I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more shares, creating a snowball effect that allows your investments to compound over time. It's one of the most passive and effective ways to build an income stream. well managed steady growth for me.
Jacob I am so big on stocks and it has worked well for me, but I also like to have a well balanced, low-cost set of ETFs that keeps the money in my pocket. How can I maintain an effective ETFs approach returns on the long run?
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
Fantastic video! The length is perfect, not too short, not too long and your clear explanations make even complex topics easy to grasp. The pace at which you deliver the information is just right, ensuring nothing feels rushed or overwhelming. It’s evident that you’ve put a lot of thought into making the content accessible and engaging. Truly impressive work!
Thanks for your feedback. I appreciate you taking the time share all that information! I'm trying to approach investors who aren't beginners but also don't want to hear too much jargon. A lot of fund managers try to talk in a way that's difficult to follow.
I have been investing a long time (45 yrs+). Like you, but at a later age, I transitioned to income investing when I retired so your channel is quite helpful providing new insights and ideas. Thanks for taking the time to investigate so many opportunities.
I put in enough towards income investments to comfortably cover my expenses. I’m now allocating towards growth along with some of the more boring lower yield dividend growers. For me, I want to see my overall portfolio continue to grow into retirement. I also trade actively in a separate account because I enjoy it. Those profits help fuel the income portfolio. Of course everyone will have their own methods.
I do almost the same thing and am doing well (along with a bit of good luck). I am continuing to invest in Retirement and have no intention of slowing down. I now have an income that's about three times what I was making when I was "employed". Go figur'!
It wasn’t until your discussion with wealthadventures that I really understood the risk of a lengthy downturn in the market for CC index funds. You touched on it here more, but I think a deeper dive video would do well since no one seems to talk about that one drawback. Mention JEPI to get those sweet sweet algorithm views
Haha...did I mention JEPI and how JEPI performs during a downturn because JEPI is focused on value? There we go :) Thanks for the suggestion about cc fund risks. Will keep it in mind.
Question for the community: You mentioned you have no debt, but in what situations would you consider using a bit of margin for income investing? Especially if rates keep falling and you can borrow at a say, 5% rate, and use the funds to purchase a 10-12% yielder
There's enough leverage built into some of the closed end funds I hold to squeeze out plenty of income. I don't want to push the risk envelope further by adding my own leverage, even if it's cheap. I sleep better knowing that I will never receive a margin call.
You’re asking the community, so I’ll share my view: yes for the reason you just gave. I use a fair amount of margin for my dividend portfolio. As I’ve learned from this channel, yields in the 8-12% range is achievable, so that easily covers margin interest rates. I heard a phrase a number of years ago: develop strategies that make money using other people’s money. Of course my options trading relies on margin as I trade naked positions everyday, so I’m no stranger to margin! Plus, margin interest is tax deductible. Side note: I trade daily so I’m on top of my accounts for no surprises.
@@finwest thanks for the response! I used to trade options too, mostly naked strangles on futures, made okay returns, but found it was too much work and stress especially with a new job and being a new parent at the same time. I've been thinking about income investing a lot and this channel has been excellent. I wouldnt mind using a bit of margin now, as I still have income from my career and real estate, but after retiring and relying solely on income investing and options trading, I'd maybe dial down
@@waylonfong9977 Very cool you're into futures options! I haven't crossed over to that area yet. My index and stock options keep me plenty busy. Trading is my passion and it's my full time 'job' (but I don't think of it as a job) so I have the time. Others will certainly have different situations and different priorities. Do what you feel comfortable with.
Well explained, clear and simple. thank you for another interesting video! I transitioned to income investing over a period of 18 months before I retired and still allocate about 15% to growth. I also had one year of expenses in a boring money market fund to benefit from another year of snowball effect before starting to withdraw the income generated by the portfolio. Whatever lets us sleep at night is the right strategy 🙂
For long-time growth investors, there is *definitely* a learning-curve switching to an income-focused approach. More than that, though, there is a change in mindset that can be very difficult to overcome. Speaking from personal experience, giving yourself a runway to accomplish both is a fantastic idea. And yes, it requires a bit more work than buying VOO and watching it climb over the years. That said, the effort is well worth it. A well-designed income portfolio can produce healthy, growing cash flow and puts to rest many of the sequence of returns worries with the traditional 4% methodology. I really appreciate the channel and the information you share!
Thanks for sharing your perspective. I've noticed a lot of growth investors focus only on increasing the size of their portfolio. That works really well while you're working. But during retirement there are other factors to consider (like paying bills). I agree, it's a different mindset.
No problemo. Future editions will be emailed to you. The signup process includes a link to the most recent edition. If you missed that, here's a copy of the same link: armchairinsider.beehiiv.com/
As a non-American hold BDCs. CLO isn't a tax efficient due the 30% withholding tax. If I'm not mistaken I should have funds what distributes more capital gains and roc. Thanks for the informations
You can get a tax refund at the end of the year if your avg tax rate is less than 30%, assuming that the country you live in has a dual taxation treaty with the US
@@moneekdilawari4508 US and Panama do not have any tax treaties however, I can get CC ETFs with over 90% of it distribution being ROC and Capital gains who are not taxed In Panama neither in the US, but not so much diversification into different types of funds
I don't know the tax treaty with Panama but I suggest looking into filing a tax return with the IRS because the tax due (regardless of your country) will be far less than 30% and you can claim a refund.
Thanks, this is a very good summery of income investing! I would only recommend to have more than one year to concert an investment portfolio from value/dividend growth to high yield. I‘m doing this since 1,5 years and expect additional 2-4 years. First you need time to learn and second you need the right time to buy specific high yield products for a good price.
Great video! This strategy of investing just makes so much sense to me. Transitioning from growth mindset. I was planning for another 10 years of work, but this approach of aligning income with sensible budget may help speed that up greatly! Thank you for all the great discussions! VERY thought provoking!😃
I'm always struggling with the expense ratio when I am researching funds. I really appreciate the effort you put into researching this subject and explaining pretty clearly why those higher fees can be misleading. Thanks.
I made the switch to income investing about 6 months before I retired. That allowed me to build up a larger cash buffer. I did a test run a year before with my smaller Roth IRA to see how it worked
Good idea. Sounds like you plan ahead. It requires placing trust in your ability to pick quality investments to pay your bills. Thanks for sharing. your experience.
I started the transition to Income Investing 10 months before my retirement date. Now I am four months in and I just figured out what % of my portfolio will be allocated to Income investing and how it would work with the rest of my allocation to make my overall portfolio more resilient. It will probably take another 12 months to fully transition into the allocation I would like to set for my retirement (lots of private equity, private debt and private CRE investments and take time to re-allocate). But this channel along with a few other resources definitely helped me on my learning curve.
Thanks for the great videos! About your portfolio size, in one of your vids you exposed your yearly dividend income...which effectively tells your portfolio size.
You have a keen eye :) I think you're referring to some screenshots for Snowball. I use screenshots from a previous video I made comparing Snowball to Simply Safe Dividends. For that video I created a sample portfolio to demonstrate the features. I don't show dollar amounts from my portfolio, only the percentages. To do that, I export my Snowball portfolio into a Google Sheet, then add links to applicable videos (ie Armchair Insider). There's no upside to sharing personal information on the internet.
Awesome video armchair. I know myself I have asked you some of these questions so it’s great to see at least partially answered along with completely answered too LOL. I can certainly see all the work that goes into these videos with the edits, the graphics, etc. very well thought out very well explained and very entertaining actually…….more than usual if anyone cares about the entertainment value, loved the back story and how you approached jumping into this strategy……..you do a great job. Now that the election is over I wonder if you feel more or less confident about the market? I also am excited about the new neos fund, in fact I already stuck a toe in, love those guys!!! Cheers
Thanks for all that feedback. Those graphics take a long time to make so I'm glad you noticed them :) The post election market sentiment is positive and is likely to remain so until the change of government. It's unlikely either side can do much to screw it up until January. After that it will come down to the actual policies and laws enacted. Nobody knows what they will be (as is always the case). In the short term it's great for growth stocks. For income investments...not much change to the income we receive :)
I have been learning a lot from your videos - very nice job. Over the last 6 months or so I have been slowly moving my portfolio to a more income focused model using many of your holdings and definitely your principles. Now I understand that you like to limit any asset to no more than 5%. As I go through your portfolio, PBDC is there at a ~5% allocation, and it's holdings include: ARCC, BXSL, CSWC, HTGC, OBDC, FDUS which you also have in your portfolio. Nothing wrong with this of course, but what is your reasoning for this approach over 1) increasing PBDC to ~18% and simplifying your portfolio a bit or 2) go with the BDC holdings you like and eliminate PBDC?
That's an excellent point. I hadn't done the math on the overlap between PBDC and the individual BDC holdings. It has crept up higher than I thought. I like the simplicity of PBDC, but there are some BDC's I like individually. As you pointed out, this means an ARCC weighting of 5.5% if you add ARCC to it's 12% weighting within PBDC. The 5% cap is more important for individual or highly focused investments so I should consider shaving off about 0.5% from the ARCC holding. I'm not going to constantly adjust individual holdings each time PBDC makes a trade, but you raise a great point about remaining aware of these overlaps.
