
@JeffTeeples yes please.
keep pumping out those financial informational videos Jeff!!!! I'm 50 this year and hope to be retired in less than 10yrs....
Hey Kevin. Very nice! I hope this video was informative. I know you understand a lot of this stuff already, but I figure it couldn't hurt (:
Are you maxing out your retirement accounts?
Not sure if this is meant for me or Kevin. For me, we max a 401k and a HSA.
@@JeffTeeples both lol
Thank you for all the encouragement Jeff. I will turn 48 in a month. I currently have 18k a year dividends from VOO, 16k a year from VTI, and 13k a year from schd. In the future, I want to build up my VYM and VYMI dividends to get 12k a year each from those.
That is awesome Richard. Thank you for the comment. You have quite the portfolio and a lot of future flexibility!
Rational thoughts, seemless and simple transition of execution of material. You might just be the teacher we all needed but due to the crappy pay never had and my awareness of this is just now happening in my 50's from YT finance content you supply. Thanks again for another informative and mind blowing tutorial.
Thanks for the positive feedback Roy. I'm glad it is helping. It's never too late to get started with this stuff. You have plenty of time for the compound effect of a well set up portfolio to build your wealth & cash flow.
Excellent content as always, Jeff. As you disclose the details of your future approach, I can foresee a future video outlining 'Things I (will, will not do) as I prepare for Retirement". Might include expanded coverage of various topics like (no particular order): no bonds, SS claiming strategy, percentages of funds held in tax (able, deferred, free) accounts, ideal tax deferred amounts on hand heading into RMD years, etc. I cannot believe it, your content already blows away a lot of the basic stuff put forth by seasoned CFPs on other channels, in a ways that relates to the average investor without getting bogged down in the details. Well done...keep up the good work!
Those are great ideas! Noted. Thank you for the kind words. I appreciate the continued support. I see your shiny member badge (:
Nice update to the spreadsheet Jeff! And thanks for walking through the scenario of starting with JEPQ to create income while waiting for the qualified dividend snowball to grow.
Absolutely Eric. Thank you for the kind words.
I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'.
Right now, the list looks like this:
1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables, need to redo)
2) Add retirement dividend projector to Excel and Sheets
3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video)
4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel
My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
Thanks Jeff! Excellent information! That spreadsheet is fantastic.
Thank you Rob! I appreciate the kind words.
I need to move things around to keep it this simple. Thanks for the info!
Hey Kim. Thank you for the positive feedback. I love simple. Simple means I can't screw anything up (:
Great video. We are in the situation now you are planning for. We are 55 and 57 and just retired two months ago. We have a little more than $1M and are traveling the world. It can be done.
We have enough in taxable accounts to get us to our first IRA in two years, and then the bulk of our money in 3 1/2 years.
I have a different scenario for SS though. My SS is much higher than my wife's so I plan to wait until 65. That way it grows at 8% per year. We will take ours at 65 and 67. I am hedging my bet with it as I am everything else. 🤷🏻♂️
Very nice! Love it. Thanks for the comment. Also, great work to you and your wife for getting out of the rat race early! There are so many great ways to go about retirement planning.
Yet another great video. Sundays are not boring anymore !!
Thanks Kumar! I appreciate the positive feedback on the videos.
Great video content and great explanation, thanks Jeff! Can you create future video on HSA investment strategy for millennial as I think investing on HSA account is a win win scenario.
Thank you for the feedback. I think that is a great idea! My wife and I have been using her HSA as an investment account for years. I made an older video about HSAs in general, but an update would be welcomed (:
This was good timing. I have been trying to help my mom with her retirement planning and her situation is very similar to the scenario in this video.
Thanks for the feedback Cooper. I'm glad the video was timely for your mom.
Looks like a pretty good plan except for "one complaint" is counting on the MMfund for 5.20%. That YIELD will tank at the first sign of economy/inflation weakness. I have a chunk in MMfunds but am moving some to a high yield ETF like SPHY for relative safety and way more yield every mo. More than double the return of the MMF the past 15 mo.
That is a great call Gary. I forgot to mention the federal funds rate is high right now, and this will fluctuate (likely down) in the future.
Use the annual surpluses to pay the tax on roth conversions for that tax year.
For example, a $1,000 surplus would pay the tax on a $8,333 Roth conversion for someone in the 12% tax bracket.
Like Jeff says, everyone's situation is different, but its hard to argue against filling up the bottom two tax brackets with Roth conversions IF you can afford it.
Could not have said it better myself! In fact, I am planning on a part 2 of this series to talk about when / how to take the money, and how to max conversations to kiss the RMDs goodbye in the future (:
Great video! Love this spreadsheet with the additions. Can you add this version to the membership drive? I would love to play with this one. If you also would get a small pension (not inflation adjusted), am I correct in just adding a column beside SS column and then add those together for subtracting from the need column? Thanks Jeff! I hope you and your family are doing better. It's amazing the power of time (good and bad)...Financially (compounding) and life (helps with grief and gives us opportunity for experiences). Thanks for the video! Take care!
Thank you Darlene! Your kind words mean a lot.
I will try to get this one out there this week. I need to make sure it works for multiple situations before I get it out there. I honestly just threw it together as I was going, so it doesn't win any beauty contests, but that's okay! You are correct in that you can add a pension to the SS area.
I will make a video for the members as well showing how to use it (more focused and to the point compared to this video).
Hey Jeff, really liked this one, I think you had mentioned something similar in a different video but this broke it down well. I originally started investing focusing on getting dividends going but now I realize you can easily just get a giant traditional IRA going and when you need it flip on the dividends. This is encouraging to see what a million dollars can do since if my math is right and the future goes as planned I should have more than that come age 60.
That is fantastic to hear. I appreciate the kind words and I'm glad you're on a great path. We can do this! We really can.
you made it look so easy and gave many a great piece of mind with that great demo!👏👏. Thank you Jeff!
Thank you for watching & for providing the positive feedback. I appreciate it. I’m here to help.
