With the way the market is moving, we'll mostly hold for longer than 2025 to realize profit gain, I think a video on "How to profit from the present market" will be more effective, I mean I've heard of people making up to 250K within few months and I'd like to know how.
It’s precisely at times like these that investors need to be on guard against the next certainty. You don’t have to act on every forecast, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
The 1% Millionaires stay rich by staying off high interest debts and investing passively. Personally i made my first million from having investments that spreads across stocks, etfs, coins and bonds.What i can say to early investors is diversification and solid management..at this point I'm actually grateful for my advisor Colleen Janie Towe. it's been great.
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. "Colleen Janie Towe" is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
Thanks for your guidance . I will search on her site online and do my due diligence. If She seem proficient. I write her an email and scheduled a phone call.
A lot of folks have been going on about a January rally and said mutual funds [ETF] stocks that would be experiencing significant growth these festive season, any idea which stocks/mutual funds this may be?
@@tatianastarcic True, we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
@@tatianastarcic thank you so much for this tip! Finding your coach was a breeze and I was really impressed with all the research I did on her credentials before scheduling a call. It's clear from her résumé that she's extremely knowledgeable and skilled, and I'm so excited to have the chance to talk to her!
Time in the market is better than timing the markets. One of my favorite quote from Ken Fisher. This has been one of the reason people don't make it in financial markets, cos they don't understand time. You get in on time, you would make profits other than buying the hype and later losing out.
@@danalves47 You're correct, reason why I work with a financial advisor. Risk management, early entry and exits points, access to own stocks which is isn't available to the general public, these are few of many advantages. My life has changed and my approach to financial market better with lot of profits.
@@borilam293 Sheila Maureen Oneill is my financial advisor, I met her during a conference in new york, she's one of the best out there. She would do well to guide you.
I was with you until near the ending when you compared it against qyld. Qyld writes at the money covered calls on 100% of the portfolio, so they will constantly erode. Jepi writes out of the money covered calls on a PORTION of the portfolio. Big difference.
Exactly. Completely unfair comparison. Apples and oranges. He picks the worst ETF and compared JEPI with it. JEPI has a completely different investment strategy.
Is now a good time to invest in stocks? I know everyone says stocks are cheap, but how long will it take for us to recover?. The fact that others in my field make six figures each piece. Obviously, there are strategies to be used in this market, but these strategies are not available to the average person, so am better off putting my money elsewhere. I am fully aware of the expense of working more to get more money.
The top experts, however, have access to confidential information and data that is not made available to the broader public. Being knowledgeable enough to use them successfully is quite another. Big returns, not changing stochastics, are the key. Rewards and risks must be balanced. To reach your aim, pick the right size and turn your edge as often as necessary.
I concur; I've been in frequent communication with an investing advisor for more than 17 months. I definitely remember needing inspiration to keep my business running after a protracted divorce. I researched licensing consultants, sometimes known as portfolio coaches by some.
@@AnthonyHart34 I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate this instructor?
@@aaronbritzly3154 My advisor "sharon lee casey" , is a highly respected financial consultant in the industry. For further information or to connect with her, a simple online search with her name will suffice. I wish you every success in your endeavors
@@AnthonyHart34 I can see why She is so busy; her career and outstanding qualifications are Fascinating! So I immediately copied Sharon's complete name and pasted it into my browser.
Qyld sells cover calls at the money. JEPI sells cover calls out of the money or what they call strategic calls. There is a huge difference and we should not compare the two. QYLD also has return of capital and JEPI does not. My preference is to hold very little that has return of capital in any of my accounts. That is just me. Might want to go over the difference with your audience of dividend vs return of capital.
What is the best way to profit from the current market, meanwhile I'm still undecided about investing $400k in my stock portfolio to get some dvidends and minimize risk
Yes true, I have been in touch with a financial advisor. With an initial starting reserve of $80k, my advisor chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
Excellent video. I cannot seem to find any people who are using high dividend ETFs, such as JEPI, and using an aggressive weekly dollar cost averaging model to continuously buy new shares. This will of course compound the dividend, and then by reinvesting the dividends, compound further (of course with ebbs and flows depending on market conditions). Have you ever done an analysis on such a model? For reference, I currently do this with SPY and sell covered calls against the shares. Thank you, just subscribed and shared this with my investing circle.