Love this video format, well done! You make a compelling case for income investing for sure. If you set aside 30% or so of the income for reinvestment, and have a diversified basket of holdings with histories of resiliency in market downturns, it’s hard to go wrong. Punishing taxation of the STCG income is the biggest wet blanket. It’s a shame the foreign earned income exclusion doesn’t apply to capital gains!
I agree. For US tax residents, the foreign earned income exclusion isn't helpful to retirees. Thanks for the feedback, I'm glad the channel is helpful.
Too wild for me. My #1 priority is consistent income. I don't follow the oil market, I mostly avoid instruments like ETN's as there's credit risk, and I'm not a fan of such volatile income.
Another great video, thank you for your time and effort in making this channel, as I am a couple years out from retirement you have helped me better plan for success. Keep up the great work!
Your channel is great and I plan to go the Income route when I get a chance to retire. Quick question, when you say you reinvest some of your dividends, do you buy more of the same asset or do you put that money elsewhere?
Thanks for your feedback. I'm glad the channel is useful. Each month I reinvest some of the income to grow my income. The purchase(s) will be whatever is the best opportunity at the time. Sometimes that's part of a new buy, but mostly its just buying a little more of whatever offers the most attractive pricing within the portfolio.
Very very good episode ! Although I know it, your references to a abrupt and prolonged bear market on CC funds make me to be interested to BDC and others “Non equity” investments for income diversification in the future. Keep up the good works !
Great content as always. A question for your next Q&A show: What CLO's do you like? I see you own EIC, is that the lowest you will go in the CLO rating tranches?
Thanks for the feedback. I'm open to other CLO funds, but I'd need a deeper understanding before dipping into equity tranche CLO's. Still learning this area.
Maybe I jumped the gun.. planning retirement in 5-7 years, but are slowly transitioning about 10% a year into HY bonds and income funds as I’m learning (mostly from you 😉) Might be missing some opportunity cost but it’s going to be much easier to forecast funds as we get closer. Anywho thanks for the Q&A sessions, love the change of pace and appreciate all your hard work! 🤝
Thanks for your feedback. There's no perfect time. Also, there's a psychological aspect...if income makes you sleep better at night even though the long term returns aren't as high, there's some value in that too. Glad to know you find the information helpful!
Another great video! I look everyday hoping you have put out another. Specifically, after your NEOS interview on HBYI, I was interested in your approach. I know you don't carry "cash" or the like, but I have remained about 45% in SPAXX for my safe house. With interest decreasing, I was thinking about putting a portion (15% to 20%) in the HYBI fund as a way to keep a decent yield overall without increasing a lot of risk. I'll probably watch for a bit, maybe until the next .25% funds rate reduction, just to see how HYBI is looking. Thanks again for your videos and sharing your research! It certainly helps to validate (or not) my own!
Thanks for sharing all that. I plan to continue releasing videos on Sundays. I like the look of HYBI but I want to watch it for a bit and then ease in.
I was wondering if you would mind sharing your experience during the Covid drop. Since it was relatively short. What you held and portfolio performance. Any lessons learned? Thx
It wasn't fun. I sold far too many funds out of fear and held cash for too long. I didn't expect as much govt intervention as there was. I was fearful of dividend cuts and the reality was that there were very few for the funds I held. So my lesson learned was not to sell out during a major correction because buying back in is much harder than it sounds. In other words, don't try to time the market.
@ Thx. I’m kinda glad Covid crash happened, I bought into a bunch of funds that came back and had no cuts, at a discount. Also got into some ETFs that survived 2022-23 drop. But I get it, it’s emotionally a struggle. Your channel helped me learn more. I don’t want just some you tuber dudes picks. Teach me to fish.
Great video as always. In my experience CC ETFs are getting better over time in terms of vital metrics such as NAV preservation. My goal is to allocate about half my portfolio to carefully selected CC ETFs and half my portfolio to uncorrelated income investments. I simply don't have the inclination to be juggling 25 or 30+ individual investments all the time. Then it becomes a part-time job, which is great for those who enjoy it. I have other passions I'd rather dedicate my time and energy to. But that's just me 😀
I agree that managing that many investments only makes sense if you enjoy it (although I do have other hobbies too). Personally, I'm keeping my cc exposure to far less than half of my portfolio. I think you have a good point about finding uncorrelated investments to balance out risk.
I recommend checking it out in person as soon as possible to know if it works for you. If you like it then it may alter your future plans (in a good way).
One of my biggest holdings is PFFA....that's about 200 preferreds. I also have NLY-F and AGNCN. I'm looking at some baby bonds but the volume has been too thin.
@@armchairincomechannel There was a time a year or a bit more ago when a number of preferreds and baby bonds were selling at 30% discounts and had huge yields. That time is pretty much over. But here's a wild one: TCNAF (TC Energy, first preferred shares Series). It's currently selling at $US12.51 with a redemption price of $US17.89. The dividend is floating and about to reset at just under 5% (Canadian 5-year bond plus 1.92%) giving it a yield on market price of 6.87%. If it were called, you'd not only get your 6.87% dividend but a 30% capital gain. And TC Energy is a very solid company whose common shares have numerous outperform ratings.
I converted from Growth to individual Growth and Income portfolios about a year before retiring. Started the income portfolio with higher risk CC positions to reinvest as much as possible into high-yield lower risk positions (no DRIP !). Had decent luck with both portfolios and currently doing real well with both. The Growth portfolio has good growth; the Income portfolio is what I live on (along with SS as a "kicker"). RMDs will shortly start and I will transfer a portion of the RMD into the Growth portfolio and the rest will be divided into living expenses and Income portfolio re-investment. A bit more work/complication balancing between Growth-Income-Living but it does seem to work out (so far).
You may of been asked this in a previous post, so sorry if I’m repeating. For tax purposes on your income, are you being taxed as an Australian or American citizen or have you set up for taxation purposes in the country you are residing in currently. Just trying to get an understanding of what rate you are being taxed at. Love what you are doing.
I don't get into a lot of personal tax information because most viewers are from the US so my tax status isn't helpful to them. I'm taxed as a non US tax resident, which is more advantageous than if I'd kept my Greencard (which would mean being taxed as a US tax resident). Glad you're enjoying the channel!
Thanks for an interesting Q & A presentation. I would love to know your first name, and the Southeast Asia country you chose to relocate to and why that country. Also, I have ARCC on my watch list and would like to hear your updated thoughts on that BDC especially in light of the latest Fed interest rate cut this last Thursday here in the U.S.
Thanks for your feedback. I want to retain some privacy because as my channel gets larger, I occasionally (but rarely) see a comment from somebody "having a bad day" so there's more downside than upside to sharing my private information to thousands of people publicly. As for ARCC, I'm holding onto it. I think they're conservatively managed and should be able to adapt to whatever changes lie ahead.
I always look forward to watching your content. Thank you for doing this. I think you made a mistake on calculating your amount needed to retire. $70,000 divided by 7 percent is $1,000,000. 7% = 0.07 (without the % sign) I got to visit SE Asia not long ago. I can imagine being happy living there. I love the food, warm weather and sandy beaches.
It's a small percentage but it has done amazingly well. I'll keep an eye on it because Simplify keeps changing the assets. So I wouldn't say set and forget. Also, I'm looking into the NEOS BTC fund too...
Recently, before long bond rates started going up, I started buying CEFs that would benefit from rates going down. Are you more concerned with a decrease in the funds price or a decrease in the distribution
I'm more focused on income than price volatility. As long as the long term price trend isn't down, I'm ok with the ups and downs over the months and years. I was leaning slightly toward investments that favor rate cuts but now...who knows! So I'll lean more neutral going forward. Rates could go either way.
A far more curious point for me that you have not talked about regarding the questions around how much you started with in your retirement is how much do you have now? In other words if you cashed out of all your other non-dividend assets in 2017 and started with “X” invested in dividend stocks, is your portfolio now “X+Y”? Have your dividend paying companies not only paid for your lifestyle but also grown your net worth?
That's a good question. My portfolio doesn't appreciate as much as the market. It keeps slightly ahead of inflation. The one exception was the pandemic. I sold a lot of funds out of fear and held cash for too long. Turns out the dividends weren't cut so it was a costly error. That put me behind for a while. Aside from that mistaken attempt to time the market, my portfolio has grown each year, except for the bear market of 2022, but it recovered.
@@armchairincomechannel Everyone's a genius when the market goes up but like so many others on here, my question is around what happens when the market goes south. This year I've been more than half in cash (earning 5% or so) and 75% of the remainder in high yields and 25% in super risky growth stocks. The dividends have been phenomenal and enough for me to live on (not to mention it is particularly addictive getting paid weekly) and my portfolio is substantially ahead of 2023. But like you and Bavaria talked about, do the dividends keep rolling in during a downturn AND will the stocks themselves recover after the market turns. Some of Bavarias picks have clearly NOT recovered from the last crash. Covid is a bad example for exactly what some said on here-it was a "V" downturn. I just don't know. If I had my way and had a crystal ball I'd wait till the next bottom and buy a handful of stud companies like MAIN, ARCC and a couple of others instead of the 52 I now hold. The real unknown for me is what others have pointed to: what happens to all these covered call players when the market drops 20%? I'm hedging with HYBI and I suspect that's exactly what you are thinking.
I guess the obvious elephant in the room is how does the strategy and mindset react to a bear market. Do you feel like this strategy will outlast an extended crash . If all of your funds are in this strategy how do you mentally cope with crashes?