Very nice spreadsheet, thank you!. How would I go to see the overall value of the portfolio every year?
Thanks for the kind words. This particular spreadsheet doesn't include the portfolio value. I do plan to make something that is more comprehensive in the future. I appreciate you becoming a channel member! Welcome to the community.
@@JeffTeeples Sounds great! Also I see the 2 columns PP/ year and PP / month in the spreadsheet. They don't seem to be part of the overall calculation... What do they represent?
That is for the purchasing power per month or per year. It accounts for inflation to tell us what the money is worth compared to 2024 dollars in the future year. It dynamically updates based on the assumed inflation assumption (3% by default).
Good stuff and more food for thought for me @ 63, 1M, single, not sure when to start SS, sill working . Mostly regretting not prioritizing my Roth 401k and Roth IRA. I have been on board with SCHD, VOO and QQQM, but will have mull/DD over your DGRO and JEPQ ideas...
Very nice Karl! Thank you for the comment. I think you're doing it right and will be good to go long-term. Having income now will make waiting for SS worth it (most likely, still depends).
This will enable you to roll with your lower yielding / higher growing mix when you retire (because the SS will create more base income, so you won't need the JEPQ of the words).
I think I need to make a part two of this video about taking the money out, and converting traditional IRA to Roth IRA in retirement (I'll be doing a LOT of this, my Roth balance is pathetic right now).
Jeff, I love this video! In the taxable account, how do you move from VGT to SCHD once you are nearly 60 years old? Since you accumulated massive capital gains in VGT over the years, selling VGT and buying SCHD might require you to pay capital gains? Thanks!
Hey Carlos, thanks for the question!
You will need to pay long-term capital gains when you sell VGT and move it over to SCHD (assuming you held the VGT for at least 1 year). The good news is, it will likely be taxed at 0% if you are retiring early and living with dividends.
It will be taxed the exact same as qualified dividends from SCHD (or anything else) are. If you are in the 12% tax bracket or lower, 0% taxes will be paid. 22% and above will have you paying 15% taxes.
It's not too bad. I'm building SCHD now in my taxable account to not have to worry about that (VGT is stashed in my IRAs).
@@JeffTeeples Thank you so much for your reply. Thank you for inspiring and educating us. I have learnt tons with your videos. Please keep it up! Do you have a video or planning to do a video on this topic? perhaps including strategy when/how to convert IRA to Roth with the same scenario having VGT in the IRA and converting to Roth IRA with SCHD or JEPI/JEPQ or DGRO?
Hey Carlos. Thanks for the awesome feedback. I am planning on making a part 2 of this video. I will try to throw in most of those details.
Hi Jeff -
This is your best video to date! I have already watched it three times! Your updated spreadsheet that includes social security payments is excellent! My wife and I will be retiring at different times and our social security payment will be different. Does this version of the spreadsheet or the next one allow for spouses that will be retiring at different times with different monthly payments?
It would also be helpful if the total amount of funds in the retirement portfolio (traditional IRA, Roth IRA, Taxable Investments) was linked to total portfolio allocation in the spreadsheet, noting the variance. This would make it easier to see how much money was available to be allocated.
When will this updated spreadsheet be available to subscribers?
Hey Bruce! Thank you for the awesome feedback. I appreciate it. I am going to add more flexibility to the spreadsheet for the social security income section. You also gave me a great idea for linking the amount available, and potentially for reinvesting the surplus. Although... With taxes and life things, I like to under exaggerate if anything. So maybe I'll leave that part unchanged.
I'll clean it up and get it out there this week. That's my plan. This is pasted from another post to save a little time.
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I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'.
Right now, the list looks like this:
1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables, need to redo)
2) Add retirement dividend projector to Excel and Sheets
3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video)
4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel
My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
Thank you for another great video, Jeff! I especially appreciate how you share your personal feelings about your portfolio choices and why. It helps me understand how applicable it is to my situation. So informative 👍🏽
Thank you Aurea! I try to make it as detailed as possible without getting too far on side tangents (: I had you and a few other members in mind with this one! Previous comments on the channel gave me the idea.
@@JeffTeeples Thanks Jeff. You truly are one of the best financial educators out there and it's a pleasure to support you.
Besides risk, are there other concerns about keeping a chunk of JEPQ long term? A scenario we are considering is living off the dividends for 3ish years until SS at 62, then DRIP into a growth ETF. Should we then move our JEPQ position completely or stick with our DRIP strategy?
Hi Aurea. Thanks for the kind words! I appreciate you supporting the channel and I'm glad you get value from it.
I wouldn't hold JEPQ unless I needed that cash flow in the near term. I think it's great, don't get me wrong, but I prefer the predictable dividends that grow consistently over time that are paid by things like SCHD and DGRO.
As your portfolio value increases, I would sell JEPQ over time to put more into the dividend growers. This will help you stay ahead of inflation long-term. If the portfolio value tanks during a crash, that is perfectly fine because the cash-flow will remain the same or grow. At that point, anything you reinvest will buy more shares for increasing your future dividends.
I do think you should move completely out of JEPQ over time IF you have the portfolio value that can support your lifestyle with a lower yield.
@@JeffTeeples Thanks so much for this. Distilling so much information about dividend investing into our retirement plan can be overwhelming...your encouragement is super helpful. I hope you and your family are doing okay.
Excellent Post as always!!! Thank you for the great information and scenario. I love when you go through the different possibilities using real numbers straight from the market. It helps me understand how to better run my personal retirement scenario. Please keep those videos coming!!!
Thank you for the kind words! I will keep them coming for sure. My goal is to get us all heading towards financial freedom!
All of our portfolio are in taxable & currently don't have any tax-advantaged accounts, would only the non-qualified dividends be taxed as earned income and the qualified dividends taxed at 0% if our taxable income falls under $80k MFJ. Would have to rewatch this video again to get a better understanding. Amazing breakdown all of us needed, wished I'd known before. Thanks!
