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PRIV, BDCs such as BIZD, etc.
have owned off/on for years, great company along with DX and NLY, they are 3 residential MBS companies with high yields. Only own when most likely that 10yr yields are heading lower, then the MBS loans go up in value and so does AGNC's NAV -net asset value, and then so does it's price. With FED cutting overnight rate by 100bips in last 8 months and likely to cut more over next 2 years, the 10yr is more likely to trend down, FED is cutting due to inflation falling, the 10yr yield = inflation rate + GDP growth rate. IF both are heading lower, like now with Tariffs decreasing global demand and decreased M2 causing lower inflation last 3 yrs, since 9.1% july of 2022. Then very good time to now own mREITs like DX/NLY/AGNC. you can use any temporary rise in 10yr yields like April 6th to May 21st to buy low on AGNC It's a trading vehicle, not a long term hold when 10yr yield in a sustained rise, play the opposite side with BDCs, like BIZD or PBDC etfs
It is a very good idea but SCHD is not the best choice for this. They yield is very small. 100,000 in SCHD would only earn about 325 a month. Only enough to buy a little food or and maybe cover your utility bill. I did what your are proposing. I would use QQQI. QQQI has a higher yield 13% and the fund management takes steps to reduce the tax you pay on the dividend you receive. This ould generate about 1000 a month from your 100K deposit. Do not automatically reinvest the dividends. Instead they will appear as cash in your acount My brokerage put the money in money market account. Use the cash to pay billls or rebuild your emergency fund. At this point you have self refilling emergency fund. it will refill slowly but it will rebuild. As as much money as you can to increase the income Eventually you will have an eveThe rmgency cash in the money market account. And you could get enough income to cover er all of your living expenses. In my case that is 4K a mont. Enough to cover my living expenses (I live in high cost of living area).For 4K a month you would need about 400K in QQQI There are many funds you could use such as UTF 7% yield, PBDC 8%, PBDC 9%, BIZD 11%, SPYI 11%, BTCI 24% and many more. The key is to get the highest you feel ocmfortable with and if possible use a fund that payshas a lowe tax on the dividend you receive. Most of the funds I have listed are taxed as ordinary income. But they are useful for the income they create. Once I had enough income I started adding more funds until I had enough to retire early at 55. Also I reinvest about 1K a month to gradually grow my income. Hopefully enough income growth to cancel out inflation. No mater which fund you will use you will genrate taxable income. The best way to handle this is to estimate the additional tax you willl pay with the assumption that all of the dividdends are taxed as ordinary income. The highest taxrate to insure you have more than enough. Then you could put the money asside in monoy market account and use it to cover the april tax bill. Eventually you will start to charged with a lat payment of tax penalty. At this point start sending quarterly tax payments to the IRS.IF the estimate is low you owe more. IFyou pay too much you get money back.
you are assuming low volatility means low returns. Look at BIZD a 11% dividend yield. meaning an aaverage total return about the same as the average for the s&P500 index funds..
You best bet is a dividned fund or stock that returns about 10% yield. At a 10 % yield the dividned cash payments will equal the purchase price of the fund or stock you purchased. So you are guarantied to get about all of you initial investment back from dividneds alone.after 10years. If the stare price goes up you will acan add captial gains fto your dividend income.I This assumes you don't reinvest the dividneds. If you reinvest the dividends the time needed is deterred by the rule of 72. If you reinvest the dividends the time needed to recover your initial investment with a yield of 10% is is 7.2 years. With S&P500 index fund or other similar index funds with about a 1% yield you would have to hold the fund for 100 yiears to get you money back from the dividneds. While the dividend income is very stable and predictable the share price is not. In a market crash is is not unusual to see share by 10% to 30% and yet most companes concubine to pay the dividned. What finds off reasonably stable yield yield dividends BIZD 10% and /PBDC9%. These two fund invest is a group of buisness development companes. (BDC). BDCs loan money to businesses. And they are required by law to return 90% of their earnings as dividneds. So most BDCs have high yields. Both of these funds are actively managed and picked the what they believe are the best BDCs to invest in. General consensus is PBDC does a better job of picking the BDCs it invests in. The dividned s from BDCs are always unqualified and are taxed as income. Now these funds are required by SEC law are required to add BDCs expenses to the funds expenses. So any tax or fees a BDC pays to run itsits buisnesee must be added to the ETFs expense. The ETF never pays the the BDC expense. So officially PBDC posts an expense of 13%. But is your read teh prospectus that and exclude the BDC expenses the ETFs expense is 0.75% Which is about in line with an actively managed ETF. Another option are covered call funds. These funds use a trading strategy know as covered calls to to changes in share price into divined. income. In my opinion some of the best ones for a 10 year investment are JEPQ 10%, SPYI 11%, and QQQI 13%. JEPQ and QQI hold the NASDAC 100 index stocks. while SPYI hold the SP500 stocks. ?EPQ produces unqualified dividneds while SPYI and QQQI take steps to reduce the tax you pay on the dividends. There are other covered call funds that have higher yields of 20% or more. But NAV erosion is a significant issues with these funds and instead of holding stock they write covers calls on the hold cash or cash equivalents instead. So these fund also have significantly less retention of capital gain. in the stock price. .