Good question. My plan for the next crash is just to hang on. During a bear market, everybody's portfolio will shrink in value, including mine. The question for retirees is...do you want to spend dividends during a bear market, or sell part of your portfolio at a discount? I'd rather spend dividends. I'm yet to meet a retired growth investor who is totally comfortable with selling stocks during a crash period. If they hold/spend bonds, that would make more sense....as long as you have enough bonds to last longer than the bear market.
I started investing in the Sunshine Coast in 2018 so I wouldn't be priced out. Great part of the world, but like you I'll probably end up staying in Asia most of the time. Been here 18 years. It's addictive.
I think you snuck in just in time before the Sunshine Coast took off. I have a thing for Noosa and the surrounding area. It's beautiful. However, there's a lot more to do in Asia! Still love visiting Noosa though.
@armchairincomechannel It was still expensive to me (but about 50% more expensive now)! Noosa is beautiful. My places are in and closer to Maroochydore. Restaurant scene not too bad now, but we'll see if I ever get there full time. I'm thinking 3 months a year, perhaps.
Glad you like the videos :). I've looked briefly but never found any gold or gold related investments that appeal. It's not really an asset that's designed to produce income. Still experimenting with Bitcoin income ETF's on a small scale.
Take a look at the sibling GAAMCO funds, GGN and GNT. GGN is 52.6% in metals and mining stocks, mostly gold mining and it yields 8.92%. GNT is a bit less concentrated being 36.5% in gold miners and 17.2% in energy and energy services and it yields 6.9252%. Both also have large positions in treasuries (GGN is 10.5% and GNT is 25.2%). So in the case of GGN, it's almost 80% in gold miners and treasuries with a yield above 8.0%. Still GNT has done very well the last few years due to its energy holdings.
Not particularly. That means the price and distributions didn't change, or they moved at the same rate. Ideally, yield on cost increases. That means the income increased.
Thanks for the suggestion. I've been keeping an eye on it. It's so new and so is the fund behind it, so I'm giving it some time to see how it performs under various market conditions.
Curious on the criteria you are using to count covered call funds? For instance BST prospectus says "As part of its investment strategy, the fund will also employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio". It isn't counted. THQ semi annual report talks about writing options on securities. It isn't counted. However, most of the funds I see in your portfolio are covered call funds. I'm not sure how you are counting some funds as covered call funds and not others?
You're right about BST, I missed that one. THQ writes covered calls on less than 20% of their portfolio so I'm not sure that I'd classify it in the same group as SPYI or JEPI. THQ makes most of its income from realizing capital gains. If we count BST and THQ then that would make 9 covered call funds. I don't see how 9 out of 37 funds is "most of the funds". I could have been clearer on the criteria for defining covered call funds. I definitely should have included BST!
@@armchairincomechannel Now that I think about it. I realize I don't have a criteria that defines a fund as a covered call fund. I never thought of classifying my holdings along these lines. Where do you find that THQ writes covered calls on less than 20% of their portfolio? Another example: ASGI mentions the fund: "7... may purchase or sell options and futures contracts ..." I don't know how to find out how much of their portfolio they write these on either. Current info on holdings found somewhere? If you have some guidance on determining this, it might be worth a video or just a response here. Thanks, Mike
i'm an idiot investing on covered calls etf like ISPY and JEPQ at 34 years of age? I really don't mind losing potential growth gains I'd rather retire early like in 20 years. What's your opinion?
Conventional wisdom is to focus on growth until you're close to retiring. Growth offers higher long term total returns and higher tax efficiency. That's what I did.
I'm not familiar with it. They raised their dividend BY 15.8%. The current dividend as of today, is 9.2% (after the raise). A quick look and I saw some dividend cuts as recently as 2020 and a long term decline in NAV. The discount to NAV just shrunk to zero. Not saying it's bad, just not the metrics I usually look for so I haven't studied it.
In retirement i plan to live off the distributions , but at the half way markish , I would be incrementally eg. 4 or more percent yearly, selling off the income vehicles themselves ..... anyone thinking like that ?
There's some logic to the "die with nothing" concept if you can figure out how to plan it. I think the older you get, the less important it is to "build up" your portfolio as opposed to just figure out how to spend it in an enjoyable fashion without risk of running out of money.
I too am retired early (age 58) and live off a combination of dividends, 401(k) using rule of 55 and savings. My wife and I are traveling Europe now living day by day with no stress :) I am curious about your thoughts on GPIX vs JEPI. I have about 6% of my portfolio in GPIX and do not hold JEPI.
Congratulations. I plan to visit EU again next year....so excited! GPIX is far newer but off to a fantastic start. Too soon to know if that's because it's well constructed versus, needing a bull market to thrive. I expect it will be a nice compliment to JEPI, meaning that GPIX will do better in a bull market and JEPI in a bear market. The market goes up more than it goes down so I'm weighting more heavily to GPIX. If it continues to perform under various market conditions I'll gradually add to GPIX. Enjoy Europe!
The yield is very good for all the funds and stocks in the Armchair Income Portfolio but, do all of those (37) holdings - especially the funds - are in fact paying cash dividends that can be used to actual living expenses?
You have been doing this for 7ish years. I know you focus on income, but you do reinvest, what percentage of growth do you have on your overall pie since you started?
That's a good question. My portfolio doesn't appreciate as much as the market. It keeps slightly ahead of inflation. The one exception was the pandemic. I sold a lot of funds out of fear and held cash for too long. Turns out the dividends weren't cut so it was a costly error. That put me behind for quite a while. Aside from that mistaken attempt to time the market, my portfolio has grown each year, except for the bear market of 2022, but it recovered from that one.
This may help. I follow a similar plan to the author (I've copied him and bought some of his top recommendations since I discovered him, and others in his portfolio I discovered before he did) here but I am a bit less rigorous in sticking with very high yielders and funds. I add some REITs, some MLPs and some high-yielding common stocks to the mix and am getting about an 8% yield on my portfolio vs his 10%+. But my 10-year portfolio gain (growth) has been 160% compared to the S&P's 240%. Similarly, over 5 years I've gotten 76% vs the S&P's 103%. But over the last year I've gotten 40% vs the S&P's 38%. So I don't think you have to give up growth entirely, or even that much.
I also want to know how much you saved before you moved to a lower cost country to retire, at lease in the ballpark if not an exact number. How can a US citizen obtain residence in the country you live?
I don't disclose all my personal financial details. The amount to retire on depends on what you want/need to spend for your lifestyle. As for visas, there are plenty of options to live in Vietnam, Malaysia, Thailand, and the Philippines to name a few. It's not "residence" but there's not much upside to residence, especially from a tax perspective.
I retired to Viet Nam, I got residency by marriage, but most retirees either get retirement visas (if available) or stay on tourist visas in SE Asia. There are tons of YT channels with overseas retirement info, Vagabond Awake is my favorite.
Thanks for the suggestion. A lot depends on age, risk tolerance, and living expenses. Some people have high fixed expenses, and some (like me) have low fixed expenses but relatively high discretionary spending. It's difficult to cover the subject in a way that is relevant for everybody and doesn't get too technical. In the video, my example was living on 6% of net worth per year, assuming investing all of my net worth.
I made a video a few months ago, about what causes me to sell and a price drop isn't one of those reasons. If I like a stock and it gets cheaper I buy more if I don't already have too much.
SPYI has another advantage. They sell calls on a portion of their fund, leaving some to appreciate with the market. XDTE has an advantage. They don't hold their calls overnight, allowing their fund to capture overnight gains.
I am curious about whether you have considered margin. I plan to utilize margin if a significant market correction occurs. I have a margin rate currently @ 5.75% so I believe I would have a significant arbitrage opportunity. I realize that this strategy is highly situational dependent.
I don't use any margin. There's some inherent leverage in some of the covered call funds I hold. That's more than enough leverage for me. The last thing I need in a correction is a margin call.
I know you were in Vietnam for a while (with all those shrimp spring rolls)... but where did you retire to if not Australia? Are you in SE Asia... Thailand or Philippines or Malaysia??
I'm trying to retain some privacy so I don't get into my personal life too much. Never know who's out there in internet world. I'm in SE Asia. I've spent time in Thailand and Malaysia. Haven't been to the Philippines. Hoping to try Indonesia some time next year. I've also spent a long period in Taiwan before I started the channel. Only been to Japan once but I'm dying to go back again.
@@armchairincomechannel Well, if you have your investments in USD, the Japan should definitely be on your must visit list soon. The exchange rate is back above 150 yen per USD, which is amazingly good. I plan to visit northern Vietnam next year, so if you got any good tips (other than trying the shrimp spring rolls!), please let me know. 😀 Been to HK, Japan, and TW... and Japan is my fav of the three... would like to hit up AU and NZ at some point also.
What's your rationale for investing in a BDC ETF like PBDC while also still holding several invidual BDC stocks? Couldn't you mitigate your risk while still getting adequate diversication with just the ETF? Thanks!
Good question. PBDC alone is enough. I also bought the individual BDC's that I'm particularly fond of. So I'm overweighted on some. It would be interesting to see who performs better! Over the long term I plan to gradually shrink the individual BDC holdings in favor of more PBDC but it's fairly new....so far, so good!