Thanks for the kind words. You nailed it. In your situation, the qualified dividends from a taxable account will be taxed at 0%. They are as valuable as income from a Roth IRA.
Non-qualified dividends will be taxed at 12% (as if you had more 'regular taxable income'). That's not too bad either, but the qualified dividends are soooo juicy for MOST retirees at that 0% (:
Nice video and perfect timing! Can’t wait to try this version of the dividend projector!
Thank you for the positive feedback. I will clean up the spreadsheet and try to get a version out there this week. I still have it, but I will attempt to make it a bit more user friendly.
I usually work on spreadsheet stuff (if life lets me) on Wednesday or Thursday. Right now I need to get a copy of the simple portfolio tracker I use out there in Google Sheets, along with this thing out there in both.
Plenty more to come in the future. I plan to slowly grow the library of tools out there.
Great information, it's got me hopeful! Will that version be available soon?
Thank you for the kind words Scott. It will be. I need to make a few changes to it before I put it out there (to make it user friendly and accurate for different scenarios). More to come. I'll copy/paste a comment below to save me some typing (:
I'll get the updated spreadsheet out there this week (I hope). I have a list of spreadsheet stuff I need to add to Google Sheets and Excel. I usually work on this Wednesday or Thursday each week (if the day lets me). This one needs a couple little tweaks to make it 'user friendly'.
Right now, the list looks like this:
1) Add portfolio tracker to Google Sheets (Sheets broke all of the pivot tables of spreadsheet, need to update)
2) Add retirement dividend projector to Excel and Sheets
3) Add Nasdaq-100 vs S&P 500 history spreadsheet (haven't talked about this one, next video)
4) Add HODL Factory stats spreadsheet with full holding details to Sheets and Excel
My primary job is raising a couple toddlers right now. I will eventually have WAY more time (when they go to school) to put into adding value to the channel. For now, I'm staying the course (: That said, we should see a new sheet every week or two.
You are giving me the courage to manage my investments!!
I'm glad! You can do it! No doubt about it. It's scary at first, because having someone else do it for you costs thousands of dollars in fees, and thousands more in holding actively managed funds (they get kickbacks, the funds objectively suck). You'll be happy with a great long-term strategy.
I don't quite understand the shorter term income etfs like JEPQ like I understand the function (short term income before the div growth of schd can out grow inflation/SS kicking in etc. in the example)
I've heard that JEPQ can "erode" over time but I don't quite get it, any information you can share would be helpful. If you own 100 shares of jepq can you lose shares without selling? Or do people mean that the income might not be consistent. Sorry I am being unclear.
Hey Oldrin. You are not alone in being confused about covered call ETFs like JEPQ. The monthly payments will be all over the place with JEPQ because the premium income is created by covered calls. These will vary based on the market volatility. The yield is very high, but it is also unpredictable. I will say the underlying holdings are solid (based on the Nasdaq-100 index), so the price stays pretty steady unlike some other high yield ETFs that are yield traps (high yield because value falling).
In a perfect world, we would have the portfolio value to not have to go with a higher yielding solution. SCHD and DGRO will consistently grow dividends (literally have never not done that in a single year of existence so far) because of the strategy used. It focuses on receiving qualified dividends the 'normal way'. The yield is lower, but the dividend will grow predictably over time. They are objectively better for cash-flow 'long-term', but your portfolio value will have to be really high to have 3.5% be enough yield to pay the bills.
Usually, a hybrid approach is realistically needed.
@@JeffTeeples Thank you so much. You are extremely helpful.
GREAT video Jeff. The TEEP$ Method looks great. Always enjoy your videos and your excellent presentations. You make learning easy. Only problem - need more - lol. Be well. Prayers remain for you and your families peace.
haha, thank you Lance. I appreciate the kind words as always!
Jeff, I joined, and have been working this spreadsheet based on my situation. Can you tell me where you get the CAGR information which is so critical to the growth factor of the portfolio? For example, I would like to add VYMI but I cannot find the CAGR from the Vanguard website.
I'm just getting to these comments. It is Seeking Alpha. Sorry for the wait. Thank you for becoming a member. Very cool! I appreciate the support.
Hi Jeff! Excellent video and exactly what I was looking for. Encouraging me to become a member :) Can I get your thoughts on a couple changes in the example portfolio. I have something very similar I am about to start DCAing into but plan to use DGRW vs. DRGO and I plan to use CGDV vs. VOO. Also, I plan to have only QQQM (or perhaps a lower % of TQQQ) vs. VGT. I am 53 and plan to be DONE working by 60 and maybe a little sooner. I have no taxable accounts except for a high yield savings fund with emergency fund. So, this DCA will be done inside my Roth IRA. Thanks for any thoughts.
Hey Jamie. I think DGRW is a fine replacement for a dividend (kind of a hybrid really between dividend and foundational). CGDV works for your foundational, and QQQM is awesome. I plan to add it to my growth soon as well (alongside VGT).
If you dollar cost average into that portfolio over many years, and never panic sell when the market drops, you will very likely be looking good.
You may need a bit more yield in retirement (SCHD, JEPQ, anything you like that is a comp) unless you have the portfolio value to cash flow on your current holdings.
I think you have a great thing going!
Thanks for the great video, Jeff! I'm learning a ton from each of your videos.
I am glad to hear! Thank you for watching and commenting.
Love that spreadsheet!
Thank you for watching & for the feedback.
Great video as usual! I would like to get your opinion on SPYI/QQQI ETFs from NEOS Investments vs JEPI/JEPQ. Would you recommend those?
Thanks for the feedback and the question. These funds are too new for me to have a strong opinion on. However, I am not a fan of the high expense ratios. I'll be watching them with a wait and see approach. I'm a tentative no from the research I've done so far.
Great video! I am turning 60 soon and will be retiring at 63. My wife, retired and 61, and I both have a decent 401K balance between us and would like to begin to align our funds similar to what you laid out in the video. Would you suggest rolling a decent portion of our 401K into an IRA now to get the process started, or just leave it as is until we need that money? The 401K funds are mostly in an S&P 500 index fund and 2030 Multi-Asset Fund. I will continue to contribute to the 401K until I am 63/retirement.