Right now i would look for a guarenteeded return on investment if you could find it. While dividends are not guaranteed they are highly predictable and reliable. Much more than Captial gains from an index fund. Most companes continued to pay there dividned during the 2008 downturn,the covid 19 market crash, The three years (200 to 2003) were the S&P500 3 years of negative returns. . With a fund like PFF you could get % per year. BIZD has a yield of about 10% a year. And some newer funds like JEPQ and SPYI also yield about 10%.
The best way to save money is to set up a direct deposit from your employer to your savings account. You like have direct deposit setup pay. After paying off my education debt in 1990s. i had my employer deposit 200 into my savings and the rest into my checking account. This guarantied by savings would grow by 2400 a year. So when I had to get new car I had money available. And I kept that car for 20 years and when I replaced it again I had cash available to do it. However do to inflation 200 is not what it was. So I would tray $400 for starters and if possible increase it. $ 25,000 in 2000 is now about $47,000 in 2025 due to inflation. So I would plan on saving up about double or 50K. for a new car. You can use a high yield savings or you can open a brokerage account and get a similar yield with money market fund. to you voulf buy rhe $400 a month in sn ETF such as BIZD, zPBDC. JEPQ, or SPYI. All of the funds have a dividned of about 10%. IF the dividneds are reinvested you 10 years your account would be worth about 81,000 which you could sell shares to generate the cash for a new car. IF you let the fund grow ofr 20 years fund would be worth about 300K and the yearly dividned income would be about 30k a year. Meaning at that point you could stop reinvesting the dividned and put the cash in money market fund. and build up a 30K cash balance in 1 year. If you increase the 400 a month to 800 you ould have $163,000 in 10 years and in 20 600k.
An excelent option of CDs is dividend stocks Some companies return a portion of their profit to share holders as cash payment. Dividend yield very from stock to stock put can be from 1% up to and over 20%. Risk does increase with higher yields but the risk is quit low at the 1% to 10% range. For example ETF such as PFF and PFFD have a yeild of 6%. Funds like BIZD 10% an and PBDC 9%. And then there are covert call funds like JEPI 7%, KNG 9%, jEPQ10%, and SOPYI11% IF you had $100,000 in SPYI you would get about $11,000 cash payment. I currently get 50k a year from dividneds and I retired at age 55.
