Article: systematicincomeinvesting.com/2024/11/08/whats-left-to-buy-in-this-expensive-credit-market/ Buy me a Sweet Tea:👉 ko-fi.com/incomearchitect Income Factory Book 👉 amzn.to/3ZCzp1p Affiliate link Seeking Alpha 👉 www.seekingalpha.link/3RJ5GCX/2QZRGT/ Link to the channel: 👉 www.youtube.com/@Income_Architect?sub_confirmation=1
Love the video, Brad! Factory 3 wins. It doesn't matter that factory 1 is "worth more" unless you are wanting to sell your factory (in which case you will no longer receive profits from the factory). I get more profits from factory 3 and isn't that what counts if you are keeping the factory ?! Just my opinion.
@@Income_Architect I get that Factory 1 wins the question that you that proposed. And it is a great question if you are looking to live off capital gains by selling shares of your portfolio/selling off parts of your factory capacity and machines. I am simply saying that In My Case it is the wrong question to ask. I want my portfolio to create an income I can live off. In this case, 3 wins that scenario hands down. Factory 1 net profits $8.78; Factory 2 net profits $23.69; and Factory 3 makes a whopping $43.42 net profit. I would rather have slightly less "value" in my factory/portfolio after 7 years (but still higher than when I started) and have between four and five times the income. Great thought experiment!
@@he-him1009 100% not selling shares and capital gains. I am living off that 8%. To keep up you have to reinvest a large part of the high yields to keep up and even then you can't keep up. That was the whole reason for the question.
Factory 1 is the winner. 2.69 times bigger than year 1. Factory 2=2.21 times, Factory 3=1.82 times. This is a very good way of showing what type of Dividend paying company or ETF one should be investing. I would add STABILITY to my decision making in choosing ETFs.
Lots of great nuggets today. Sounds like you've definitely made some changes over the last month. Looking forward to the next what's in your wallet update. Enjoy some Sunday Football!
Not sure if you meant to leave this out of the hypotheticals at the start, but the other dimensions of this problem are random volatility, sensitivity to market changes (like interest rates), and black swan events. I look back to the time of covid, and some of these types of investments had massive single day drops. I don't have a real question here, but was wondering how you see the risks for these investments. I still have a lot of reading to do, so ... glad to have opinions to follow up on. I am enjoying your channel. Thanks for doing it!
So I look at putw and that around before Covid it has done well. I can point to several others that are around before Covid. I look at Steven retired for more than a decade and armchair at 7 years. The risk is real put at the same time keeping it under the mattress is not an option. Keeping in the market same issue. My grandparents used Exxon for their distributions talk about risk.
I fed a screen shot your question into AI (didn't even need Excel) and it got it correct! However, rumor has it, the CEO of factory #1 is cooking the books and has a gambling issue and likes to bet on the phonies.
There management fee is 0.4. BIZD's expense ratio is high because it invests in BDCs, which disclose their expenses as acquired fund fees and expenses (AFFEs). AFFEs are indirect expenses that are not borne by the fund.
I guess if you are using margin then deduct the margin interest percentage off of the revenue. So for example, 23 percent revenue minus the 5.50 iterest rate equals 17.5 percent revenue. I think I did that right. I like the 20 percent option, which is Factory 2. But factory one should have the highest ROI
I do not use margin I live on the 8%. If you use margin there are other factors. But margin also increases risk and margin can only be used in a taxable account. I only use taxed differed or tax free accounts.
@ Which type besides Roth IRA do you use ? I understand . I use not more than 25 percent of my available margin and only on one account . The other account I use margin for my monthly expenses if I go over $7200, which is my monthly pensions . And I just pay that margin with my dividends if needed . Otherwise I’ll re invest on that one account
If you’re a home owner or plan to be, you may want to consider property tax as well. Texas has some of highest in the nation, over 3X what I pay in my state
100% I will never be a home owner again. (Well I don't plan on it). My old home today is $700 month in property taxes. I would still have a JOB if I had that house just to pay the taxes. RV life :). now after RV life we are looking at other opportunities. If I had a two bedroom apartment in South Dakota. Rent $900 per month for a new building with a gym. Compared to $700 property taxes $400 month average on home maintenance. Its about 1% of the homes value ends up being maintenance cost in the long run. Some how its cheaper to rent that new upscale apartment then owning a house. No grass to cut, pool, gym starting to sound attractive.
UA-cam is a great indicator of current market in my opinion better than looking at index. If you see lot of videos saying recession is coming its going to go up much higher and vice versa
This is a good point. It is interesting to think that the algorithm that tends to drive the content is picking up what people most fear and amplify the sentiment. High fear is the best time to buy.