One more thing. I am aware that something like SPY will appreciate much more over the long term. But my analysis is pointing to great growth once the monthly dividend cash flow REALLY starts to compound. Plus, the volatility smoothing appeals to me. Would love to hear your thoughts based on all your experience.
To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough. I've been quite unsure about investing in this current market and at the same time I feel it's the best time to get started on the market, what are your thoughts?
An identical mutual fund with the symbols JEPIX/JEPAX/JEPCX has existed since August 31st, 2018, so we can see a longer performance history. JEPIX has an expense ratio of 0.6% versus 0.35% for JEPI. So, theoretically, JEPI would have done 0.25% better than the institutional class of the identical mutual fund. The three year total annualized return is 8.55%, which translates to 8.8% equivalent for JEPI. Just thought I’d point this out since so few pieces on JEPI show the longer track record for the sister fund.
have you considered these ETFs may pay significantly less if the market falls hard then consolidates for years? options premiums could contract severely as volatility contracts during a prolonged multi-year sideways consolidation. but you won't be able to get out of the ETFs because they will have fallen so much doing so would incur a significant loss. there is not always a 'V' bottom. we might be in for years of nothingness
"dumb cat" not so dumb... :) This is a great warning to call covered call ETF investors; absolutely this would be the worst-case scenario. Implied volatility is essential to understanding the amount of income generated. In this case, the fund does own 80% of the underlying securities, so that provides some comfort. And those stocks tend to be lower volatility, so I think risks here are less substantial than most in the space.
I think the only covered calls options ETF that has been around for years is QQQX and it seems to perform well for years. The rest are so new and unpredictable.
Could you elaborate more on the point that you shouldn’t spend the whole income from the yield? Why and how did it go from $1M to $200K in the example you shared? Thanks in advance
Number 2 is exactly what I've been thinking, and thank you for confirming that. There is another problem that combines a few of your points. The unit price will fall inevitably. S&P 500 has a long time return of around 10%, and JEPI will underperform this. That means the return of JEPI will be lower than 10%. And consider the massive dividend of 14%, the mismatch must come from the drop in unit price. When the unit price drops too much, the dividend won't be able to stay the same in terms of dollar value. The % might stay the same, though. This means your income will be less and less. I think the idea of this kind of fund is to make you retire a bit early by making a portion of your portfolio in it so you can have enough income. Then over the years, both the unit value and the income drop. But hopefully, the other parts of your portfolio could have good dividend growth to cover that loss.
@@hansdatatrek234 Well, yes. You are absolutely right. Income investing will not give you income. The thing is, only some are so rational. Some people can't live well and sleep tight knowing they must sell shares. I would like to give you an example. Say you have 2 million dollars. If you buy SPY or VOO, your dividend is about 32k a year. That might not be enough. If you need more, you'll have to sell some of your shares. But if you make a portion of this, say 300k in JEPI or QYLD, your dividend goes up. That makes you live your life without selling any shares. That is a false feeling. You feel safe by doing the wrong things that don't make you safe. Yes, you don't need to sell shares, but that is done by JEPI, or QYLD loses its unit value. I hope I have explained this clearly.
Because of my early financial ignorance, I made my mistakes in buying these CC ETFs with the naive misunderstanding that they would be able to reduce volatility while still growing enough to sustain inflation. The reality is that this is not necessarily true and is also hard to back test to have a certain level of confidence to make plans for decades. Eventually all the pro arguments are a form of timing the market. They all work well in a down market but the point in investing is to accept the loss for when the market eventually recovers and goes up and this only works in a long term strategy. If one has a belief that the market is going down and these ETFs would loose less value why investing at all and just hold everything in cash until the market goes up? It would be interesting though to compare JEPI with a more balanced retirement portfolio delivering a similar drawdown to see which one would have the best return overall.
Yes I saw that but it is not directly comparable and 12% is not a realistic retirement withdrawal. What would be interesting, if there was sufficient historical data, was to see if a product as JEPI is a better option than a mixed stock/bond for retirement or FIRE. It seems to reduce the drawdown quite a lot which might be a good thing to maximize the safe withdrawal, in the hope to increase the 4% rule. Biggest reason why the 4% rule is one of the safest rate despite average yearly market returns are much higher is because there could be large volatility and you could deplete your capital in long times that the market is down. If JEPI can reduce the drawdown this problem is prevented. However, the problem is that there is no such historical data so it seems very hard to be considered blindly for FIRE.