There are a lot of pretty shaky BDCs and, because they have so much money to invest, I don't think the funds can be selective enough. If we do have a recession or market correction--and it's been a long time since we've had one--BDCs really do poorly. So, like the author of this channel, I put some money into PBDC for diversification, but I'm really more comfortable putting much of my allocation to this area isnonly what I consider a small number of the most solid companies.
I don't recall exactly but as it was sliding down I sold a lot and it turned out to be a mistake. Going to cash was easy but knowing when to buy back in was difficult. That year I learned some hard lessons and took a substantial loss for trying to time the market. I thought the dividends would be cut heavily and I was wrong. The prices dropped a lot, but the dividends didn't. Going forward, next time there's a crash I'll just stay in the market. If I had to guess I'd say my portfolio would have dropped 40-50% (if I hadn't sold) and my income would have dropped maybe 5%. That was before covered calls though and I don't know how they would have bene affected.
I retired in early 2020 and did a custodial transfer of my entire 401k into a self directed IRA.(I already had a pre-existing brokerage account which was growth focused). I went "all-in" with high yield income investing and have done well. (buy low -don't sell)
QDTE and XDTE pay around the 8th of each month and FEPI, SPYI and QQQI pay around the 24th of each month. It's not exactly in the middle of the month but they all pay a nice dividend. You could strike a nice balance by purchasing a little of each and the dividends could smooth out your income each month.
I've noticed a similar pattern! I wouldn't buy anything based on its pay schedule so I I'm just used to spreading out the cash over the month. I just checked this month and not much coming in during the middle...it's all at the end like yours!
There's no such thing as "safe" when it comes to investing. Growth stocks and income stocks will be drop during a market correction. Most of the time, the market is "over valued". If you decide to stay out of the market when its over valued then you won't receive the dividend income, but you can receive the lesser income from short term treasuries. I suggest looking at studies that analyze investors who sit on cash while they think the market is over valued versus investors who dollar cost average every month. If you can ride the price volatility without getting stressed and select investments that don't cut their dividends during corrections, then you will receive income during a market correction, which you can use to buy new investments at a lower price.
Thanks for your kind words. You haven't really made it until you get trolled ;) Earlier this year I spent a month in Bangkok and 2 months in Vietnam. It was nice to breathe all that fresh air after being cooped up in that basement! Next year will be more travel, less basement.
I have no idea what he will do and how it will affect banks vs BDC's. I wouldn't make investing decisions based on what he might do. But I'll keep an eye on what he actually does.
Take high yield risk with 50% of your portfolio, the rest in cash. You cannot afford a crash mentally when 65+ years old. Yes it might come back in 5,10,15 yrs. Remember even if you hold, some sectors do not come back. If you did not save enough for the 4% rule to work, you need to lower your life style. Making 8% with 50% of your portfolio is the same as making 4% on the whole Ancelotti.
Thanks for sharing your strategy. I expect my portfolio value to fall during a crash, but I've picked dividends that I think will hold up more than the price will. eg. price drops 50%, dividends drop 20%. That's still more income than if I was 50% in cash. I held a lot of cash during the pandemic and it cost me a lot so I am no longer a fan of cash...especially given the potential return of inflation. Either way, it's important to have a plan for how to deal with a crash and I expect your plan will work too.
@@freeagent.87cash is not trash, every dog has its day. During a down turn you got dry powder make some quick doubles just by buying blue chips. I bought an annuity just cooking with cash, will payout 10% on my premium for life if I take it. Your 8% portfolio will also have some capital gains to cover cash if interest rates go back to zero, wanna bet? Buy tips and Ibonds. The market does not care you are only trying to make inflation when it takes 30% of your money. Every investment has a cycle where it makes money. Retired dont put all your eggs in one basket. Be real about your economic status. Of course you could be one of those living on a fixed income worrying about the market everyday.
@@armchairincomechannel cost you alot, that sounds greedy. You only lost opportunity. Hindsight is always 20/20. Cash reduces risk. Insurance costs money. During Covid I doubled my cash then rebalanced. Like Mike said everyone has a plan till they get hit. When one no longer has a job to quickly recover loses, it gets real fast.
I totally get not disclosing what your retired with. But you might consider disclosing a multiple of the average annual income you earned during the last five years you were working, for example. Just a suggestion. In any case, thanks for continuing to make the great content!
Thanks for the feedback. That's an interesting way to communicate the information. I'll give it some thought. I worked on 100% commission in commercial real estate so my income varied considerably, but I get your point.
You're right...about the out of the question part :) There's more downside than upside to sharing your personal information to tens of thousands of people on the internet. I appreciate that some people have personal channels and share their personal lives, but my channel is about sharing what I've learned from researching and investing in income investments.
That's an interesting question. It gets complicated, depending on your expenses, rent vs cost of ownership, etc. For many people, home ownership is an emotional or psychological decision more than a financial one.
Maybe I am wrong, but to me it is just a question of cash flow, rent or own. I do recognize that one is a bit less "flexible", but either way you need a place to lay your head! 🙂 I often times "debate" with the zero debt (particularly mortgage) crowd that as long as my "income" is greater than my "expenses" I'm good. I do understand housing should be limited, but as long as I can get the income without needing the tied up capital from my housing, I don't understand some peoples obsession with "paid off house". Think that is different FYI, than ARMCHAIR INCOME's decision to rent.... JMHO
I keep it general by saying SE Asia. I'm retaining some privacy/anonymity because I don't know if my channel will ever grow large enough to attract the "challenges" of being a public figure on the internet. Once you lose privacy it's almost possible to restore it.
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@armchairincomechannel I'm a new subscriber! Just curious what part of south Asia did you decide to retire in? I am doing research myself.
I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more shares, creating a snowball effect that allows your investments to compound over time. It's one of the most passive and effective ways to build an income stream. well managed steady growth for me.
Totally agree!
I reinvest 100% and will do so for years.
Better to keep some growth etfs that don't distribute income, if you get too much money from dividends, since you have to pay taxes on the dividends.
Jacob I am so big on stocks and it has worked well for me, but I also like to have a well balanced, low-cost set of ETFs that keeps the money in my pocket. How can I maintain an effective ETFs approach returns on the long run?
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
Fantastic video! The length is perfect, not too short, not too long and your clear explanations make even complex topics easy to grasp. The pace at which you deliver the information is just right, ensuring nothing feels rushed or overwhelming. It’s evident that you’ve put a lot of thought into making the content accessible and engaging. Truly impressive work!
Thanks for your feedback. I appreciate you taking the time share all that information! I'm trying to approach investors who aren't beginners but also don't want to hear too much jargon. A lot of fund managers try to talk in a way that's difficult to follow.
agree, not boring.
And this video is why your channel remains the best for this style of investing. Fabulous presentation. Thanks for sharing!!!
I appreciate that!
Can't tell you how awesome it is to see you all out my article. Much appreciated!
I can't tell you how awesome it is to see you watched my video :) Thanks for writing great articles on Seeking Alpha :)
Thanks for being so transparent. You are helping a lot of people, and we can't thank you enough!
I appreciate that!
I second this statement.
I have been investing a long time (45 yrs+). Like you, but at a later age, I transitioned to income investing when I retired so your channel is quite helpful providing new insights and ideas. Thanks for taking the time to investigate so many opportunities.
I'm glad it's been helpful. Best of luck with the remainder of your investing journey. You can learn a lot in 45 years!
I put in enough towards income investments to comfortably cover my expenses. I’m now allocating towards growth along with some of the more boring lower yield dividend growers. For me, I want to see my overall portfolio continue to grow into retirement. I also trade actively in a separate account because I enjoy it. Those profits help fuel the income portfolio. Of course everyone will have their own methods.
That sounds like a well balanced and enjoyable approach! Thanks for sharing.
I do almost the same thing and am doing well (along with a bit of good luck). I am continuing to invest in Retirement and have no intention of slowing down. I now have an income that's about three times what I was making when I was "employed". Go figur'!
It wasn’t until your discussion with wealthadventures that I really understood the risk of a lengthy downturn in the market for CC index funds. You touched on it here more, but I think a deeper dive video would do well since no one seems to talk about that one drawback. Mention JEPI to get those sweet sweet algorithm views
Haha...did I mention JEPI and how JEPI performs during a downturn because JEPI is focused on value? There we go :) Thanks for the suggestion about cc fund risks. Will keep it in mind.
Question for the community: You mentioned you have no debt, but in what situations would you consider using a bit of margin for income investing? Especially if rates keep falling and you can borrow at a say, 5% rate, and use the funds to purchase a 10-12% yielder
There's enough leverage built into some of the closed end funds I hold to squeeze out plenty of income. I don't want to push the risk envelope further by adding my own leverage, even if it's cheap. I sleep better knowing that I will never receive a margin call.
You’re asking the community, so I’ll share my view: yes for the reason you just gave. I use a fair amount of margin for my dividend portfolio. As I’ve learned from this channel, yields in the 8-12% range is achievable, so that easily covers margin interest rates. I heard a phrase a number of years ago: develop strategies that make money using other people’s money. Of course my options trading relies on margin as I trade naked positions everyday, so I’m no stranger to margin! Plus, margin interest is tax deductible. Side note: I trade daily so I’m on top of my accounts for no surprises.
@@finwest thanks for the response! I used to trade options too, mostly naked strangles on futures, made okay returns, but found it was too much work and stress especially with a new job and being a new parent at the same time.