Brad, I'm new in your channel but I'm enjoying so far! One of my concerns as a non-American is taxes. I do not want leave 30% withholding tax on the table. So CLOs, BDCs and even preferred shares is not tax efficient so, it is difficult to get diversification among types of funds. I can get it in different CC ETF. Your thoughts please! and thanks
Welcome aboard! There are other asset classes within CC for diversification that are 1256 contracts. I am unsure how they are taxed to non-Americans but we can look at some funds that are ROC in different asset classes for tax efficiency. Maybe a portfolio for those taxable accounts.
I believe in diversification as well. I have my SIP retirement account invested in funds from the Capital Group. Over the last23 years it has returned an average of 8.9% and I am taking a withdrawal of 6%. So, it should continue to grow over time, this represents just over 61.2% of my total investments. The rest I keep investing in the markets and the last 5 year have returned about 28%. So hopefully it will continue to grow in the future. Also, I picked 1 but that is only correct at the rates of returns you specified. If the rate of return is higher for 2 and 3 it could change the answer depending on the rate of return each is assigned.
Factory 1 is the winner. but what happens when the vix spikes to 80+ ? i looked at binc and there is no butcher. there must be etfs with a vix inverse that prevent a huge to the right chart and also generates income?
Look at a 5% payer. I will pass. I make lots of money when the vix spikes and others will just cry to sleep. I am retired and no need to fear. I have the money some how I got this money without fearing the 1989 black friday, 2000 bubble, the 2008 GFC and the 2020 Crash. So why would I fear the next one? I started working in 1986. So I have lived through all of these investing nightmares.
Most will produce more income as VIX spike premiums go up. High premiums high distributions. Crash no issue look at PUTW. Not a new fund. Look at EOS dating back to 2005 before the GFC. Everyone forgets this is not new. EOS is 19 years old. I am surprised sometimes that people forget about these funds. EOS is in the book behind me call the Income Factory. I can tell you Steven still holds it today.
Not sure why you want a 2% yield. That clearly is not income investing. Not sure why people worry about VIX spikes. Some how I am millionaire and went through the 1989 black Friday, 2000 dot com, 2008 GFC and 2020 Covid. But not your financial advisor.
Inflation is the change in prices. As long as inflation is positive, the prices keep going up. They don't come down unless you have deflation, which is BAD. The only way to combat price inflation is wage inflation. This has started again, but it will take a long time to catch up to where we were, if ever.
Warren Buffet is hoarding cash because he is selling some stuff. He is selling BoA and Apple, I believe, If you own those two, you may want to sell. He subscribes to the Benjamin Graham school of thought, which is above all, don't overpay, and then buy good companies. So he is holding cash until he gets to an opportunity to buy. The more interesting thing is what he is selling.
Brad I like your 8% withdrawals, so far so good. However, in a bear market Are you planing to continue withdrawals of 8% or do you have cash reserves 1-2 years to avoid withdrawals? When you turn 62 or 67 and collect SS are you planing to reduce your 8% to 5-7% or maintain it? Thank you for your videos
100% collect my 8%. Bear or no Bear. Why would it matter? That is the whole reason of income investing or I should just buy spy and withdraw. CLO is no real beta to the S&P500. Steven in the income factory has done this for years. Now social security is just a bonus. Will move IRA money to Roth as I can.
Psychologically, for me I’ll prefer to maintain NAV that’s why I’ll prefer to use the cash bucket during retirement in a bear market to DRIP more during a bear market( I could be wrong). I have 3 buckets Bucket 1 cash 1-2 years Bucket 2 Dividends stocks ETF SCHD/DGRO and CC ETFs Bucket 3 Growth ETFs VGT/VUG I’m not retire yet, I’m 44 but, I’m planning on retiring at 55 years old God willing. I’m using bucket 2 in my brokerage account to pay for my mortgage and kids college to have more money to create dividend memories NOW 😂 My portfolio was created from these UA-camrs excellent information GenExdividend investor Joe Kuhn Dividend Growth Investing Thank you
Your Hilarious. Got caught up this morning with your vids. I don’t pay for lot subscriptions unless I see value. I have no problem paying UA-cam and I also pay for Adrain PII membership but he fairly priced but you get tons a value and you have be member to get some of stuff not for general videos. Could you not just hide columns in excel and password protect editing… when I do math for some of my friends questions. I start first 12 months then hide between each year just showing January each year. I learned lot today and did not know about Amish people was thinking of the TV Series Banshee lol Go Bills !!!