Nathan, great video, thanks. In a world of low interest rates (last 6 months excluded, which I don't view as long term sustainable, given the amount of debt out there), what do you think of using JEPI or other high yield, short duration investment vehicles as bond proxies? Even though T-Bonds are "risk free", then ~6 - 10% upside seems to more than compensate for that risk, thoughts?
Depends on time horizon. I’d think for a more moderate time like 3-5 years, it could be useful for that. Less than 3 years, I’d think cash or short duration USTs are still ideal. JEPI will lose with a downturn, just not as much.
Hey Nathan, I've been following your channel is 2020! Always love your explanations and insight. I have question unrelated; what program are you using to make the presentations? Thank you.
There is a comment from Blue Sky that may help here. I don't know much about JEPQ yet (haven't even looked it up). Blue Sky comment below: "Brad … there are numerous videos on that and your broker research tap will tell you ….if you cannot figure something so basic as this out ..maybe you should not be investing….jepi leans towards sp500 stocks …jepq …to nasdac stocks"
Nathan, great review, you are amazing. I will argue that ELN Notes have a higher risk than you state, and you can't qualify it so that is a problem. With all the debt out there and monster amounts of CDS this creates all kinds of problems determining risk. In just over ten years the amount of new debt is staggering so counter parties could easily get in trouble.
Great point! It could be more of an issue than I assume; it helps to have the JPMorgan label behind it. I think they would step in if needed and if possible.
The other "youtuber" that you refer to was specifically talking about a period of time in which the index would NOT have faired as well, but that included the 2008 crisis, which yours does not. It was simply to prove that if you go with an index alone, the timing could ruin your nest egg. You take that comment way out of context in my opinion. I really enjoyed the rest of the video however.
14% dividend is too high. Imagine the taxes you will pay. And the capital returns will be negative over time. Just better off buying SPY or QQQ unless you have less than 100k and you want to maximise income.
Thanks! It depends on your goals. If you want higher returns, then probably. If you want downside protection in a recession or safety of principal, then Treasuries are the ticket.
If you cannot spend the entire dividend, what is the point? Lets say i have to put half back in, to avoid meltdown shown in the last few minutes of your video. Effectively this means i need twice as much capital in the initial investment. Those graphs are all trending down. To me this looks like a bank account where i draw out 14% per year, and receive interest of 5%.
You can spend it with some luck. It’s up 9% since inception. Mutual fund it is based on is JEPIX which is down a total of 8% over 5 years. I own JEPI and reinvest $$ I don’t need for expenses.
Sorry if I missed it in an earlier comment, but do your JEPI returns include the distribution or make any assumption about distribution reinvestment? I’ve had an investment in JEPI since February 2022 and while it is down on price about 4.75%, the distributions actually result in a positive total return this year.
I watched a video on COLD FUSION TV about banking scams. One of the examples that is an ongoing investigation is these ELM’s. Perhaps you could comment on these instruments in a video?
Great video! So if you were to retire tomorrow, and converted your whole pile of savings into JEPI and owned enough shares so that the "dividends" alone covered all required income so that you never needed to sell shares....just lived off of the monthly payout.....this is a poor strategy? I was thinking of investing heavily throughout my life into growth funds/stocks....accumulate a large stash and when I retire to do as described above. I was under the impression if you owned enough shares and the monthly payout of a JEPI or JEPQ or SCHD, as examples, was enough to never need to sell shares you could preserve the underlying investment forever or for MUCH longer. Would love some blunt advice as this has been my strategy yet very willing to correct course. Thanks!!
Technically yes you can and that's the point. And if there is enough, you continue to reinvest some of the dividend so it continues to increase the underlying asset and slowly increase your dividend payment over time.
Since inception JEPI has under performed SCHD, 14% vs. 23% avg annual return...And SCHD has no REITs, so after 60days, you will be earning growing qualified divs. What am I missing??
JEPI pays out a lot more income than SCHD. SCHD has a SEC yield of 3.43% and JEPI is at 14%. If current income is more important than capital appreciation, JEPI is the big winner.