Thanks for the detailed feedback and great question. Some employers allow you to roll over your 401k to a traditional IRA before you leave. Others (all of mine) do not allow you to do so until you are no longer working there.
It's fine to stay in the 401k as long as you're happy with a low-cost S&P 500 fund. The IRA will give you full control on exactly how the money is invested. As soon as you retire it is a good idea to roll it over to a rollover IRA and get your system set up. But no rush before that.
For those wanting to retire before 60 still need jepq in taxable accounts till social security comes in
It's not tooooooo bad to have in a taxable account as long as your taxable income stays in the 12% bracket (which will be true for most new retirees pre SSI).
I am 2 years away from full retirement. I have most of my money in my ROTH. JEPI/JEPQ/QYLD/O all 25%. Is this a good idea or what would you suggest?
I don't think that's a bad idea at all. I guess I should say, it depends on how much yield you require to pay the bills. For example, if you had a huge portfolio, you could get by with something like QQQM / VOO / SCHD as a nice mix. That 2% yield may be enough.
If the value needs a little more dividend kick to cash flow to your needs, then your set up is nice. So the answer to these things is always 'it depends' on your goals and situation. But you are looking good assuming you need more cash flow now for paying bills.
I don’t need the dividends at the moment I’m looking for growth in about 2 to 3 years from now. I will need to use some of the dividends to pay my bills.
I think having some VOO / QQQM / VGT (not necessarily all) isn't a bad idea. Your core holdings are great, but not the best for 'growth' if that is part of the objective. Again, I'm not saying your mix is bad at all, it really just depends on your goals and risk tolerance.
I unfortunately got started investing later in life (46 years old) so I am hitting it hard for the next 14 years. Maxing out my Roth and 401k every year. In order to make it up I’m also investing $5000/month into my taxable account. So that account will probably be my biggest bucket by the time I retire. Would you still hold VOO, VGT and SCHD in the taxable account? Or go all in on SCHD there? (Just to not have a huge taxable event later) Thank you Jeff. Absolutely love your channel!
Thank you for watching and for the great question. With 14 years remaining, I would put it in the balanced mix and late that thing compound. You have plenty of time to get this thing rolling!
When you need to sell some VGT and VOO some day to get the higher dividend paying holdings, you will very likely have to pay 0% taxes on the long-term capital gains.
You won't have regular income at this point (if retiring), and as long as you keep your income in the (what now is) 12% bracket, you'll be able to sell the long-term capital gains and pay zero taxes. You can do it over a couple years. Long-term capital gains and qualified dividends are the best with taxes Especially in retirement!
@@JeffTeeples oh wow. I didn’t think about it that way. You rule! Thank you so much Jeff!
Another really clear and informative video your content is very good ! Thank you! 😊
Thank you for the kind words. I hope these videos are helping people. I can't get tooooooo into the weeds of everything on each video (already getting longer lol), but I try to cover the basics.
One question though that's bugging me 😊 how sustainable is the cagr increase every year I get it when the etf was founded, but let's say in in 10-15 years it will reach 10% ? Will that be sustainable?
I'm not sure about this one. Time will tell. So far, the last 3-5 and 10 years have been amazing for CAGR. The 1 year isn't great. We will see how it plays out.
My HOLD Factory (individual stocks) have a 3 and 5 year dividend CAGR of 18% (: So it's not impossible to sustain. But 'everything' could drop a bit in the next 10 years. I still think these investments will be 'comparatively impressive'.
After Social Security kicks in, and you change to more growth, how do you perceive this portfolio will do in down markets? And will you go to more cash during that time, or just ride it out?
I think the portfolio will do better 'long-term' with more growth ETFs like VGT and QQQM, but it would be a lot more volatile. Going from $2M to 1.3M is not out of the question in a down turn.
I would be okay with that, and if anything would try to trickle some of the dividends back into the portfolio when it crashes. My goal is to have enough dividends to cover 100% of my lifestyle.
When the market crashes, generally speaking, the dividends will remain the same or even be increased. I would only make adjustments if that failed to be the case. But I'm 99% sure the dividend growth will outpace inflation in any market with the ETFs I roll with.
SCHD and DGRO are built to grow dividends. Even VGT, QQQM, and VOO have consistently outpaced inflation with dividend growth for many years.
I would always be open-minded. I would make sure I'm producing 25% more than I needed AFTER buying more growth. I will play it fairly safe, but not growth free, in retirement.
Thank you for answering these questions. One hedging technique that could be used on an ETF like QQQM is to add a collar when it goes below the 50 day moving avg. Collars are cheap, but this requires more monitoring which you may not want to do. Thanks again. I really learned from this video.
Interesting video, definitely good food for thought!
Thanks Oldrin. These ones are tough to make because everyone has different goals and portfolio value. Thank you for your continued support of the channel.
Great video.... lots of good information for all. Time for homework!
Thanks Anthony! I appreciate the positive feedback.
Average growth of VOO is 10%-11%. Dividends yield is only 4% and they can drop. One will certainly come out ahead by putting 100% of the money in VOO (or VGT + SCHD which is better that VOO as you have pointed out) say. So what is wrong with doing this? This is also much simpler than having multiple investments. Your thoughts?
I think you have a great idea. Thanks for the comment.
I hope to do what you said when I retire. However, the yield is very low. Let's just take VOO for example. With the 1.37% yield, you would need $4,379,562 dollars to create $5,000 a month to pay bills (from my example). That is unrealistic for the vast majority of people. Thus, the higher yielding set up from the video. If you have enough to avoid needing things like JEPQ for cash flow, you're in a great position (:
@@JeffTeeples It would have been great to throw in this scenario for comparison! In case you want some dividends, then try VGT + SCHD which is better than VOO as you have said. Thanks Jeff. You are the calmest person on the internet 🙂
What do you think about SVOL? It shots Viks , the price might go down, but it is giving dividend 16% consistently for the past five years
Thank you for the question. I'm not a fan of SVOL. The 1.16% expense ratio will cost six figures over a long period of time. Shorting is never a smart play (in my opinion) long-term either. Set floors are important.