I figured out the sheets last night. Yes locking is one step but I need to make the chart dynamic depending on how much data. I had to make it an index function. Now you can drop in 6 months of data or 20 years and the chart will change with the data size. I am thinking share the excel sheets for the videos, share all my holdings as a percentage, live updates if I add or drop, members only live streams, live streams that only members can comment. Keep it inexpensive $3 for basic , $5 for all inclusive. Not trying to get rich but if I have to little extra work it should be worth my time. I will see how I feel about it over the next week or two.
Factory 1 total return (TR) = 10% growth (GR) + 12% return (RE) = 22%. Factory 2 TR = 0% GR + 20% RE = 20%. Factory 3 TR -10% GR + 30 RE = 20% TR. While the analysis is the right framing, these are not exactly the same factories. Please repost the analysis after adjusting factory 1 to 8% GR for the same 20% TR.
The analysis was at the end of the video. All adjusted for the 8% operational. Same as 8% withdraw. Your math is spot on. In the end 12% returns with 10% growth outpaces the higher distributions rates but they all ended up being winners.
Article:
systematicincomeinvesting.com/2024/11/08/whats-left-to-buy-in-this-expensive-credit-market/
Buy me a Sweet Tea:👉 ko-fi.com/incomearchitect
Income Factory Book 👉 amzn.to/3ZCzp1p
Affiliate link Seeking Alpha 👉 www.seekingalpha.link/3RJ5GCX/2QZRGT/
Link to the channel: 👉 www.youtube.com/@Income_Architect?sub_confirmation=1
Happy sweet tea, Brad🎉❤ I’m also contemplating about moving to Eastern Thailand , what a coincidence that you’re talking about it,lol.
We might visit for a few months.
You are answering the BIG question lingering in my mind!!! TY
You are so welcome!
@@Income_Architect Yeah where IS the sweet tea
Love the video, Brad! Factory 3 wins. It doesn't matter that factory 1 is "worth more" unless you are wanting to sell your factory (in which case you will no longer receive profits from the factory). I get more profits from factory 3 and isn't that what counts if you are keeping the factory ?! Just my opinion.
Due to compounding Factory 1 wins. Its a hypothetical math question. In reality 2 and 3 are tide after 7 years for worth.
@@Income_Architect I get that Factory 1 wins the question that you that proposed. And it is a great question if you are looking to live off capital gains by selling shares of your portfolio/selling off parts of your factory capacity and machines. I am simply saying that In My Case it is the wrong question to ask. I want my portfolio to create an income I can live off. In this case, 3 wins that scenario hands down. Factory 1 net profits $8.78; Factory 2 net profits $23.69; and Factory 3 makes a whopping $43.42 net profit. I would rather have slightly less "value" in my factory/portfolio after 7 years (but still higher than when I started) and have between four and five times the income. Great thought experiment!
@@he-him1009 100% not selling shares and capital gains. I am living off that 8%. To keep up you have to reinvest a large part of the high yields to keep up and even then you can't keep up. That was the whole reason for the question.
Factory 1 is the winner. 2.69 times bigger than year 1. Factory 2=2.21 times, Factory 3=1.82 times. This is a very good way of showing what type of Dividend paying company or ETF one should be investing. I would add STABILITY to my decision making in choosing ETFs.
Factory 1 was the winner.
Amazon's largest and primary data centers are in Virginia.
Amazon providing servers for the CIA. I like that story even better.
Lots of great nuggets today. Sounds like you've definitely made some changes over the last month. Looking forward to the next what's in your wallet update. Enjoy some Sunday Football!
Thanks! You too!
Thanks again for sharing! Always appreciate your insights!
My pleasure! 😇. I really like doing the videos.
Thanks Brad.
Sure thing! Thanks for watching.
Love the charts, stories and insight. Thx Brad
Glad you like them!
Not sure if you meant to leave this out of the hypotheticals at the start, but the other dimensions of this problem are random volatility, sensitivity to market changes (like interest rates), and black swan events. I look back to the time of covid, and some of these types of investments had massive single day drops. I don't have a real question here, but was wondering how you see the risks for these investments. I still have a lot of reading to do, so ... glad to have opinions to follow up on. I am enjoying your channel. Thanks for doing it!
So I look at putw and that around before Covid it has done well. I can point to several others that are around before Covid. I look at Steven retired for more than a decade and armchair at 7 years. The risk is real put at the same time keeping it under the mattress is not an option. Keeping in the market same issue. My grandparents used Exxon for their distributions talk about risk.
I fed a screen shot your question into AI (didn't even need Excel) and it got it correct! However, rumor has it, the CEO of factory #1 is cooking the books and has a gambling issue and likes to bet on the phonies.