Yes, this is 💯 accurate. Over the next 10, 20, 30 years, VOO will probably run circles around JEPI. If you’re looking for a diversifier against a sideways market, this isn’t a bad pick. But it definitely is in a long-term up market, which we usually have. Great point!
investing requires good experience and knowledge to carry out a good and successful trade, I have lost a lot trying to trade all by myself May I ask which investments are good??>>>>
I understand your concerns, my friend. I recommend exploring passive index fund investing and expanding your knowledge in this area. Personally, I experienced both successes and challenges when initially seeking a reliable passive income......,
There are a lot of strategies to make a tongue-wetting profit that the average Joe don't know. Personally, the financial market for me seems the only way forward with my long time horizon (accrued roughly $457k in gains since Mid 2021 ) but if you don’t have that fortune of time it’s a tough market out there almost nowhere feels safe!
If you’ve got patience I believe it’s a great time to invest… I’m no expert but as Warren buffet said he’s seen this happen a number of times throughout his life
I've known I had wanted to start investing for a few months but just haven't been brave enough to start due to the market so far this year. I have $60k I want to transfer into an S&S ISA but it's hard to bite the bullet and do it. $457 is a huge milestone, Please what's your strategy? I will love to have an insight
I began with a fiduciary portfolio advisor by the name *MARTHA ALONSO HARA* . She’s verifiable and her works ethics is in accordance with the US investment act of 1940. Her approach is transparent allowing total ownership and control over my portfolio with fees very reasonable in comparison with my investment income. Also, She covers things like investment insurance, ensuring retirement is well funded, and discussing tax advantages and ways to have a volatility buffer for investment risk. many things like that.
*MARTHA ALONSO HARA* really seems to know her stuff. I looked her up on the web using her full name and found her page, read through her resume, educational background, and qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I'll book a session with her
@mackenzie fventes You are right especially older Yt pros. used to see Graham's video promoting him. It's been a while, don't know why he does not own a video channel like others.
@@sakhalittle9206 Lol. I am one of them. Not a pro though not even close to that... Started last year and in all honesty, wish I had known about him earlier.
I've watched sooo many videos trying to understand JEPI the best way I can and I can say this is the best one I watched. So clearly explained. Thank you
yes you have to aware that continuing to invest during periods of volatility can be a smart way to build wealth. I’ve heard testimonies of people accruing over $250k in this red period. What measures can I take to achieve this?
Very true! I've been able to scale from $350K to $650K this red season because my FA figured out Defensive strategies to protect my portfolio and profit from this roller coaster market.
I am guided by Loreen Michelle Gilbert . I found her on a CNBC interview where she was featured and reached out to her. She has since provided entry and exit points on the securities I focus on. You can look her up online if you care for supervision..........
Thanks, I actually did look her up curiously and went through her credentials on her webbsite.…Top-notch! I wrote her an email, hopefully she’s accepting new intakes...........
1. JEPI sells out-of-the-money calls. This means that ALL the gains are not given away. 2. The ELNs are based on the S&P 500 index. Thus, JEPI does not ever lose holdings when the covered call goes against it. JEPI is 15% of my portfolio; I'm retired (early) and live off dividends.
if you sell covered calls so far out of the money that your stock never gets called away, your returns will be so low us treasuries would be a better investment. which means jepi is not selling calls that far out of the money and they will get hit from time to time. they will either have their stock called away, or they will have to roll the options which is expensive
You have helped me stay the course toward my financial goals. It is so tempting to change strategies or try and time the market. But long term investing in simply investing in the market and having a high savings rate will get me to my retirement goal. It's that simple. You helped me to see that. Thanks
One of the best videos I have seen on covered ETFs. As you say other content producers suggest you can take the 12-15% yield on QYLD and retire on $250,000. You covered the technicalities as clearly as possible in a short video.
I hold 4000 shares of JEPI in a retirement account. The monthly dividend has served to subsidize a huge portion of my RMDs. I am strengthening my position in Jepq to prepare for when Tech stocks rise again. You were adamant about not spending the income however I have not sold off any shares and done just fine spending the income
Great video. you've reminded me of what someone once said ❤ Your assets are your employees. Invest more on those performing well. Let the non-performers go
@@donaldmark3197 Haha you don't have to be surprised Mrs Lauren is really good and everyone loves genuine services,she helped me recover what I lost trying to trade on my own.