It has performed very well from a cash flow perspective, and even solid from a total return standpoint as well (even with falling price), but I do not have high hopes for the sustainability. We'll have to check back 5 years from now.
I think I found it. It looks like you got the CAGR from Seeking Alpha, Correct?
Hey Rob! Yessir. That is where I get the dividend CAGRs from. I love Seeking Alpha. Sometimes it will have a weird number for CAGR here and there, but it's great overall.
Trying to figure out my tax problem. My RMD’s will start before my spouse retires do to our age difference. Your video was well thought out but based on both of you retiring together. Any thoughts with regards to a 10 year gap in SS benefits while I’m forced to withdraw in the higher tax bracket. 😢
Thanks for the comment and question. In a situation like this, you will inevitably be in a higher tax bracket until your spouse retires. However, it isn't a bad thing. As soon as they retire, you'll likely want to fill up the 12% tax bracket each year (by pulling out or converting as much of your traditional IRA as you can while staying in the 12% bracket). If you have a LOT of money in the traditional, you could consider filling up the 22% bracket as well. It depends on your situation.
Either way, be sure to keep piling money into your investments (:
What are your touts about taking your sis at 62 and putting it directly in to jepq and drip the dividends for 5 years and then taking distributions if needed
I think that's a great move as long as you are in the 12% tax bracket (which 90% of people will be) with your 'income' in retirement.
Taking SSI at 62 and putting it into JEPQ is great. I think JEPQ has great underlying holdings and a nice dividend yield.
Something to consider is that the income it produces will count as ordinary income. It's as if you made more money at your job. Whereas SCHD qualified dividends, for example, will not add to your 'income'. SCHD will be taxed at 0% and JEPQ will be taxed at 12%. But that is okay as long as you stay in that tax bracket (and don't sneak into the 22% bracket).
Then you can live on what you need while reinvesting the rest into more JEPQ (or other ETFs to add some qualified dividends as a 1-2 punch).
Hi Jeff, when you said schd voo and vgt are also qualified dividends. Is there anything i have to let my accountant know or it is automatically applied?
Hey Roxanna. Great question. The forms you receive from your online broker each year will break it down by category. Your accountant will have everything they need without you saying anything.
@@JeffTeeples thank you do much, saves me from headaches
@jeff teeples do you think it makes more sense to have my 401k mirror my Roth IRA which has qqqm, schd, splg.. or would it be better to have schd as my only holding in my 401k
Hey Darrell. I think it makes more sense to have your mix of QQQM, SCHD, and SPLG in both. This is assuming you are still adding to the portfolios and haven't retired yet. If you do need the cash-flow NOW, then SCHD will likely make more sense.
😊 That is a spreadsheet I can use. Thanks
Can't wait for the HODL one!!
I appreciate the feedback! I am going to try to get more stuff out there as time goes on.
It's funny because my job was making spreadsheets that were so complicated that most would say 'Excel can do that'? But I like my personal spreadsheets simple and easy to use. It's a weird balance. I'll try to get some more complex stuff out there.
I'm pumped to share the full holdings out there. My screeners and spreadsheet scoring will stay with my best friend and I for the time being, but I'll put all holdings out there each month, and some cool stats about them.
@@JeffTeeples That's great. I'm currently mostly an ETF investor following in a similar pattern to your 3 funds. But I want to learn more about picking individual companies for when I actually retire. So this is just another part of my education.
Another great content as usual.🎉
Thank you for the support! I means a lot to me & the channel.
Ok members I want to start a new name for us. I vote for "Teepleheads" with all due respect to Jack Bogle. Jeff is the everyman's Bogle. Great job as always Jeff.
Haha, love it. Thanks David. I'm glad you're enjoying the videos. Thank you for your channel support.
Please correct me if I'm wrong - you need the $1.0M (or so) at 62 to make it work. You can't take it and keep working full-time. I mean, you can, but you get penalized for it.
Hey Kent. You are correct. If you are still working at 62 and taking SS, you will lose $1 of benefits for every $2 you earn over $22,320. This is the case until you reach 65 years old.
If you are not retiring early, you'll want to wait on taking social security. Assuming you're earning a solid amount of money.
Should the dollar amount in the value cell been 100,000 or 1,000,000?
Thanks for watching and asking the question. I believe this one was for $1,000,000 of a portfolio is memory serves.
Great scenario! I hope in 30 years when I’m 60 I can live off of just qualified dividends. If living off SCHD dividends fully, is there a need to include VOO or a growth ETF instead of just taking the SCHD dividend growth? Or is it more of if something happened to SCHD dividend and a percentage of the portfolio needed to be sold?
Hey Ben. Great questions.
I think it is nice to have a balance of value and growth, personally, in all scenarios. However, SCHD is a great 'one ETF to retire on' because of the way it screens companies for quality balance sheets instead of 'only dividends' like many of the other dividend ETFs. It has a bond-like high floor (don't say that to traditionalists, they freak) with some growth of the stocks.
It's floor isn't as stable as a bond, and its price doesn't shoot up like a growth ETF, but it's a nice safe option that self updates with 100 quality companies, based on value, each year.
I would still have 'a least a little' VOO or VTI, and VGT or QQQM in the portfolio. Especially when you are younger. It will likely exceed the total returns of SCHD over a long period of time (if never selling during the hard times). But SCHD is one of the few that I think is safe to retire on exclusively.
There are so many great ways to go about this.
@@JeffTeeples Thanks, I am only holding 10% of SCHD in my Roth IRA currently. I still have around 30 years before I plan to retire at 60. I will probably bump it up to 20% at age 36 and maybe 30% at age 40. In my 401k I’m just following the S&P 500 due to limited investments. So I have a long time before SCHD is a major part of my portfolio.