I've been thinking about income investing a lot and this channel has been excellent.
I wouldnt mind using a bit of margin now, as I still have income from my career and real estate, but after retiring and relying solely on income investing and options trading, I'd maybe dial down
@@waylonfong9977 Very cool you're into futures options! I haven't crossed over to that area yet. My index and stock options keep me plenty busy. Trading is my passion and it's my full time 'job' (but I don't think of it as a job) so I have the time. Others will certainly have different situations and different priorities. Do what you feel comfortable with.
I enjoyed your story on Dave's channel last week.
Glad to hear it! There might be a Dave interview coming up on this channel soon...
Great video and one of the most underrated channels on you tube.
That's very kind of you to say. I'm glad you liked the video!
Well explained, clear and simple. thank you for another interesting video! I transitioned to income investing over a period of 18 months before I retired and still allocate about 15% to growth. I also had one year of expenses in a boring money market fund to benefit from another year of snowball effect before starting to withdraw the income generated by the portfolio. Whatever lets us sleep at night is the right strategy 🙂
Thanks for sharing! I agree about sleeping well at night. A blended approach might be smarter than my 100% income approach.
For long-time growth investors, there is *definitely* a learning-curve switching to an income-focused approach. More than that, though, there is a change in mindset that can be very difficult to overcome. Speaking from personal experience, giving yourself a runway to accomplish both is a fantastic idea. And yes, it requires a bit more work than buying VOO and watching it climb over the years. That said, the effort is well worth it. A well-designed income portfolio can produce healthy, growing cash flow and puts to rest many of the sequence of returns worries with the traditional 4% methodology.
I really appreciate the channel and the information you share!
Thanks for sharing your perspective. I've noticed a lot of growth investors focus only on increasing the size of their portfolio. That works really well while you're working. But during retirement there are other factors to consider (like paying bills). I agree, it's a different mindset.
I like your questions/answers videos as much as the fund review videos. Thanks for taking the time and effort to answer these questions!
That's good to know! I've done 5 so far and I plan to keep doing them for as long as people find them useful.
My core is SCHD, DRGO, SCHY, IGRO and Divo. I am a hybrid or Barista
Thanks for sharing. Those should serve you well. Enjoy Barista life :)
Sorry for the dumb question, but I signed for Armchair Insider, but I don't see where to download your portfolio. I'm sure it's me. What am I missing?
No problemo. Future editions will be emailed to you. The signup process includes a link to the most recent edition. If you missed that, here's a copy of the same link: armchairinsider.beehiiv.com/
As a non-American hold BDCs. CLO isn't a tax efficient due the 30% withholding tax. If I'm not mistaken I should have funds what distributes more capital gains and roc. Thanks for the informations
You can get a tax refund at the end of the year if your avg tax rate is less than 30%, assuming that the country you live in has a dual taxation treaty with the US
@@moneekdilawari4508 US and Panama do not have any tax treaties however, I can get CC ETFs with over 90% of it distribution being ROC and Capital gains who are not taxed In Panama neither in the US, but not so much diversification into different types of funds
I don't know the tax treaty with Panama but I suggest looking into filing a tax return with the IRS because the tax due (regardless of your country) will be far less than 30% and you can claim a refund.
@@armchairincomechannel I'll take a look on this. Thanks
Thanks, this is a very good summery of income investing!
I would only recommend to have more than one year to concert an investment portfolio from value/dividend growth to high yield. I‘m doing this since 1,5 years and expect additional 2-4 years.
First you need time to learn and second you need the right time to buy specific high yield products for a good price.
That's a good point. While you're working you have the luxury of not rushing to pick up some nice deals on above average yields.
TIME --->> Is the most important thing we have no control over...
Thank you for the open discussion. I appreciate your point of view and the work you put into these videos.
Thanks for watching :)
Great explanation of the covered calls!! Thank you!
Glad it was helpful!
Great video! This strategy of investing just makes so much sense to me. Transitioning from growth mindset. I was planning for another 10 years of work, but this approach of aligning income with sensible budget may help speed that up greatly! Thank you for all the great discussions! VERY thought provoking!😃
I'm glad it was helpful. There are many ways to approach retirement and hopefully sharing my approach can help you assess which way is best for you.
I’m loving everything I’ve watched so far on this channel (one week in).
Glad you enjoy it! Welcome to the Community :)
I'm always struggling with the expense ratio when I am researching funds. I really appreciate the effort you put into researching this subject and explaining pretty clearly why those higher fees can be misleading. Thanks.
They're so confusing! Glad it was helpful.
This is a great video.
I like how much value you add with your in-depth answers to the questions.
Thanks! I'm glad the information is useful. It's more fun to share it than just read and keep it to myself.
I made the switch to income investing about 6 months before I retired. That allowed me to build up a larger cash buffer. I did a test run a year before with my smaller Roth IRA to see how it worked
Good idea. Sounds like you plan ahead. It requires placing trust in your ability to pick quality investments to pay your bills. Thanks for sharing. your experience.
I started the transition to Income Investing 10 months before my retirement date. Now I am four months in and I just figured out what % of my portfolio will be allocated to Income investing and how it would work with the rest of my allocation to make my overall portfolio more resilient. It will probably take another 12 months to fully transition into the allocation I would like to set for my retirement (lots of private equity, private debt and private CRE investments and take time to re-allocate). But this channel along with a few other resources definitely helped me on my learning curve.
Thanks for the great videos!
About your portfolio size, in one of your vids you exposed your yearly dividend income...which effectively tells your portfolio size.
You have a keen eye :) I think you're referring to some screenshots for Snowball. I use screenshots from a previous video I made comparing Snowball to Simply Safe Dividends. For that video I created a sample portfolio to demonstrate the features. I don't show dollar amounts from my portfolio, only the percentages. To do that, I export my Snowball portfolio into a Google Sheet, then add links to applicable videos (ie Armchair Insider). There's no upside to sharing personal information on the internet.
Could you do a review of the Roundhill Investments ETFs?
They have 20 ETF's! I'm keeping an eye on QDTE but it's still new.
Thanks! QDTE is the one I have been watching! I took out a very small position.
Awesome video armchair. I know myself I have asked you some of these questions so it’s great to see at least partially answered along with completely answered too LOL. I can certainly see all the work that goes into these videos with the edits, the graphics, etc. very well thought out very well explained and very entertaining actually…….more than usual if anyone cares about the entertainment value, loved the back story and how you approached jumping into this strategy……..you do a great job. Now that the election is over I wonder if you feel more or less confident about the market? I also am excited about the new neos fund, in fact I already stuck a toe in, love those guys!!! Cheers
Thanks for all that feedback. Those graphics take a long time to make so I'm glad you noticed them :) The post election market sentiment is positive and is likely to remain so until the change of government. It's unlikely either side can do much to screw it up until January. After that it will come down to the actual policies and laws enacted. Nobody knows what they will be (as is always the case). In the short term it's great for growth stocks. For income investments...not much change to the income we receive :)
Thank you. I own both bizd and pbdc
Nice! A lot easier than trying to buy BDC's individually.
I have been learning a lot from your videos - very nice job. Over the last 6 months or so I have been slowly moving my portfolio to a more income focused model using many of your holdings and definitely your principles.
Now I understand that you like to limit any asset to no more than 5%. As I go through your portfolio, PBDC is there at a ~5% allocation, and it's holdings include: ARCC, BXSL, CSWC, HTGC, OBDC, FDUS which you also have in your portfolio.
Nothing wrong with this of course, but what is your reasoning for this approach over 1) increasing PBDC to ~18% and simplifying your portfolio a bit or 2) go with the BDC holdings you like and eliminate PBDC?
That's an excellent point. I hadn't done the math on the overlap between PBDC and the individual BDC holdings. It has crept up higher than I thought. I like the simplicity of PBDC, but there are some BDC's I like individually. As you pointed out, this means an ARCC weighting of 5.5% if you add ARCC to it's 12% weighting within PBDC. The 5% cap is more important for individual or highly focused investments so I should consider shaving off about 0.5% from the ARCC holding. I'm not going to constantly adjust individual holdings each time PBDC makes a trade, but you raise a great point about remaining aware of these overlaps.
Thank you, as always. 😊
You're welcome 😊
Love this video format, well done! You make a compelling case for income investing for sure. If you set aside 30% or so of the income for reinvestment, and have a diversified basket of holdings with histories of resiliency in market downturns, it’s hard to go wrong.
Punishing taxation of the STCG income is the biggest wet blanket. It’s a shame the foreign earned income exclusion doesn’t apply to capital gains!
I agree. For US tax residents, the foreign earned income exclusion isn't helpful to retirees. Thanks for the feedback, I'm glad the channel is helpful.
great info. Thanks from a income investor
Glad it was helpful!
I've never seen you mention USOI and was wondering if you have ever reviewed this one. I've had this and have done pretty well with this one.
Too wild for me. My #1 priority is consistent income. I don't follow the oil market, I mostly avoid instruments like ETN's as there's credit risk, and I'm not a fan of such volatile income.
I agree,you need a diverse way round fund your retirement
Thanks for watching. Yes, diversification is key.
Good summary of income investing.
Glad it was helpful!
Another great video, thank you for your time and effort in making this channel, as I am a couple years out from retirement you have helped me better plan for success. Keep up the great work!