LOL. As long as its craps and the good ponies its all good.
Enjoy your videos and thoughts.
Thank you!
BIZD had a expense of 13%, my small brain can't wrap my head around that.
There management fee is 0.4.
BIZD's expense ratio is high because it invests in BDCs, which disclose their expenses as acquired fund fees and expenses (AFFEs). AFFEs are indirect expenses that are not borne by the fund.
I guess if you are using margin then deduct the margin interest percentage off of the revenue. So for example, 23 percent revenue minus the 5.50 iterest rate equals 17.5 percent revenue. I think I did that right. I like the 20 percent option, which is Factory 2. But factory one should have the highest ROI
I do not use margin I live on the 8%. If you use margin there are other factors. But margin also increases risk and margin can only be used in a taxable account. I only use taxed differed or tax free accounts.
@ Which type besides Roth IRA do you use ? I understand . I use not more than 25 percent of my available margin and only on one account . The other account I use margin for my monthly expenses if I go over $7200, which is my monthly pensions . And I just pay that margin with my dividends if needed . Otherwise I’ll re invest on that one account
I have roll over IRA and Roth
If you’re a home owner or plan to be, you may want to consider property tax as well. Texas has some of highest in the nation, over 3X what I pay in my state
100% I will never be a home owner again. (Well I don't plan on it). My old home today is $700 month in property taxes. I would still have a JOB if I had that house just to pay the taxes. RV life :). now after RV life we are looking at other opportunities. If I had a two bedroom apartment in South Dakota. Rent $900 per month for a new building with a gym. Compared to $700 property taxes $400 month average on home maintenance. Its about 1% of the homes value ends up being maintenance cost in the long run. Some how its cheaper to rent that new upscale apartment then owning a house. No grass to cut, pool, gym starting to sound attractive.
recessions are great; more shares for me!
Boom! 💥. Love it
Love these sweet tea videos
Glad you like them! Fun to make it does take time to get all the data together.
UA-cam is a great indicator of current market in my opinion better than looking at index. If you see lot of videos saying recession is coming its going to go up much higher and vice versa
100% I look at them with a hmm. but then something always pops up saying hmmm the other way. So I income invest so I don't have to worry about it.
This is a good point. It is interesting to think that the algorithm that tends to drive the content is picking up what people most fear and amplify the sentiment. High fear is the best time to buy.
What kind of funds does the CIA invest in? SPY, ISPY, AND SPYI 😅
Funny. They use that inside information. just like Gordon Gekko
@@Income_Architect and the pelosi family
Brad, I'm new in your channel but I'm enjoying so far! One of my concerns as a non-American is taxes. I do not want leave 30% withholding tax on the table. So CLOs, BDCs and even preferred shares is not tax efficient so, it is difficult to get diversification among types of funds. I can get it in different CC ETF. Your thoughts please! and thanks
Welcome aboard! There are other asset classes within CC for diversification that are 1256 contracts. I am unsure how they are taxed to non-Americans but we can look at some funds that are ROC in different asset classes for tax efficiency. Maybe a portfolio for those taxable accounts.
@@Income_Architect this would be great!
I believe in diversification as well. I have my SIP retirement account invested in funds from the Capital Group. Over the last23 years it has returned an average of 8.9% and I am taking a withdrawal of 6%. So, it should continue to grow over time, this represents just over 61.2% of my total investments. The rest I keep investing in the markets and the last 5 year have returned about 28%. So hopefully it will continue to grow in the future. Also, I picked 1 but that is only correct at the rates of returns you specified. If the rate of return is higher for 2 and 3 it could change the answer depending on the rate of return each is assigned.
Another well thought out plan. Thanks for sharing.
Factory 1 is the winner. but what happens when the vix spikes to 80+ ? i looked at binc and there is no butcher. there must be etfs with a vix inverse that prevent a huge to the right chart and also generates income?
Look at a 5% payer. I will pass. I make lots of money when the vix spikes and others will just cry to sleep. I am retired and no need to fear. I have the money some how I got this money without fearing the 1989 black friday, 2000 bubble, the 2008 GFC and the 2020 Crash. So why would I fear the next one? I started working in 1986. So I have lived through all of these investing nightmares.
@@Income_Architect im interested to so your ETF tickers when the vix is spiking and producing income at the same time.
Most will produce more income as VIX spike premiums go up. High premiums high distributions. Crash no issue look at PUTW. Not a new fund. Look at EOS dating back to 2005 before the GFC. Everyone forgets this is not new. EOS is 19 years old. I am surprised sometimes that people forget about these funds. EOS is in the book behind me call the Income Factory. I can tell you Steven still holds it today.