Thanks for the video! Is it possible to retire today with 500k invested in ETF’s?
Thank you for the feedback and the question. The answer if the dreaded 'it depends' (: But, yes, many people could retire on 500k invested. Especially when social security income kicks in. A pension or other forms of income are a nice bonus as well, but are not required.
The portfolio will likely need to shoot for a high dividend yield to make up for the lower value compared to one with 1M or higher. But it is absolutely doable.
Thank you very much!!
Would buying JPEQ in a HSA Brokerage account be ok regarding tax implications?
Absolutely. JEPQ is perfect in an HSA because the ‘type of gain’ (non-qualified dividends) doesn’t matter at all.
Awesome thanks Jeff!
Great video as always Jeff!
I have a question if you don’t mind sharing. How many years have you been investing VOO, SCHD, VGT, etc? And how long did it take for you to get to 1 million? And did you put a lump sum into VOO or other ones to start? And about how much do you invest into each every month? Thank you so much!
I know you are a proof since you already reached over one million! 👏 I really appreciate your advice and thoughts.
Hey Jane. That is a great question, and I don't mind at all. I'm 42 years old now and I first hit $1M on 03/25/2022. This was VERY short lived. It wasn't until 03/31/23 that I hit $1M again after the rough 2022. I got as low as $887k in that window. I'm not a weird that has this memorized, haha, I'm looking at my spreadsheet as I reply. I was about to turn 40 when I first hit the milestone.
I started investing in 2010 when I got my first 'real' job that wasn't in a warehouse. I was a late bloomer, didn't start college until 23. It was all VOO for the first couple years, and then I added VGT, and finally SCHD joined the mix. I have been dollar cost averaging into my target allocations (buying the lowest one with each new dollar) for years now. It's boring, but it works very well.
@@JeffTeeples Hey Jeff, that's awesome! Congrats! So it only took you about 10 years or so to get there! That's very impressive! Thank you so much for sharing that. Really appreciate your info and advice. Do you have them mostly in your regular taxable account?
I am guessing you probably put more and more money each month by dollar cost averaging, right?
I will try to follow your advice and hope I can get there in 15 years or so!
Hey Jane. The majority of our funds are in retirement accounts. Taking advantage of the generous company matches and pre-tax contributions has been a big part of the strategy. I think the taxable accounts are about $500k or so at this point.
The only 'new dollars' invested are to max out my wife's 401k and her HSA. She has better benefits than I did, but I made quite a bit more money (I quit to start this channel, more interested in helping others). Now we invest in JEPQ to help pay the bills (taxable account, need it in real time) along with her paycheck that doesn't go to 401k or HSA. We have a mortgage and 2 small kids.
We maximize every tax advantage account as much as possible. I wish I knew this stuff better when I was younger (: But it's never too late to get it building!
@@JeffTeeples Thank you so much Jeff! It's so nice of you to want to help others and give me your smart advice. I really appreciate that and can't thank you enough. Thank you for making your videos and helping us. I believe you channel will grow fast :)
I see. I thought for the retirement accounts, usually we don't have choices to pick the stock we want like VOO or others, other than picking like large cap or small cap or bond or target date funds. The downside of 401k is that you have to reach to 59 and a half to take your money right? or else there is penalty? From my understanding.
For maxing out the tax advantage accounts, do you mean the Roth IRA and 401k from the job and HSA? or other traditional IRA account too? Sorry I have so many questions since I am still learning and still have a lot to learn lol. I hope you don't mind answering. Thank you so much!
Would you tell me more about the benefits of investing in JEPQ and how that can help you pay your bills? is it like selling the covered call? I remember watching one of your video talking something about that.
Hey Jane. Thanks for the kind words and great questions:
There is a 10% penalty for early withdrawals before 59 1/2.
You can max a traditional *or* Roth 401k with $23,000. In addition to that, you can max a traditional *or* Roth IRA with $7,000 per year. Both can have more added if you are 50 or older.
It is important to note that IRA and 401k have separate limits. It's great to take advantage of both in a given year. And, you can also do the HSA as well.
JEPQ has a high yield of 9.92% in the trailing twelve months (TTM). It also pays on a monthly basis. For example, I received $883 dollars this month. This is on my $99,400 of JEPQ I have (as of today, 2,000 shares of it).
That produces a lot more cash-flow 'now' to help pay bills than SCHD does. But SCHD is better long-term cash flow because it grows the dividends over time. JEPQ is a high yield, but it is a bit more random (doesn't grow with consistency).
First, I would like to say I enjoy your channel and I appreciate you.
I am retiring next month and my situation is roughly similar to this scenario. I have a pension and also a traditional, Roth, and taxable (all mostly VTI)
I would like to get more dividend income by reallocating money into schd.
My question is about having dividend funds in the traditional IRA. I am 100% VTI in my traditional IRA. Since all withdrawals from a traditional IRA (whether they are from dividends, capital appreciation, or the original principal) are taxed the same as income, what is the benefit of say schd in my traditional than VTI if VTI has a higher total return?
My thinking is it's better to have my dividends taxed as qualified dividends in my taxable account.
Thank you
Thank you for watching and for the comment. You are spot on! There is no advantage of any income type (qualified dividends, interest, ordinary dividends, short-term gains, long-term gains) in a traditional IRA. It is all taxed as ordinary income when you take it out anyway. You want the best total return.
SCHD is awesome in your taxable account for the benefits of qualified dividends.
I will say one reason to have high yield in a traditional or Roth IRA is that it will allow you to control your income flow better than the 4% rule (selling your holdings to pull the money out). If the market is up or down, you wont care. The dividend yield will stay the same or increase (99% of the time) so you know you can turn dividend reinvestments off and send it directly to your checking as a withdrawal. It allows you to 'never sell shares' (therefore steadily increasing your value over time naturally).
But you are right. At the end of the day, there is no 'advantage to qualified dividends' in a tax protected account.