Great video. I have a friend high up within JPM that recommended JEPI, back in 2020, specifically for my roth IRA to avoid the taxes and to keep the cash flow coming in. I can confirm that for a downward/choppy market, JEPI is solid pick. However, for a rising market JEPI is also a solid backup/reinforcement for whatever you're using as your value/growth fund. My friend recommended sitting on cash and use the JEPI dividends to re-investment more into in a sp500 fund, such as VOO or SPY, when the market finally pivots and begins going back up. JEPI itself is ok, but using it with what outpreforms or keeps up with the markets is the key. For example, 2020 and 2021, VGT with JEPI, massive technology growth with JEPI = big win, last year, as the market corrected, I swapped VGT for XLE. XLE along with JEPI in my roth, this combination of growth and reinvesting monthly dividends along with a monthly contribution crushed the market, XLE was up over 50% while jepi fell about 14%, however jepi made up the 14% from the dividends. The key is to have JEPI with a solid fund that beats/keeps up with the market. IMO, 2023 any sp500 after q1 along with jepi. Maybe with more risk go back to VGT/QQQ. Good luck to everyone!
Your strategy is non-sensical. If you’re putting all the dividends into a different fund, then logically you should liquidate your JEPI holdings and put the cash into those funds as well.
@@IndexInvestingWithCole No, I shouldn't. There is no way I can know exactly what will do well in the future, nor will I ever put all my funds into a single stock/etf/fund. The cashflow accumulated along with my contributions over the long term will be better down the road than now. I prefer a solid foundation of cashflow along with growth. In order to do that, I'm gonna have to sacrifice some growth short-term. In the past 3 years, I've made a little over 5k in JEPI dividends alone, so at current pace, ever 4-4.5 years, I'm able to squeeze an extra year of cash into my Roth, and choose where to invest depending on current data. So unless i know exactly where to move my funds, then sure ill take more risk and buy more. However, what if I'm wrong and what I invest in doesn't preform well? Thats why its good to extra cash ready on the side to adjust and minimizes losses. So my preference is establishing a solid cash flow base short-term, so more can be invested longterm. On top of that, i wont see this money for at least another 20 years. Im purposefully setting up my roth for more cash flow than growth. Whereas my 401 and other investment accounts are for growth, so I take more risk in the small and mid caps. That post was 6 months ago, and with the data I had, it looked like it would be a good idea to use the extra cash for certain domestics etf. Example, the tech sector is killing it, so vgt, qqq, and close others are killing it. However, with the current data, international funds are beating the the sp500, with the exception of blue chip funds, I believe if you follow any Russell 1000 value/growth funds they should be up 45-50%, right along the nasdaq example fbgrx and say vgt. But I'm expecting a pullback when Powell speaks next week. So again that extra cash flow is going allow me to buy more over the long term. I wouldn't liquidate jepi because having the extra 1.5-2k annually in cash flow in a Roth is amazing and it continues to go up as i maintain the balance i have for jepi and other etfs in my portfolio. Especially the tax free part. Jepi is about 90% options, so all taxed at ordinary, while 10% are qualified.
In 20 years? What in the world are you doing? and why are you investing into an income fund? JEPI is not a growth fund. In 20 years you'll kick yourself when you realize what you are doing. JEPI will never outperform the stocks in holds in the long term.