Dividends are very helpful in bull market. When the share price is down you still willl get dividends. S&P500 funds have a long term average growth of about 10% So to get similar performance from dividneds you need a fund with a dividend as close as possible or higher than 10. SCHD has some good growth attributes but its dividned is very small, 3.5%. Some good options are: * KNG 9% yield, JEPI 7%, JEPQ10. These are covered call funds that use adding activities to convert share price swings (up and down) to income. So the long term growth is less than the index they follow but they have a high resonably stable dividned. There are covered call funds that produce higher yields 20% or more but they often have problems with NAV erosion and there are concerns about their long tern durability. I am not aware of any covered call fund that has failed. The covered call stratagy is about 40 years old and it is widely used. Only recently have covered call ETF become available.An old one DIVO has a field of 5%. All of these funds produce regular dividends which are taxed at the higher income rate. * SPYI 11% yield and QQQI 13% are some of the newest covered call funds but with a twist. They incoperagte tax loss harvesting to reduce teh tax you pay on the dividneds. Thee can be used in a taxable or retirement account. * BIZD 10% yield, PBDC 9%. These funds only invest in Business Development Corperatations These companes are required by law to return most of their invoke to sharholds as dividneds. So the dividneds are higher. Now these funds are currently required by law to to report teh funds expenses plus any expenses the BDCs they hold insure. However any expense incurred by the BDC is payed by the BDC not the ETF.IF you exclude this SEC requriement the expense for the fund drops form 13% too 0.75. These companes have a history of paying dividends in a bear market sucks h as the lost Decade of 2000 to 2010 when growth funds dividned have much growth.These funds all produce regular dividends. Just a note on taxes. Don't let teh fear of taxes dictate your investment choices. The tax on dividends is often less than people expect. Calculate the estimated tax impact before you invest. For my self I have determined that 100K of regular dividends in a taxable account with no work income would result in a tax of about 10K a year. leaving 90k of spending money. So 500K in a taxa le account with one or more of the above funds would make a great retiement i ncome fund or an emergency fund.
Most retires prefer a much more reliable passive income because they want to preserve capital as long as possible Traditionally that was done with bonds. However at the long term average yield of SCHD and bonds that amount of money you would need is simply out of reach of many people. 4000 a month today would be good minimum income level for a retiree. But with SCHD you would need about 1.4 million to earn that much pasive income. This is simply out of reach with many peppy today making minimum wage. bonds also don't keep up with inflation. Today you can get a higher yield with dividned funds. Yields of 6% or higher are possible You an get a 6% yield with funds like PFF and PFFD. 9% with funds like KNG, BIZD, and PBDC, and with JEPQ and SPYI you can get 11%. And even higher yeilds are possible.
You might want to learn more avbout investing and do it yourself. .you could just half in VOO and the other half in VXUS and the money in good market conditions could double 1 million in about 7 years. But with everything going on in washington DC i thing the market will be flat or worse for the next 4 years. The other option would be to invest for dividneds 500 million with 33% invested in BIZD 10% yield, 33% in SPYI 11% yield, and 33% in PFF 6.2%. . 500K invested this way in a taxable account would generate about 45,000 cash payments to you. IF you are working you could reinvest the dividned to keep the amount growing, and gradually increasing the yearly dividned. If you should loose your job you could stop the dividend reinvestments and use teh dividends to cover your living expenses until you get a new job. Tax on rt k is would estimate at about 4,000 per if the dividends were your only soulce of income You would've to talk to a tax professional to to figure out what your tax would be. with you job income. This doesn't generate money for house in the next few years but if you just grow the just reinvest the money for 8 years your your yearly income would be higher possibly 90K a year which would make owning a home easier.
BIZD 10%, PBDC 9%, JEPQ 10%,APYI11%kng 9%
Dividends from where? You can always look into private credit funds (BIZD, GBDC, BKLN are a few examples for you to research).
diiviedned funds are great place to put money when you are worried about the market. You know about REITs and I completely with your opinion on then now. They were better in the past. REITs are required to return most of their profit to investors. So the Yield is typically higher than most other dividned funds. BDCs (Business Development cocmpanies) loan money to and sometimes invest in smaller companies. qqq They are also required to return most of their profit to investors. They frequently pay around 9%. BIZD and PBDC are two ETFs that invest in these companies. Now they are also required to list their expenses as well as the expenses the BDC insure. However in practice the BDCs pay those expenses not the ETFs. So these funds list total expenses of about 12 to 13%. The ETF only expense is less than 1%. BDC however do only produce unqualified dividends. These are a very good option. Also in the last 10 years Covered call ETFS have appeared. These use a trading activity called covered calls to gernate income. From 5 to about 13% there are a lot of good ETFs to choose from. Above that you start to get into the wild west of CC ETFs. Some generate 20 to 30% dividneds. but there can be considerable variability in the payout and NAV erosion is often visible in the share price. My favorite right now are DIVO 5%, JEPI 7%, KNG 9%, JEPQ 10% and SPYI 11% and QQQI 13%. I currently only own JEPQ and SPYI. These generally produce mainly unqualified dividends with some qualified dividends some like SPYI and QQQI also take advantage of tax loss harvesting (when possible) to help lower your tax.