Much appreciated! I'm glad to hear that. Get ready for a new chapter...it's a lot of fun :)
Your channel is great and I plan to go the Income route when I get a chance to retire. Quick question, when you say you reinvest some of your dividends, do you buy more of the same asset or do you put that money elsewhere?
Thanks for your feedback. I'm glad the channel is useful. Each month I reinvest some of the income to grow my income. The purchase(s) will be whatever is the best opportunity at the time. Sometimes that's part of a new buy, but mostly its just buying a little more of whatever offers the most attractive pricing within the portfolio.
Great video, thank you!
Glad it helped!
Another great video, Thank you for sharing.
Thanks for watching!
Very very good episode ! Although I know it, your references to a abrupt and prolonged bear market on CC funds make me to be interested to BDC and others “Non equity” investments for income diversification in the future. Keep up the good works !
Thanks! Glad it was helpful.
Great content as always. A question for your next Q&A show: What CLO's do you like? I see you own EIC, is that the lowest you will go in the CLO rating tranches?
Thanks for the feedback. I'm open to other CLO funds, but I'd need a deeper understanding before dipping into equity tranche CLO's. Still learning this area.
I believe you should group BST in with your covered call funds.
Good catch! Even though it's not technically an index fund, it does use options.
@@armchairincomechannel No, but it is a "fund" haha
As always......well done.......thank you
As always...thanks for watching....and for taking the time to leave a kind comment :)
Great stuff. P.S. I spy a set change...some hard drive under monitor or power brick.
Wow, you're observant. It was a power brick that I put back there because I thought it was out of view :)
Maybe I jumped the gun.. planning retirement in 5-7 years, but are slowly transitioning about 10% a year into HY bonds and income funds as I’m learning (mostly from you 😉) Might be missing some opportunity cost but it’s going to be much easier to forecast funds as we get closer.
Anywho thanks for the Q&A sessions, love the change of pace and appreciate all your hard work! 🤝
Thanks for your feedback. There's no perfect time. Also, there's a psychological aspect...if income makes you sleep better at night even though the long term returns aren't as high, there's some value in that too. Glad to know you find the information helpful!
Another great video! I look everyday hoping you have put out another. Specifically, after your NEOS interview on HBYI, I was interested in your approach. I know you don't carry "cash" or the like, but I have remained about 45% in SPAXX for my safe house. With interest decreasing, I was thinking about putting a portion (15% to 20%) in the HYBI fund as a way to keep a decent yield overall without increasing a lot of risk. I'll probably watch for a bit, maybe until the next .25% funds rate reduction, just to see how HYBI is looking. Thanks again for your videos and sharing your research! It certainly helps to validate (or not) my own!
Thanks for sharing all that. I plan to continue releasing videos on Sundays. I like the look of HYBI but I want to watch it for a bit and then ease in.
I was wondering if you would mind sharing your experience during the Covid drop. Since it was relatively short. What you held and portfolio performance. Any lessons learned? Thx
It wasn't fun. I sold far too many funds out of fear and held cash for too long. I didn't expect as much govt intervention as there was. I was fearful of dividend cuts and the reality was that there were very few for the funds I held. So my lesson learned was not to sell out during a major correction because buying back in is much harder than it sounds. In other words, don't try to time the market.
@
Thx. I’m kinda glad Covid crash happened, I bought into a bunch of funds that came back and had no cuts, at a discount. Also got into some ETFs that survived 2022-23 drop. But I get it, it’s emotionally a struggle. Your channel helped me learn more. I don’t want just some you tuber dudes picks. Teach me to fish.
Great video as always. In my experience CC ETFs are getting better over time in terms of vital metrics such as NAV preservation. My goal is to allocate about half my portfolio to carefully selected CC ETFs and half my portfolio to uncorrelated income investments. I simply don't have the inclination to be juggling 25 or 30+ individual investments all the time. Then it becomes a part-time job, which is great for those who enjoy it. I have other passions I'd rather dedicate my time and energy to. But that's just me 😀
I agree that managing that many investments only makes sense if you enjoy it (although I do have other hobbies too). Personally, I'm keeping my cc exposure to far less than half of my portfolio. I think you have a good point about finding uncorrelated investments to balance out risk.
Wow, I didn't know you moved to Southeast Asia, that's cool! I'm thinking about doing this too 😅
I recommend checking it out in person as soon as possible to know if it works for you. If you like it then it may alter your future plans (in a good way).
Really like your channel. Just curious why you don’t have any Preferred’s or higher yielding baby bonds that have 8-11% yields?
One of my biggest holdings is PFFA....that's about 200 preferreds. I also have NLY-F and AGNCN. I'm looking at some baby bonds but the volume has been too thin.
@@armchairincomechannel There was a time a year or a bit more ago when a number of preferreds and baby bonds were selling at 30% discounts and had huge yields. That time is pretty much over. But here's a wild one: TCNAF (TC Energy, first preferred shares Series). It's currently selling at $US12.51 with a redemption price of $US17.89. The dividend is floating and about to reset at just under 5% (Canadian 5-year bond plus 1.92%) giving it a yield on market price of 6.87%. If it were called, you'd not only get your 6.87% dividend but a 30% capital gain. And TC Energy is a very solid company whose common shares have numerous outperform ratings.
I converted from Growth to individual Growth and Income portfolios about a year before retiring. Started the income portfolio with higher risk CC positions to reinvest as much as possible into high-yield lower risk positions (no DRIP !). Had decent luck with both portfolios and currently doing real well with both. The Growth portfolio has good growth; the Income portfolio is what I live on (along with SS as a "kicker"). RMDs will shortly start and I will transfer a portion of the RMD into the Growth portfolio and the rest will be divided into living expenses and Income portfolio re-investment. A bit more work/complication balancing between Growth-Income-Living but it does seem to work out (so far).
Thanks for sharing your strategy. A blend of income and growth works quite nicely, especially if you're relatively young.
Great info. Perfect amount of detail and overview
Much appreciated! Thanks for taking the time to type your feedback.
I have allocated 4% to covered call ETFs. At least to learn and see how they are doing. But I see a lot of value in that mechanic.
Good idea to ease in slowly and learn as you go.
@armchairincomechannel especially in Germany we don't have many income investors. So need to learn by myself.
You may of been asked this in a previous post, so sorry if I’m repeating. For tax purposes on your income, are you being taxed as an Australian or American citizen or have you set up for taxation purposes in the country you are residing in currently. Just trying to get an understanding of what rate you are being taxed at. Love what you are doing.
I don't get into a lot of personal tax information because most viewers are from the US so my tax status isn't helpful to them. I'm taxed as a non US tax resident, which is more advantageous than if I'd kept my Greencard (which would mean being taxed as a US tax resident). Glad you're enjoying the channel!
@@armchairincomechannel Looks like we both in the same boat then. Thanks you for replying.
Thanks for an interesting Q & A presentation. I would love to know your first name, and the Southeast Asia country you chose to relocate to and why that country. Also, I have ARCC on my watch list and would like to hear your updated thoughts on that BDC especially in light of the latest Fed interest rate cut this last Thursday here in the U.S.
Thanks for your feedback. I want to retain some privacy because as my channel gets larger, I occasionally (but rarely) see a comment from somebody "having a bad day" so there's more downside than upside to sharing my private information to thousands of people publicly. As for ARCC, I'm holding onto it. I think they're conservatively managed and should be able to adapt to whatever changes lie ahead.
@@armchairincomechannel --Thanks for your input on ARCC.
I always look forward to watching your content. Thank you for doing this.
I think you made a mistake on calculating your amount needed to retire. $70,000 divided by 7 percent is $1,000,000.
7% = 0.07 (without the % sign)
I got to visit SE Asia not long ago. I can imagine being happy living there. I love the food, warm weather and sandy beaches.
Thanks for catching that. I love all those things too, and also the mountain regions that are higher and cooler, with less humidity.
Another great video…i noticed you have MAXI in your portfolio…do you like that long term?
It's a small percentage but it has done amazingly well. I'll keep an eye on it because Simplify keeps changing the assets. So I wouldn't say set and forget. Also, I'm looking into the NEOS BTC fund too...
Great Job 😃
Thank you! Cheers!
Very helpful video. TY
You're welcome!
Recently, before long bond rates started going up, I started buying CEFs that would benefit from rates going down. Are you more concerned with a decrease in the funds price or a decrease in the distribution
I'm more focused on income than price volatility. As long as the long term price trend isn't down, I'm ok with the ups and downs over the months and years. I was leaning slightly toward investments that favor rate cuts but now...who knows! So I'll lean more neutral going forward. Rates could go either way.
A far more curious point for me that you have not talked about regarding the questions around how much you started with in your retirement is how much do you have now? In other words if you cashed out of all your other non-dividend assets in 2017 and started with “X” invested in dividend stocks, is your portfolio now “X+Y”? Have your dividend paying companies not only paid for your lifestyle but also grown your net worth?
That's a good question. My portfolio doesn't appreciate as much as the market. It keeps slightly ahead of inflation. The one exception was the pandemic. I sold a lot of funds out of fear and held cash for too long. Turns out the dividends weren't cut so it was a costly error. That put me behind for a while. Aside from that mistaken attempt to time the market, my portfolio has grown each year, except for the bear market of 2022, but it recovered.