@@J-D248 I don't invest in jepi for growth, I never said that. I use it for generating cash flow. I use that cash along with my contributions and invest in other funds that do grow significantly more. I'm willing to cut bit of growth so I can increase the cash flow into my Roth in order to invest more into other funds to accelerate growth down the road. Examples, a few years back, 2021, VGT gave me 26% returns and JEPI was also up 6%. I made an extra 1.6k in dividends to reinvest. In terms of raw value I was 'down' a few thousand had I went completely in vgt which was ~2% difference. 2022, I liquidated vgt and swapped it for xle and bought more jepi. I was able to put 6k of contributions and the extra 1.6k from dividends into xle as the year when on. My returns were over 50%, while anyone who followed any sp500 fund was down over 20%. I ended the year with over 1.9k dividends, i was 'down' a few hundred when i compared to going fully into vgt and then into xle from 2021-2022. 2023, in January, I sold all my xle and went back into tech and bought vgt again. The margin of how much I miss from going all in on growth with no cash flow is slowly eroding away. So think about, if I'm putting the max 6500 this year and an few extra thousand from from dividends now vs someone who is putting all 6500 into growth, with no or very little extra cash flow, what happens? In the short term, most people will have better returns, however what will happen as I'm able to invest more because of the increased cash flow over time? I'll out-pace those same people way further down the road. I'm trying to optimize growth and cash flow. Going strictly 100% growth means very little cash flow, the other extreme is way worse, there's no growth lol. So I'm finding that sweet spot. I won't be kicking myself at all. My roth isn't my only investing account. I have a purpose for my roth and I've stuck to it for a long time, and I'm very pleased. I don't like holding stocks in my Roth. I buy stocks in my brokerage account, so I can have access to the gains without being penalized and i can access the money now. So example, stocks I bought in 2020 post covid were like MOS, CF. then I sold them in 2022 and bought First solar because of what I was hearing about the inflation reduction act and the amount of money that was going to flow into solar, hydrogen, ev stocks. That type of more of active trading/investing that I enjoy in my brokerage account, not a retirement account.
Hi Nathan, great video. JEPI sounds very interesting. It sounds similar to Hamilton's HYLD (on the TSX), which writes covered calls and 1.25x leverage, to attempt to get similar returns as the SP500 with around 14% yield. JEPI does seem safer because of the lower volatility, and apparently does not use leverage. What I am *very* curious about is if you are able to model at what rate JEPI needs to be reinvested to retain its value. My immediate gut says half of the yield would have to go back in, leaving someone about 5-7% useable yield if the goal is for the nominal value to not go down.
JEPI is up 11% since inception. Technically you could have spent all the yield since 2020. That being said, I reinvest what I don’t need. Retired 4/22.
One thing I don't like about SCHD (one of my favorite core ETF's) is that if you're holding a large position and you want to sell covered calls against it in a sideways or even bear market, the options premiums are pretty much garbage, even ATM, meaning that you assume a much higher risk of your underlying being called away in an unexpected market upswing, while not collecting enough premium to justify that risk. JEPI seems like it would be a great holding to pair with a core fund like SCHD, since it does the call writing for you, with much higher premiums collected, minimal risk, and a very attractive expense ratio when considering what you're getting for the money.
Exactly I like to take the dividends from JEPI and reinvest some back into Jepi and some into s c h d along with a little growth. Like SCH X. I feel like that's a well-rounded approach with jepi and has been working for me this year.
even if you are selling covered calls on a volatile stock like tsla if you don't want your stock to get called away you will have to sell so far otm you might be better off just buying us treasuries. jepi risks their stocks being called away or rolling. obviously they are rolling which can get expensive. if the market blasts higher jepi could be hurt. they will not be able to roll forever and their stocks could be called away. then they will be stuck with buying back the stocks at scary prices, risking a big drawdown if the market then falls. covered call writing is not that easy
Thanks for this. Honestly, this ETF is hard to understand imo. The ELNs seems like a big black box to me. Like, how do they achieve such high yields while only 20% of the assets are involved in covered calls? Especially if the covered calls aren't ATM like other CC etfs as some people suggest. And also while also having NAV appreciation. The results are amazing, so whatever the ELNs are doing it seems to be working, but I just don't understand why they perform so well. I guess it's just because the stocks they pick have low volatility relative to QQQ or even SPY.
Don't confuse dividend yields with total returns.. There's a lot of people that think "Oh it's got a 10% dividend! It must make people a lot of money!" A stock with a 10% dividend and a 2% total return is not better than a stock with a 2% dividend with a 10% total return. It's hedging those stocks, the stocks are not low volatility. Selling covered calls is a way to profit when the stocks do anything except go up. The drawback is the upside is capped, and when the stocks go down, you won't profit to cover the entire the loss in equity. This ETF isn't meant for long term investing, it's meant to have less volatility for those that need income.
That was a great over view Nathan. You confirmed much of my own research with some different sources which is a confidence builder of course. For me personally, I am utilizing JEPI as a bond alternative. I was very impressed in how it performed, especially in this recent bear market in bonds, versus even the treasuries. My feeling is that it is also a great boost to utilize for building an income stream to enhance your rate of reinvest into lower dividend yielding vehicles that I intend to buy and hold, such as Apple and Microsoft. I see it as kind of “front-loading” my income to offset the lower dividends I receive in positions such as Apple, Microsoft and UNH. Throw in DIVO (another covered call ETF I would love to see you review btw) and SCHD and you have the foundation for a strong Dividend base around which you could build a few individual stocks when great value opportunities allow to build up your DGR and Yield. Thanks again sir!