It really depends on your risk tolerance. Maany that post these questions only look toUS bonds or other similar investments. Mainly because they extremely risk avers. And their voice appear to dominate ether discussions. Also many think the emergency fund must be highly liquid because the assumption is that you need the money right now, But a credit card is a good alternative because you can get a lot of cash very quickly with it. So after you pay with the credit card you have time to liquidate assets to pay off the card in full within a couple of weeks. Index fundsVOO and VTI make a create emergency asset in this situation. And they are most tax efficient of all of your options. There are people out there with several years of money in a taxable account for this reason. And these funds typically have an average realtor n of 10% which is vastly higher than most bond, money market, CDs. Many are aware of teh risks of index funds and already use them for their retirment savings. But once you reach about 5 years of savings you should consider adding passive income to your account. Now passive income does include US bonds and money market accounts. But it can also include cooperate bonds that pay a higher rate. SCHY and USHY are to such funds that payabout 7%Tehre are. But with stock dividends you could do much better. Some comapnies actually return a small portion of there proffict to investors in the form of dividend cash oayments, There are companies out there that have for decades Dividend Aristocrat stocks are companes that have been paying a dividned for at least 20 years (some for 100 years) and typically increase the dividend a little bit almost every year.A fund like NOBL invests in these copnaies The yield isn't great 2% but it is very stable. But there are other funds like BIZD that invest in difffertn companes and pay out 10% for about 11 yers. PBDC is similar but only appears a couple of years ago at 9%. There are a largenumber of funds trough 10% to choose from. With such a high reliable yield you could easily get several thousand dollars a month of income fringe your investments. I started converting index fund and stock growth assets in my emergency fund several years ago in dividned producing assets. I now have 4000 a month of income with several years of money in index funds or growth stocks. I retired at age 55. The passive income covers all of my living expense and if I have a large unexpected expense I have my credit card and index funds available. I don't expect to need social security until age 70.
You should have a minimum of one tax deferred retirement account and a least one passive income account. Retirement account ts are great but it shard to access the money until year reach age 60. It won't help you if you loose your job or have to take an extended period of time off to recover from an injury. Many recumbent a 6 month emergency fund. Not mucbbhelp if your are unemployed for more than a year. In comparison a passive income fund invests in companies that pay a dividned or in corporate or government bands. Basically instead of inviting fro growth you invest for income. Right now I am not working and have an income of 4000 a month. Enough money to cover all of my living expense. And I don't have to sell any stock to get the money. And the income will last indefinitely. You can use ETF like SPYI (11% yield), BIZD 10% yield, PFF 6%, SCYB 7% , SCHY 4.5%, and SCHD 3.6%. And there are many others. Your passive income account must be in a taxable brokerage account with no restrictions on the access to the funds. So you will have to pay tax on the income. Now many worry about taxers. But the government only taxes a portion of the income. So it you can set the money asside in money market account. And then when you need to pay the tax you have money to pay it. Additionally if you loose your job your only income might be your passive income. The IRS allows you to have an income 47,500 and they won't charge you any tax on it. IF you make a little more than that then you pay a little bit of tax. For my self I have calculated that if I had an income of 100,000 my tax would be about 10,000. Leaving me with 90,000 to spend. You can slowly build it up over time just like you do with Roth or 401K accounts. And reinvest the dividneds to help the account grow. Once you reach your target income level you can reinvest the dividends in index fund like VOO or VTI. Thes pay a minimal dividend so minimal additional tax. SCHG and QQQM are two growth funds withe lowest dividned I have seen at about 0.6%. If you have an unexpected expense that exceeds your passive income you can sell the growth funds to get the additional money. You can save several yours of money in growth fund and have minimal impact on your toes.