@@armchairincomechannel Everyone's a genius when the market goes up but like so many others on here, my question is around what happens when the market goes south. This year I've been more than half in cash (earning 5% or so) and 75% of the remainder in high yields and 25% in super risky growth stocks. The dividends have been phenomenal and enough for me to live on (not to mention it is particularly addictive getting paid weekly) and my portfolio is substantially ahead of 2023. But like you and Bavaria talked about, do the dividends keep rolling in during a downturn AND will the stocks themselves recover after the market turns. Some of Bavarias picks have clearly NOT recovered from the last crash. Covid is a bad example for exactly what some said on here-it was a "V" downturn. I just don't know. If I had my way and had a crystal ball I'd wait till the next bottom and buy a handful of stud companies like MAIN, ARCC and a couple of others instead of the 52 I now hold.
The real unknown for me is what others have pointed to: what happens to all these covered call players when the market drops 20%? I'm hedging with HYBI and I suspect that's exactly what you are thinking.
I guess the obvious elephant in the room is how does the strategy and mindset react to a bear market. Do you feel like this strategy will outlast an extended crash . If all of your funds are in this strategy how do you mentally cope with crashes?
Yes his 11% yield carry’s far more risk than I think he realizes.
He was lucky that covid was a blip and not a long L shaped bottom. All that leveraged stuff got crushed.
Good question. My plan for the next crash is just to hang on. During a bear market, everybody's portfolio will shrink in value, including mine. The question for retirees is...do you want to spend dividends during a bear market, or sell part of your portfolio at a discount? I'd rather spend dividends. I'm yet to meet a retired growth investor who is totally comfortable with selling stocks during a crash period. If they hold/spend bonds, that would make more sense....as long as you have enough bonds to last longer than the bear market.
I started investing in the Sunshine Coast in 2018 so I wouldn't be priced out. Great part of the world, but like you I'll probably end up staying in Asia most of the time. Been here 18 years. It's addictive.
I think you snuck in just in time before the Sunshine Coast took off. I have a thing for Noosa and the surrounding area. It's beautiful. However, there's a lot more to do in Asia! Still love visiting Noosa though.
@armchairincomechannel It was still expensive to me (but about 50% more expensive now)! Noosa is beautiful. My places are in and closer to Maroochydore. Restaurant scene not too bad now, but we'll see if I ever get there full time. I'm thinking 3 months a year, perhaps.
Thanks for all the info, Love listening to your videos each week. Have you ever seen a GOLD income ETF? Thanks again!
Glad you like the videos :). I've looked briefly but never found any gold or gold related investments that appeal. It's not really an asset that's designed to produce income. Still experimenting with Bitcoin income ETF's on a small scale.
Take a look at the sibling GAAMCO funds, GGN and GNT. GGN is 52.6% in metals and mining stocks, mostly gold mining and it yields 8.92%. GNT is a bit less concentrated being 36.5% in gold miners and 17.2% in energy and energy services and it yields 6.9252%. Both also have large positions in treasuries (GGN is 10.5% and GNT is 25.2%). So in the case of GGN, it's almost 80% in gold miners and treasuries with a yield above 8.0%. Still GNT has done very well the last few years due to its energy holdings.
@@BTinSF Thanks for the info .. I'll take a look!
Hello! Question. If Dividend yield equals Yield on cost is that a good thing?
Not particularly. That means the price and distributions didn't change, or they moved at the same rate. Ideally, yield on cost increases. That means the income increased.
Great content! Can you do a video on $WEEL?
Thanks for the suggestion. I've been keeping an eye on it. It's so new and so is the fund behind it, so I'm giving it some time to see how it performs under various market conditions.
Curious on the criteria you are using to count covered call funds? For instance BST prospectus says "As part of its investment strategy, the fund will also employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio". It isn't counted. THQ semi annual report talks about writing options on securities. It isn't counted. However, most of the funds I see in your portfolio are covered call funds. I'm not sure how you are counting some funds as covered call funds and not others?
You're right about BST, I missed that one. THQ writes covered calls on less than 20% of their portfolio so I'm not sure that I'd classify it in the same group as SPYI or JEPI. THQ makes most of its income from realizing capital gains. If we count BST and THQ then that would make 9 covered call funds. I don't see how 9 out of 37 funds is "most of the funds". I could have been clearer on the criteria for defining covered call funds. I definitely should have included BST!
@@armchairincomechannel Now that I think about it. I realize I don't have a criteria that defines a fund as a covered call fund. I never thought of classifying my holdings along these lines.
Where do you find that THQ writes covered calls on less than 20% of their portfolio?
Another example: ASGI mentions the fund: "7... may purchase or sell options and futures contracts ..." I don't know how to find out how much of their portfolio they write these on either. Current info on holdings found somewhere?
If you have some guidance on determining this, it might be worth a video or just a response here. Thanks, Mike
i'm an idiot investing on covered calls etf like ISPY and JEPQ at 34 years of age? I really don't mind losing potential growth gains I'd rather retire early like in 20 years. What's your opinion?
Conventional wisdom is to focus on growth until you're close to retiring. Growth offers higher long term total returns and higher tax efficiency. That's what I did.
Jepi survived the bear market so its what i plan on retiring on.
JEPI has a great record during down markets. I don't allocate to much to any single fund though.
Army… does BGH float your boat? They just raised their div rate to 15.8%
I'm not familiar with it. They raised their dividend BY 15.8%. The current dividend as of today, is 9.2% (after the raise). A quick look and I saw some dividend cuts as recently as 2020 and a long term decline in NAV. The discount to NAV just shrunk to zero. Not saying it's bad, just not the metrics I usually look for so I haven't studied it.
@ Thanks for the correction.. I mis read the SA post initially. I slapped some wonga on it and will watch accordingly
In retirement i plan to live off the distributions , but at the half way markish , I would be incrementally eg. 4 or more percent yearly, selling off the income vehicles themselves ..... anyone thinking like that ?
There's some logic to the "die with nothing" concept if you can figure out how to plan it. I think the older you get, the less important it is to "build up" your portfolio as opposed to just figure out how to spend it in an enjoyable fashion without risk of running out of money.
I too am retired early (age 58) and live off a combination of dividends, 401(k) using rule of 55 and savings. My wife and I are traveling Europe now living day by day with no stress :) I am curious about your thoughts on GPIX vs JEPI. I have about 6% of my portfolio in GPIX and do not hold JEPI.
Congratulations. I plan to visit EU again next year....so excited! GPIX is far newer but off to a fantastic start. Too soon to know if that's because it's well constructed versus, needing a bull market to thrive. I expect it will be a nice compliment to JEPI, meaning that GPIX will do better in a bull market and JEPI in a bear market. The market goes up more than it goes down so I'm weighting more heavily to GPIX. If it continues to perform under various market conditions I'll gradually add to GPIX. Enjoy Europe!
The yield is very good for all the funds and stocks in the Armchair Income Portfolio but, do all of those (37) holdings - especially the funds - are in fact paying cash dividends that can be used to actual living expenses?
Yes, every investment in my portfolio pays cash distributions...either monthly or quarterly.
Great
Thanks!
You have been doing this for 7ish years. I know you focus on income, but you do reinvest, what percentage of growth do you have on your overall pie since you started?
That's a good question. My portfolio doesn't appreciate as much as the market. It keeps slightly ahead of inflation. The one exception was the pandemic. I sold a lot of funds out of fear and held cash for too long. Turns out the dividends weren't cut so it was a costly error. That put me behind for quite a while. Aside from that mistaken attempt to time the market, my portfolio has grown each year, except for the bear market of 2022, but it recovered from that one.
This may help. I follow a similar plan to the author (I've copied him and bought some of his top recommendations since I discovered him, and others in his portfolio I discovered before he did) here but I am a bit less rigorous in sticking with very high yielders and funds. I add some REITs, some MLPs and some high-yielding common stocks to the mix and am getting about an 8% yield on my portfolio vs his 10%+. But my 10-year portfolio gain (growth) has been 160% compared to the S&P's 240%. Similarly, over 5 years I've gotten 76% vs the S&P's 103%. But over the last year I've gotten 40% vs the S&P's 38%. So I don't think you have to give up growth entirely, or even that much.
I also want to know how much you saved before you moved to a lower cost country to retire, at lease in the ballpark if not an exact number. How can a US citizen obtain residence in the country you live?
As a U.S. citizen I can’t get residence nor am I looking to do so; get a retirement visa to permit staying in the country.
I don't disclose all my personal financial details. The amount to retire on depends on what you want/need to spend for your lifestyle. As for visas, there are plenty of options to live in Vietnam, Malaysia, Thailand, and the Philippines to name a few. It's not "residence" but there's not much upside to residence, especially from a tax perspective.
I retired to Viet Nam, I got residency by marriage, but most retirees either get retirement visas (if available) or stay on tourist visas in SE Asia. There are tons of YT channels with overseas retirement info, Vagabond Awake is my favorite.
You could tell what ratio of net worth to annual living expenses to help people understand how much they might want to target
Thanks for the suggestion. A lot depends on age, risk tolerance, and living expenses. Some people have high fixed expenses, and some (like me) have low fixed expenses but relatively high discretionary spending. It's difficult to cover the subject in a way that is relevant for everybody and doesn't get too technical. In the video, my example was living on 6% of net worth per year, assuming investing all of my net worth.