Your comparing JEPI to QYLD. QYLD writes at the money calls on 100% of their portfolio. JEPI is using up to 20% of their portfolio to invest in ELN’s which are writing call options. They are not the same.
Hi Nathan! I was was one of your subscribers requesting this video so thanks! A couple of points, first my understanding is that JEPI is the ETF version of an older mutual fund called JEPIX that goes back to 2018 so you have some more performance data to consider. Second, I am not sure QYLD is a fair comparison with JEPI since it is not known where JEPI writes it’s covered calls. Confirming where JEPI writes its calls would go a long way to adding confidence in its performance. I have a mix of JEPI and SCHD in my dividend income portfolio and have been very happy compared to the overall market.
There was a recent interview, about 2-3 months back, where the fund manager said they are slightly out of the money. i think that is a good thing, in terms of being able to maintain the NAV.
I would add QYLD writes its calls systematically monthly on its (I believe) entire portfolio. Blindly writing calls on an entire portfolio can lead to turnover and value loss. JEPI and JEPQ writes its calls a significantly smaller ratio. Being actively managed allows for strategic calls and hopefully less turnover in stocks.
I’m 70 years old and own 5000 shares of jepi. My dividends go in my settlement fund. When I withdraw money I option to pay 25 percent in taxes. My dividends range from 2800-3800 monthly. So your now telling me that’s a bad idea?
Excellent breakdown. I wasn’t sure if I wanted to sink some money into JEPI before I watched this video. I’m still not 100% certain this is an investment for me, but you have helped allay some of my uncertainty.
To your point of holding JEPI when you believe the market will be flat or decrease in value, I think that is the best time to hold JEPI. In addition to that observation, I would say when the market collapses or you believe the market is mostly undervalued, then sell JEPI and buy a S&P 500 index or Nasdaq 100 index fund. This way you are not timing the market. You are only having an opinion of the overall valuation of the market.
Great analysis. Would have loved to see a comparison to SCHD instead of VIG. SCHD is only down -0.44% YTD vs -1.57% for JEPI. There’s no thesis or data supporting holding JEPI over SCHD for the equivalent amount of “income” being distributed. No capped upside for SCHD and a foundation of dividend growth. No debt instruments involved. 600% less in management fees. Add in the favorable tax treatment of its dividends and it really isn’t close.
My preference would also be for SCHD between that and JEPI. But I do think JEPI provides some interesting diversification for someone who would like to diversify against a bear market or a sideways market.
@@NathanWinklepleckCFA it definitely isn’t a bad fund for those purposes and the lower volatility and high income could provide more “sleep well at night” feelings when most investors are feeling max pain. A comfortably-held JEPI is certainly much better than a panic-sold SPY in a bear market. The data shows most retail investors don’t behave in such a way to see the true long term returns of the market. Maybe funds like JEPI could help improve those numbers.
15:00 very misleading section here. You're comparing JEPI to QYLD which sells ATM calls and has virtually no upside. You can indeed spend all of the income if you want in JEPI and the share price will still climb over time barring any sustained bear market.
You sure about that? It is possible that happens, but unlikely imo. I'd gladly make an amendment to the video if proven wrong, but I think dangerous advice suggesting people can spend 8-14% annually of their portfolio.
Are you ready to unlock the secrets of financial independence and wealth creation? Transform your mindset in just 8 days with this free mini-course. You'll learn the powerful habits and perspectives of the most successful investors of all-time (like Warren Buffett) and people who have successfully built wealth (like the $8 million janitor). If you're ready to take control of your financial future, sign up for the free course here: eepurl.com/iw26Uw
Nathan I have a $200k portfolio with 21 ETF's ranging from CLM/QYLD/OPP/PDI/RIV/RA/YYY just to name a few off the top of my head. It's a 100% income focused portfolio and I guess it's the shortcut you are referring to in this video that you claim doesn't exist over the long term. I have only been doing this 2 years I really don't know just copying someone else I found on RU-vid who you are probably referring to. I have an average of 12% yield and was planning to get to about 600k to try to live off the dividends at 6k/m passive but knowing I only need 3k/m in reality so it's essentially my fail safe if it declines over time. Do you think this is a pipe dream or do you think it will collapse on itself before 25 years time once I stop reinvesting everything and start living off of it? Technically even if your market value drops 75% in 10 years like you show in the video you would still be getting most if not all of the yields and unless you are forced out of the positions or they do a bunch of yield reductions/splits or whatever you could still keep collecting your "rents" as if you had a property that lost 75% of it's paper value but the renters never left? Appreciative of any feedback you have on this.