I would rather lock in a guarantied 9 to 10% return using BIZD or PBDC. Yes it is not a spatial gains stock I They are dividend stocks and they cost a lot less than NAViDIA With dividneds reinvested your 40K would likely be worth 60K in 5 years with about a 6000 per year dividend. At 7 years it would be worth almost 100K with a 10,000 a year dividend. How many bits could you pay with 10,000 a year?
So I would get puts ready in Tesla. Currently there is a nationwide Powerwall 3 shortage. So 395 by Friday, 390 by end of next week. Increasing stake in BIZD. Getting a frosty from Wendy's tonight.
Do you think the low of BIZD has already occurred? Looks like a good buy
For BDC I would invest in an ETF like BIZD or PBDC which only invest in BDCs. So you aren't investing in one or two but many which should reduce risk.
Relistate (Reits are required by law to return most of their earnings through the dividend. So the wild is higher. BDCs (Business Developers companies) loan or invest ing developing companies. They also are require3d to return most of their earning through dividends. PBDC is an ETF that invests only in BDCs and has a 9% yeil. you could invest in the ETF or you could buy individual stocks of the companies that invest in. BIZD is a similar ETF but pays a slightly higher dividned. Note the SEC requires BDC fund list their expenses plus the expense the BDCs may incur. Typically expenses the BDC incurs are handed by the company and not passed onto the fund. As result of this PBDC list its total expenses at about 13%. But if you exclude ether BDC incurred expenses the funds expense are 0.75%. all the issues int With all the issues in teh realistic isalistate today bdcs might be a better choice. I have gotten good result with ARCC and recently added PBDC to my right.
This is a common problem especially for low earner and those investing in index funds. Most of the growth in a portfolio does not come from capital gains. I comes by reinvesting the dividends. S&P index funds have great capital gains in good years but the dividend is only 1.3%. 75% of long term earning S&P index funds comes from Dividend reinvestment. u25% comes from capital gans the reason for this is that capital gains is not real money until you well. So capital gains doesn't nicer the number of shares you own. Dividend on the other had are is real money that is deposited monthly or quarterly into your retirement account. And The Dividend does buy additional shares. So If you have 100,000 in a Roth account and are investing $7000 a year a S&Pindex fund will only add $ 1,300.per year. So your total investment per year is $8,300 However if you switch to a dividen d fund earning 7% your total .yearly investment is $14,000. The fund is now growing twice as fast. I would recomnebnt Switching to a high dividend fund as soon as you can. With covered call funds you can easily get 10% yield. The two I would recumbent are FEPI (&%) and JEPQ (10%) Or you could invetin Business Development Corporation's (BDCs) that typically have a yield of about 9% Two funds that only invest in BDC are BIZD and PBDC. And there are numerous other funds in the 4 to 7% range. All of whichwhould exceed the dividend from the most common used index funds. Now at which high yields you likely wouldn't get much capital gains. But after your account get over 200K you can start adding small amounts of goth funds, and deversify your dividend income stream.
the primary attraction of REITs is the high dividend inc one. This can be used to provide living income or be used to proving more money depoists into a retirement fund. The High dividend is due to a tax law. REITS are required to return most of their income as dividends. This tax law also effects other business, notably Business Development Corporation's (BDCs). REITs are being impacted by the Covid. Many businesses closeted their offices and had people work from home. There are still a lot of empty office buildings. Which is lowering the performance of REITs. The high inflation rate is also impacting REITs BDC loan money to smaller companies that are growing. COVID has had minimal impact on these companies. I have ARCC stock which has a dividend d of 9%. And it has been paying a high yield for about 20 years. There are also ETFs that invest in BFDC (BIZD and PBDC).
SPLG is an index fund. It's an S&P 500 index and roughly equivalent to VTI (just missing small and mid cap). SCHD is just a bunch of companies that pay dividends. For reasons we've talked about already, there's no reason to prefer dividends. >EPD, BIZD ETF, ARCC, PBDC. ETF I didn't go through all of them, but these aren't even all ETFs, some of them are individual stocks. They're certainly not equivalents to BND. BND is just an intermediate term bond index. BND does not issue a K1. The expense ratio is also tiny. This is the kind of shit that makes me worried for you without an advisor, you're overcomplicating the hell out of this and don't seem to really be aware of what you're looking at. I'm telling you, you can build a very tax efficient and effective portfolio with just the three funds I listed. VTI is just every publicly traded company at market cap, BND is an index of all intermediate (10ish year duration) term bonds in US, VXUS is an index of all public international stocks. All you have to do is choose your percentages based on your risk appetite and whether you want to hold international stocks.