Would you mind doing a video on how to replicate living on income investing using ETF?
Thanks for your suggestion and also for watching.
How did you transition from growth investments to income? Did you take the capital gains hit and liquidate your growth stocks?
Sold all growth and bought income. Non US tax residents don't pay capital gains tax.
Thank you for this video!! I have a doubt: do you sell a stock when it is negative in your portfolio?
I made a video a few months ago, about what causes me to sell and a price drop isn't one of those reasons. If I like a stock and it gets cheaper I buy more if I don't already have too much.
SPYI has another advantage. They sell calls on a portion of their fund, leaving some to appreciate with the market.
XDTE has an advantage. They don't hold their calls overnight, allowing their fund to capture overnight gains.
Thanks for sharing those insights. SPYI won't keep up during a bull market (like now) but the income is nice.
I am curious about whether you have considered margin. I plan to utilize margin if a significant market correction occurs. I have a margin rate currently @ 5.75% so I believe I would have a significant arbitrage opportunity. I realize that this strategy is highly situational dependent.
I don't use any margin. There's some inherent leverage in some of the covered call funds I hold. That's more than enough leverage for me. The last thing I need in a correction is a margin call.
Thank that was a great income investing overview! Always enjoy your content, keep up the good work. Sequins of return LOL
I'm glad to read that at least one person got the joke :)
I know you were in Vietnam for a while (with all those shrimp spring rolls)... but where did you retire to if not Australia? Are you in SE Asia... Thailand or Philippines or Malaysia??
I'm trying to retain some privacy so I don't get into my personal life too much. Never know who's out there in internet world. I'm in SE Asia. I've spent time in Thailand and Malaysia. Haven't been to the Philippines. Hoping to try Indonesia some time next year. I've also spent a long period in Taiwan before I started the channel. Only been to Japan once but I'm dying to go back again.
@@armchairincomechannel Well, if you have your investments in USD, the Japan should definitely be on your must visit list soon. The exchange rate is back above 150 yen per USD, which is amazingly good. I plan to visit northern Vietnam next year, so if you got any good tips (other than trying the shrimp spring rolls!), please let me know. 😀 Been to HK, Japan, and TW... and Japan is my fav of the three... would like to hit up AU and NZ at some point also.
What's your rationale for investing in a BDC ETF like PBDC while also still holding several invidual BDC stocks? Couldn't you mitigate your risk while still getting adequate diversication with just the ETF? Thanks!
Good question. PBDC alone is enough. I also bought the individual BDC's that I'm particularly fond of. So I'm overweighted on some. It would be interesting to see who performs better! Over the long term I plan to gradually shrink the individual BDC holdings in favor of more PBDC but it's fairly new....so far, so good!
There are a lot of pretty shaky BDCs and, because they have so much money to invest, I don't think the funds can be selective enough. If we do have a recession or market correction--and it's been a long time since we've had one--BDCs really do poorly. So, like the author of this channel, I put some money into PBDC for diversification, but I'm really more comfortable putting much of my allocation to this area isnonly what I consider a small number of the most solid companies.
I am curious what percentage your income account went down during the Covid crash.
I don't recall exactly but as it was sliding down I sold a lot and it turned out to be a mistake. Going to cash was easy but knowing when to buy back in was difficult. That year I learned some hard lessons and took a substantial loss for trying to time the market. I thought the dividends would be cut heavily and I was wrong. The prices dropped a lot, but the dividends didn't. Going forward, next time there's a crash I'll just stay in the market. If I had to guess I'd say my portfolio would have dropped 40-50% (if I hadn't sold) and my income would have dropped maybe 5%. That was before covered calls though and I don't know how they would have bene affected.
I retired in early 2020 and did a custodial transfer of my entire 401k into a self directed IRA.(I already had a pre-existing brokerage account which was growth focused). I went "all-in" with high yield income investing and have done well. (buy low -don't sell)
all of my income comes either at the end or beginning of the month; is there anything that pays on the 15th lol?
QDTE and XDTE pay around the 8th of each month and FEPI, SPYI and QQQI pay around the 24th of each month. It's not exactly in the middle of the month but they all pay a nice dividend. You could strike a nice balance by purchasing a little of each and the dividends could smooth out your income each month.
@ the dtes pay weekly
I've noticed a similar pattern! I wouldn't buy anything based on its pay schedule so I I'm just used to spreading out the cash over the month. I just checked this month and not much coming in during the middle...it's all at the end like yours!
US stocks are looking insanely expensive.
Yes, they are. Next week I have an interview with Dave from Wealth Adventures. He'll share what he's buying to get access to international markets.
I am fearful that most stocks are overvalued. Is income investing safe with stocks so overvalued?
There's no such thing as "safe" when it comes to investing. Growth stocks and income stocks will be drop during a market correction. Most of the time, the market is "over valued". If you decide to stay out of the market when its over valued then you won't receive the dividend income, but you can receive the lesser income from short term treasuries. I suggest looking at studies that analyze investors who sit on cash while they think the market is over valued versus investors who dollar cost average every month. If you can ride the price volatility without getting stressed and select investments that don't cut their dividends during corrections, then you will receive income during a market correction, which you can use to buy new investments at a lower price.
@@armchairincomechannel Thanks.
Always a great, educational video. Apologizing for my fellow watcher who is accusing you of living in your mother’s basement 😂😂😂.
Thanks for your kind words. You haven't really made it until you get trolled ;)
Earlier this year I spent a month in Bangkok and 2 months in Vietnam. It was nice to breathe all that fresh air after being cooped up in that basement! Next year will be more travel, less basement.
@ 😂
Another great video! Do you think the BDC companies will suffer from the Trump deregulation on banks?
I have no idea what he will do and how it will affect banks vs BDC's. I wouldn't make investing decisions based on what he might do. But I'll keep an eye on what he actually does.
Take high yield risk with 50% of your portfolio, the rest in cash. You cannot afford a crash mentally when 65+ years old. Yes it might come back in 5,10,15 yrs. Remember even if you hold, some sectors do not come back. If you did not save enough for the 4% rule to work, you need to lower your life style. Making 8% with 50% of your portfolio is the same as making 4% on the whole Ancelotti.
That's 50% not making money, but depreciating!
Thanks for sharing your strategy. I expect my portfolio value to fall during a crash, but I've picked dividends that I think will hold up more than the price will. eg. price drops 50%, dividends drop 20%. That's still more income than if I was 50% in cash. I held a lot of cash during the pandemic and it cost me a lot so I am no longer a fan of cash...especially given the potential return of inflation. Either way, it's important to have a plan for how to deal with a crash and I expect your plan will work too.
@@freeagent.87cash is not trash, every dog has its day. During a down turn you got dry powder make some quick doubles just by buying blue chips. I bought an annuity just cooking with cash, will payout 10% on my premium for life if I take it. Your 8% portfolio will also have some capital gains to cover cash if interest rates go back to zero, wanna bet? Buy tips and Ibonds. The market does not care you are only trying to make inflation when it takes 30% of your money. Every investment has a cycle where it makes money. Retired dont put all your eggs in one basket. Be real about your economic status. Of course you could be one of those living on a fixed income worrying about the market everyday.
@@armchairincomechannel cost you alot, that sounds greedy. You only lost opportunity. Hindsight is always 20/20. Cash reduces risk. Insurance costs money. During Covid I doubled my cash then rebalanced. Like Mike said everyone has a plan till they get hit. When one no longer has a job to quickly recover loses, it gets real fast.
I totally get not disclosing what your retired with. But you might consider disclosing a multiple of the average annual income you earned during the last five years you were working, for example. Just a suggestion. In any case, thanks for continuing to make the great content!
Thanks for the feedback. That's an interesting way to communicate the information. I'll give it some thought. I worked on 100% commission in commercial real estate so my income varied considerably, but I get your point.
The #1 thing you need to do to retire early is to not marry, like how this guy has done.
That made me laugh out loud....Perhaps you could modify this statement and say that the #1 thing to do is to not get divorced.
Since you won't share the amount of your portfolio, then I guess your name is out of the question? I have you pegged as being a Paul.
You're right...about the out of the question part :) There's more downside than upside to sharing your personal information to tens of thousands of people on the internet. I appreciate that some people have personal channels and share their personal lives, but my channel is about sharing what I've learned from researching and investing in income investments.
A better question would be how much income do you need to have going in to have a comfortable retirement with and without owning your own home
That's an interesting question. It gets complicated, depending on your expenses, rent vs cost of ownership, etc. For many people, home ownership is an emotional or psychological decision more than a financial one.
Maybe I am wrong, but to me it is just a question of cash flow, rent or own. I do recognize that one is a bit less "flexible", but either way you need a place to lay your head! 🙂 I often times "debate" with the zero debt (particularly mortgage) crowd that as long as my "income" is greater than my "expenses" I'm good. I do understand housing should be limited, but as long as I can get the income without needing the tied up capital from my housing, I don't understand some peoples obsession with "paid off house". Think that is different FYI, than ARMCHAIR INCOME's decision to rent.... JMHO
what country are you living in now
I keep it general by saying SE Asia. I'm retaining some privacy/anonymity because I don't know if my channel will ever grow large enough to attract the "challenges" of being a public figure on the internet. Once you lose privacy it's almost possible to restore it.