21etfs is useless and over diversified in my opinion, not financial advice. I would keep 4-5 etfs and aim at a 6-7% yield that is sustainable and can also make the portfolio grow a bit. 12% is not. 100% you will lose principle over time. Ask a financial advisor for consultation. With all that money it might be worth it
Great analysis. Jepi is great for income and I think occasionally you have to re-invest the dividends and not continuously spend the money as you said. My mom has been in it for over a year and loves the income.
Thanks for the video. What if someone was to retire and move their1.25mill dollar 401k into an IRA. put 25% each into SCHD,DGRO,JEPI,JEPQ. Then just live off the dividends and not sell any of the base investment. Thinking this would create ~6K/month. Is there a downside to this other than the dividend could change or stop.
Retired 2 years ago with 50 VOO, 25 JEPI, 25 JEPQ. I have not sold any shares. I have added shares. Principal took a hit last year but is rebounding this year. Paying all expenses and reinvesting the rest. Variable dividends can be a pain though.
In December of 2021 Jepi was $63. Now it's $54. So they pay the dividend and the NAV drops. It's a head fake. You are just getting your own money back.
@@NathanWinklepleckCFA Other ETF's drop by the monthy dividend too, but the NAV rises over the course of the next month as interest is accrued. JEPI is not a bond fund, there is no interest accruing to bring the NAV back up each month. Technically, they are not paying "dividends" each month like you mention. But more importantly, it's an open end fund that grows like a balloon when they get inflows. If it was a closed end fund the managers would have close one position in order to enter another position. They put money to work based on monthly inflows, now at 20 billion. Just wait until they have outflows. They will need to rob Peter to pay Paul.
@@RazorBoy22402 was $50 at inception. Ran up to $63 with boom in all stocks. Dropped down and is at $54.60 now. Has paid out about $15 in dividends since inception. Don’t see a dividend trap.
JEPI is currently my largest holding at about 5%. Very happy with the performance so far but I understand it won't always perform this well. The ELNs are nothing to fear imo. They are only 20% of the fund and split between multiple lenders.
To complicated, not worth the risk. Just buy SCHD and collect a 3-4% dividend along with potential 1-10% in price appreciation annually. All from quality stocks that don't need ridiculious financial instruments to succeed.
JEPI continues to lose stock value over time. So it basically eats up your dividends. After all, when the market is up, they have to deliver the stocks, and when it is down, the stocks just lose value and never get it back as the stocks have to be delivered again as they try to claw their way back. It's a no win gimmick.
It’s definitely gimmicky in the sense that you’re not really going to get a 14 yield for total return, but it’s not necessarily destined to go down in value as you suggest. But, i agree with you that it’s not a panacea that most people seem to think. It serves a useful spot in a portfolio as a bet on less volatility occurring than market participants were paying for and a hedge against a sideways market, which it would do really well in. But, other than that, it’s certainly not going to help you as much as other things in a down market and definitely not in an up market. So as long as people understand it’s place-which most don’t-then it can be useful.
This fund is an ideal investment for the investor who is nearing retirement or already retired. Capital appreciation increases your wealth on paper, but dividends are real income. You are enjoying capital appreciation through dividends without having to sell the underlying security. You can invest in other equities or in a S&P 500 index fund to help your portfolio keep up with inflation. Your withdrawals from your portfolio should be less than your average return from that portfolio no matter what securites you hold.
VIX is above 20 and the SEC yield is high at 10%. The ETF will be capped in a bull market and the VIX will go to ten. That is a 5% yield and you did not get the upside of the bull market. Do the poor mans covered call. Best risk vs reward. Covered calls suck versus SCHD or QQQ for 15 years.