With funds in a traditional IRA, is it possible to turn off dividend reinvestment and have the dividends go into a settlement fund within the traditional IRA? I'm using Vanguard.
I don't use Vanguard, personally. I love how clean E*Trade is and that is my platform of choice. For me, I move the dividends over to a money market the day they are paid. It is not automatically done for me, but I'm okay with that. Plus I get 5.29% (:
Love the video! At 15:22 , you start talking about DGRO compared to SCHD, and how you think it will grow more than SCHD long term. As a new investor with 30+ years until retirement, do you think it'd be wiser to invest into one over the other? My goal is to maximize income and portfolio as a whole, and most of my money is in my Roth IRA account. Thanks!
Thank you for watching and for the comment. This is a great question. I don't know what will happen without a crystal ball, but here is what I 'think' is likely when we zoom out 30 years.
I think SCHD will continue to pay a higher dividend yield than DGRO. It screens OUT companies that are amazing, but are not in the top half of dividend yield from a screener it runs. For example, AVGO got the boot. It brings in more value companies with a higher yield.
DGRO, on the other hand, is okay with the lower yields as long as the dividend growth and payout ratio are there.
I think DGRO will slowly get a better yield on cost over many years (technically, SCHD has been better over the past decade for this, but I don't think it always will be). I think SCHD will provide a more stable floor and higher yield for new buys, while also growing reasonably well.
I would probably go with a mix of the two. They are both great, and it gives you better coverage of 'the dividend market'. They actually only have a 20% weighted overlap, which is extremely low for 'like category' ETFs. This makes them a nice combo.
@JeffTeeples Thank you for the reply! That is a great point about the overlap, or pack thereof. I currently am doing roughly 50% of VOO, 30% VGT, and 20% SCHD. Might break up the 20% SCHD to be 10% DGRO and 10% SCHD though.
Great video. Thanks!!
Thank you for the positive feedback. I appreciate it.
I wonder if you are taking in to consideration that the deficit on your first two years in your last account is deducted from your $1,000,000.00 EACH MONTH, meaning that you WON'T get the same amount of dividends for the next 24 month - or more. The strategy will work in the long run, But taking $18,500.00 to $19,500.00 out of your accounts over the first few years will have a BIG effect in coming years. I mean, you could sell one share from each stock EACH MONTH and make up the other $250.00 out of cash, But you may not want to do that. You could sell 3 of your VGT or 3 VOO shares EACH MONTH and make the rest out of cash, but it may take you a bit longer to get on the green side of things.
Hey Rick. Thank you for the comment. I think you are thinking of the traditional '4% rule' that is advised by many. In my scenario, there is zero selling of the holdings. The predictable dividend payment and growth is strictly cash-flow.
If you have 4,000 shares of SCHD (or whatever holding) you will have that many forever, or more, as you reinvest surplus. So the market value (which goes up long-term when we zoom out) means nothing in this dividend retirement. It's all about the per share dividend cash flow.
You are correct in that many of the dividends pay quarterly. So a 'monthly' $5,000 of dividends may technically be a quarterly $15,000 of dividends. It will require some budgeting and planning to 'make it' $5,000 a month.
Hi Jeff, will you be posting the modified version of Dividend Projector used for this video on OneDrive? Also, how do I change stock symbols used on the 2nd tab, the stock table? Thanks/John
Hey John, thanks for the questions. I will be posting this out there, along with a video tutorial of how to update it.
The video I have out there now will show how to add stock symbols. It is under the OneDrive link under 'Spreadsheet Video Tutorials'. I will put an updated video out there for this new retirement spreadsheet as well.
@@JeffTeeples Thank you Jeff for the response. What do you think of the combination of SPYI and QQQI in lieu of JEPQ. I recognize these are both relatively new, and the expense ratios are higher but the approach seems to be sound vs. JPM's ELN's.
Thanks for the question. I don't have a lot of thoughts about SPYI and QQQI. It is too early. I do not like the expense ratio for sure, but plan to watch these to see how they perform. I'm not a fan after quick research, but I don't have a quality opinion formed beyond the basics.
JEPQ is a very rare play for me. Normally I require 10+ years of history, great methodology, low expense ratio, and great comparative performance before investing in an ETF. I just needed good cash flow, and I love the Nasdaq-100 as the underlying index. The low expense ratio of 0.35% (for an actively managed fund) is appealing. But the price preservation is the HUGE difference I see in JEPQ vs other high yield selections. I think it will grow steadily indefinitely (albeit not as much as QQQM).
Thank you for doing this!
Of course! I didn't think this video would perform well, but, it is important information. That matters way more to me, long-term, with this stuff.
I have one more question. Sorry. Right now, I have a managed account that is over 500k in a taxable account (I think purposely, very complex mix, stocks, bonds, bond funds, mutual fund and ETFs with mediocre returns!!). If I'd sell everything to be able to get to me managing my own ETF's, it would be huge capital gains. Do you have any ideas on resources to help efficiently navigate this? I get the feeling from the managers that it needs to be complex to "protect" my assets. I think it's so they keep me locked in with them.
Hey Philip. Thanks for the question. It is definitely to keep you locked in. You nailed it.
They are incentivized by kickbacks to have you in actively managed mutual funds. I have reviewed countless portfolios and I have never, not once ever, seen on be set up to even sniff the returns of the market, net of fees. You're on the right track!
The taxes aren't as bad as they are made out to be. Here is the battle plan when you take over your accounts:
1) Anything in tax protected accounts can be sold immediately with zero tax implications.
2) For your taxable account, I would do the following (not advice, but very common practice):
a) Sell all losses right away regardless of how long the asset was held. This lowers your taxable income.
b) Sell all long-term capital gains as well. This is all tax lots (holdings) that have been owned for at least 1 year. These will be taxed at a very favorable long-term capital gains tax rate.
c) For short-term unrealized gains, you have a decision to make. If the holding is REALLY bad, just sell it. It adds to your taxable income, but it is normally worth it (will depend on your situation). If the holding isn't terrible, you can wait until it is 1 year old before off loading it.