Thank you for your input. Thanks for clarifying the function of a dividend. Correct me if I am wrong about dividends - the research that I have done that if a dividend payout is high for individual stocks that is a sign the company is not doing well and there is debts. I have a couple of ETF and not index funds such as SCHD and SPLG. I have research BND and some BND required a K-1 tax form to be completed for tax purposes. I was researching EPD, BIZD ETF, ARCC, PBDC. ETF There are some BND where completing K-1 is not required. The expense ratio is high for the BIZD ETF and PBDC ETF.
It depend on how stable the growth of the investment is. if you invest mainly in underfunds for capital gains there could be years of little to no capital gains. If you invest fro dividends or bond interest the growth would be more consistent but slower. With these dividend ETFs you can get a dividend yield of 10% PBDC, BIZD, JEPQ, and SDIV.
IF you invest in a dividend ETF with a 10% yield like BIZD, PBDC, SDIV, JEPQ and reinvest the dividends you can do that in about 15 years. and have a yearly dividend income of about $70,000.
My advice is to invest in an ETF that pays a dividend. In my accoun: I have: FAAGIX (5% yield) in gov and corporate bonds. PFFD (6%), Coperagte divides payed out monthly. And I am considering BIZD or PBDC( both have a yield of about 10%) operate dividends. If investing in an ETF you will pay taxes on the dividends but If you keep the yield at about 5% the tax is going to similar to the tax on your HYSA right now. At a 10% yield would add about another 5000 to yourtaxes. This will not likely have a major impact on your taxes. The biggest risk fro investing in EFTs like this Occurs when you have to sell share if you need more than the yearly dividend. But the share price only varies by about $5 from it average or less. So if you timing is bad you probably won't loose a lot.. The only other risk is loss of dividends. These ETF invest in many companies so if only one goes Bad it isn't going to have a noticeable impact. Most of the time there is just a slow change in dividend pay out over time. The most challenging year for all of these dividends 2as 2020 due to the pandemic. All continued to pay the dividend. you could invest the entire 100K into these funds in Fidelity or Schwab account and then have the dividend (About 5,000 to 10000 go into a cash account that would earn an interest of about 4% O you can leave much of the money as cash earning about the same as a HYSA with l a lesser amount in the ETFs, you could keep the dividends as cash or reinvest them in the ETF to increase the dividend. Since you are expected college expenses for thee next few yours this is probably thee best option for now. However after that you could continue the dividend income to refill the cash and reinvest dividends to grow the dividend.s build the dividend to help cover you in the event of a job loss If you build the dividnend yearly income you could get $24000 a year (social security level. or more. possibly enough to over all or most of your living expenses. I currently have a dividend income of 50K a year from a taxable account and I retires a couple of years ago. I won't be able to use my retirement account for about 5 years.
What are you talking about? I don't think you're looking at the right ticker. [VanEck BDC Income ETF (BIZD) Stock Price, News, Quote & History - Yahoo Finance](https://finance.yahoo.com/quote/BIZD/)
BIZD seems terrible. No dividend like ARCC.
It's never a good idea to put a "substantial" amount of money into just one stock. Swinging for the fences will get you into trouble. With that said ARCC is a business development company. There are many BDC's out there. You really should read up on what BDC's are and look at the track records of various BDC's to learn more about their histories of what kinds of companies they lend to. If you insist on putting a chunk of change into any BDC a better alternative is something like BIZD which is a BDC ETF. This holds a basket of many BDC stocks.
My current holdings are 90% bonds and BIZD, 10% SPY PUT and SOXX PUT leaps.
I just own MLPA and BIZD.
BIZD tracks the MVIS Business Development Index and has almost zero correlation to the S&P. Why do you guys compare literally everything to the goddamn S&P?
I just did compare them. They are three ETFs. What should I compare BIZD to, a kumquat?