What do you think holding about PHDG as insurance against VIX spikes?
Not sure why you want a 2% yield. That clearly is not income investing. Not sure why people worry about VIX spikes. Some how I am millionaire and went through the 1989 black Friday, 2000 dot com, 2008 GFC and 2020 Covid. But not your financial advisor.
Can't get my wife to move to Thailand either.
might go for a few months.
Brad: Can one say that Factory 1 is like SPYI, Factory 2 - XPAY, FACTORY 3 is like XDTE or QDTE?
1 yes. 2 is more xdte. 3 is more a yieldmax.. XPAY is just a ROC fund. Nothing special and is 100% NAV erosion over time unless the market goes up.
Spend some $$$ Brad. You can’t take it with you. Contango!!!!!
I can try to take it with me.
Inflation is the change in prices. As long as inflation is positive, the prices keep going up. They don't come down unless you have deflation, which is BAD. The only way to combat price inflation is wage inflation. This has started again, but it will take a long time to catch up to where we were, if ever.
Wage. You must have a JOB.
You always tend to amaze me ❤🎉 njoy football day..Seahawks got a bye today..
Go Chiefs.
Warren Buffet is hoarding cash because he is selling some stuff. He is selling BoA and Apple, I believe, If you own those two, you may want to sell. He subscribes to the Benjamin Graham school of thought, which is above all, don't overpay, and then buy good companies. So he is holding cash until he gets to an opportunity to buy. The more interesting thing is what he is selling.
94 and he is already planning his stepping away.
"Until he gets an opportunity to buy" well yea at 94 not much opportunity to buy. 😅😢
Inflation is not going down. The rate of increase is trying to go down.
it never will and the market is say its going to go back up on the last few sweet tea episodes
I think factory 1 wins.
100%
Brad
I like your 8% withdrawals, so far so good. However, in a bear market
Are you planing to continue withdrawals of 8% or do you have cash reserves 1-2 years to avoid withdrawals?
When you turn 62 or 67 and collect SS are you planing to reduce your 8% to 5-7% or maintain it?
Thank you for your videos
100% collect my 8%. Bear or no Bear. Why would it matter? That is the whole reason of income investing or I should just buy spy and withdraw. CLO is no real beta to the S&P500.
Steven in the income factory has done this for years.
Now social security is just a bonus. Will move IRA money to Roth as I can.
Psychologically, for me I’ll prefer to maintain NAV that’s why I’ll prefer to use the cash bucket during retirement in a bear market to DRIP more during a bear market( I could be wrong).
I have 3 buckets
Bucket 1 cash 1-2 years
Bucket 2 Dividends stocks ETF SCHD/DGRO and CC ETFs
Bucket 3 Growth ETFs VGT/VUG
I’m not retire yet, I’m 44 but, I’m planning on retiring at 55 years old God willing.
I’m using bucket 2 in my brokerage account to pay for my mortgage and kids college to have more money to create dividend memories NOW 😂
My portfolio was created from these UA-camrs excellent information
GenExdividend investor
Joe Kuhn
Dividend Growth Investing
Thank you
Your Hilarious. Got caught up this morning with your vids. I don’t pay for lot subscriptions unless I see value. I have no problem paying UA-cam and I also pay for Adrain PII membership but he fairly priced but you get tons a value and you have be member to get some of stuff not for general videos.
Could you not just hide columns in excel and password protect editing… when I do math for some of my friends questions. I start first 12 months then hide between each year just showing January each year. I learned lot today and did not know about Amish people was thinking of the TV Series Banshee lol
Go Bills !!!
I figured out the sheets last night. Yes locking is one step but I need to make the chart dynamic depending on how much data. I had to make it an index function. Now you can drop in 6 months of data or 20 years and the chart will change with the data size. I am thinking share the excel sheets for the videos, share all my holdings as a percentage, live updates if I add or drop, members only live streams, live streams that only members can comment. Keep it inexpensive $3 for basic , $5 for all inclusive. Not trying to get rich but if I have to little extra work it should be worth my time. I will see how I feel about it over the next week or two.
Factory 1 total return (TR) = 10% growth (GR) + 12% return (RE) = 22%. Factory 2 TR = 0% GR + 20% RE = 20%. Factory 3 TR -10% GR + 30 RE = 20% TR. While the analysis is the right framing, these are not exactly the same factories. Please repost the analysis after adjusting factory 1 to 8% GR for the same 20% TR.
The analysis was at the end of the video. All adjusted for the 8% operational. Same as 8% withdraw. Your math is spot on. In the end 12% returns with 10% growth outpaces the higher distributions rates but they all ended up being winners.