Great video Jeff.
Thanks Steven. I appreciate the feedback.
I love your Member Spreadsheet. Great visualization!
Thanks Paul! I try to keep them as simple as possible. There are so many variables to consider. The spreadsheet does its best to knock out the heavy hitters.
@@JeffTeeples Great content, thanks. Just joined the FFF; the member spreadsheet looks similar, but is missing the SS section. Did I miss something?
Hey David, thank you for joining. That is awesome. I am going to get that spreadsheet out this week (I hope). I need to make a couple adjustments to make it better for 'multiple scenarios'. I didn't realize it would be such a hit!
Not sure how to contact you to ask questions, so pardon me for doing it here. Have you checked out the new ETF released 5/1 Calamos S&P 500 Structured Alt Protection ETF - May (CPSM)? If not, can you and give us your thoughts on it, please?
Hey Mark. Thanks for the question. Here is the perfect spot to ask. Also, thanks for being a member, I see that shiny badge (:
I don't know anything about that ETF yet. I will keep it on my watch list. I see it uses the S&P 500 as its underlying holdings. I like that! And it will use FLEX options to produce cash flow. I'm interested to see how this works out!
Oh no, as I was researching, I just saw one of my few golden rules broken. It's over 50 basis points on the expense ratio. 69 (nice) basis points. I'll still check it out, but unless it is AMAZING, it will be a default no for me.
Expense ratios are the best long-term results predictors for 'like type' ETFs. It's one I'm a bit of a stickler about.
@@JeffTeeples that's all I needed to know. Thanks!
Another well explained video!
Hey Dru. Thank you for the feedback.
Right now, I have someone managing my accounts but and in the process of managing my own. All my managed accounts have international exposure, they say for diversification. You never seem to include them. Why?
Hey Philip. Thank you for the question. I don't think it is a bad decision to have international exposure. I will say I fall 'more' on the late John Bogle and Warren Buffett side of believing in the US market. The US market does a lot of worldwide business, and I'm comfortable with that for now.
However, I'm always watching VXUS to see how international is doing. I will be late to the party when things flip, but I will not miss it altogether. Having VT (total US stock market and international mix) over my mix would have costed me ~$500k opportunity cost historically (I track this because I'm weird, and because Bogleheads' are so aggressive lol). But it can, and will, flip eventually. I think it's a dangerous game to completely ignore international markets. But, it is a matter of opinion on when, how much, and why to invest in it.
Great video!!!
Thanks for watching and for dropping a comment Jay.
new subscribers here
Thank you for subscribing Erwin. I hope you enjoy the journey with this awesome community of investors.
Thanks!
Roxanna! Thank you (: I appreciate it! There will be a part 2 coming out on this topic this coming Sunday. I'll talk more about the process of withdrawing funds to live on in a tax efficient manner. Stay tuned (:
I feel like selling out of my vxus lol, it’s 20% of my roth
haha, glad I could help. International will have its time again eventually. I'm always watching VXUS. I have chosen (correctly) to stay away for the past decade. When the tides turn, I'll be a little late to the party. I'm okay with that, we can't have it all (:
Where can I find a spreadsheet like this?
Hey Tony. I keep all the spreadsheets from the videos out there for the members. There will be a Google sheets version as well as an Excel version for each. This one will be put out there this week. Sometimes there is a little lag of me getting them ready.
@@JeffTeeples thanks! this video was helpful! In the future could you make a more precise video similiar to this that shows which buckets the funds are coming from the taxable and retirement accounts? It was a little difficult for me to follow, maybe colors on each bucket could be helpful thanks!
For sure. I'm planning on dropping a part 2 to this video to detail the withdrawal strategy. I'll add more details in that one.
Is the google sheet available for everyone?
Thank you for the question. I put all spreadsheets (Excel) and Google sheets out for the members of the channel. This one isn't out there yet for either, as I need to make a couple tweaks to make it scalable for multiple scenarios. I'm hoping to have it out there by Thursday of this week.
@@JeffTeeples is there a link to these sheets? Thanks so much for doing this. Your channel is very educational and has high valued contents and deserve to have more subscribers. :)
The spreadsheets are shared with the members of the channel. My goal is to not have to 'sell out' and take on sponsorships that don't make sense with the channel to make money in the future. All videos will always be free for all. The way I'm trying to bridge the gap of leaving my six figure job to start this channel is with the memberships. There I have a variety of spreadsheets, including my portfolio tracker and my individual stocks that I hold (I call it the HODL Factory). It is $2.99 per month for the membership, and completely optional. The videos will always be here.
Great video again!!! I appreciate the running of the retirement scenario.
Thank you for the positive feedback Stephen. I think I need a part 2 (Brett's comment below) to explain specifically how to withdraw the money in retirement & plan for the taxes.
Not a good idea to lean heavily on JEPQ.
I agree with this. JEPQ is a GREAT bridge that has quality underlying holdings and high yield. BUT, if the cash flow isn't needed NOW, I prefer a mix of SCHD / VGT / QQQM / VOO more. It really depends on the need. I think low yielding, high growing funds are the way to go IF the portfolio value supports it.
@@JeffTeeples Expecting to take out 6% from ANY portfolio is also a poor idea. What if we come across another one of those lost decades?
I agree. In fact, I'm a big believer that taking out more than 0% is a poor idea. This scenario never sales a share. I'm not an advocate of the 4% rule, personally. Even though it 'usually' will math out. I'm a never sell, and control dividend flow investor.
I prefer the lower yield and higher growth holdings. However, it depends on what the portfolio value and goals are.
Investing guru can’t afford a razor
I choose to invest that $1 per week instead of splurging on a new razor. That is $52 per year, or $4.33 per month. At 10% growth, that razor costs me $27,404 over 40 years. Oh, and I get to have a sexy beard as well. It's like getting paid to be beautiful.
wow. another awesome and useful content.
Thank you Sairam. I appreciate the kind words.