How I understand it is as follows - Based on BIZD being worth $970,000,000 - their underlying investments have operating expenses totalling $97,000,000 BIZD's acquired fund fee is 10%. It's required that this number be disclosed.
Total return past ten years: VOO +233% BIZD +110% VXUS +59%
It isn't an expense ratio. It's an "acquired fund fee" https://www.vaneck.com/us/en/bizd-acquired-fund-fees-expenses.pdf https://www.investopedia.com/terms/a/acquiredfundfeesandexpenses.asp >The direct net expenses that will be borne by BIZD are anticipated to be 0.42%
IMO if you want to play in this space just buy a bunch of BDCs. Maybe BIZD.
They're not necessarily. Fidelity has funds with 0 expense ratio. Meanwhile BIZD apparently charges over 10%.
BIZD's weird expense ratio is due to the way they have to report the expenses of their entities. Looks insane, but the actual ratio is about 0.6% Good observation on Bonds. TLT fell as rates rose. I imagined the face value would pull returns back up when the Fed cuts rates again. Looked at your suggested portfolio. May add more exposure to the general US.
Am I reading this right that BIZD has a ***10.92%*** expense ratio??? I think you’re trying too hard to be edgy and unique and the result is cutting off your nose to spite your face. If you feel that strongly about tech being in a bubble, then it’s perfectly fine to overweight value but completely ignoring growth is a mistake, imo. I also find it a little funny that you mention an inverted yield curve but instead of taking advantage of it, you voluntarily and knowingly pick bonds at the bottom of the curve. My personal portfolio is 60% ITOT, 20% IXUS, and 20% individual equities. You could easily do 30% ITOT, 20% IXUS, 20% HDV, and 30% to two or three bond funds of your choice.
You will get a better return buying the BDCs directly rather than BIZD.
I’ve held BIZD. Recently swapped out to bonds, as the spread between more conservative bonds and the 8-9% of high risk BDCs was too thin to justify the extra risk.
Curious on everyone’s BIZD thoughts as well.
Business Development Companies (BDCs) have the same tax benefits as REITs and are a small corner of the investing universe that most never know about. They lend money or provide consulting to small to medium sized enterprises. Historical returns are around 9%. Can be volatile. I compound BIZD in an IRA.
A dividend or distribution paying asset doesn't intrinsically compound more than one that doesn't. What matters is average annualized return. E.g. a stock with no dividend that increases 10% per year annualized has the same return as a stock that increases 0% but pays a 10% dividend that gets reinvested in the same stock. Starting from $100, stock 1 will be worth $110 after year 1, and $121 after year 2. Same with stock 2: you get a 10% dividend on 100, reinvest the $10, then get a 10% dividend on $110...so now you have $121. If you need passive income without having to sell chunks of investments off every month to pay bills, that's different. Most high-div/distr. ETFs have lower annualized returns than SPY. E.g. KBWD has the highest 10-yr annualized return for an ETF with a 5%+ ttm distribution yield. It's only a 7.68% 10 year annualized return. SPY is 14.6%. 5-year total return, it's BIZD at 8.44% distr yield but only 11.37 5-year annualized return vs. 17.07% for SPY.
Diversify. Don’t just own 100% stocks. Here are some non-stock ETFs you can do your own DD on to see if they fit you needs: IVOL, BND, COM, GLD, SLV, WOOD, BIZD (or any of the ETFs underlying holdings). With a goal of 10 years or less, I’d be worried about putting money into stocks right now too. There’s a CPI report coming out May 12 (and every month) that I think the market is nervous about.
The core stock holdings are VTI COWZ CALF, the bond/yield holdings are BIZD BND TIP (which I am thinking of exchanging for IVOL and may add NUSI). I think the key was having price targets in mind and being patient to buy in a little at a time so that I could average down if there were dips.
I’m struggling to figure out how to prepare too. I think the markets overvalued but called 12 of the last 0 tops so if I bet on a drop the markets sure to double. I’ve shifted towards value, use BIZD JEPI NUSO KBWY for yield and have some cash to buy dips.
Besides market wide ETFs, - RTH (Retail) - UFO (Space) - XAR (Defense/Space Exposure) - XLV (Healthcare) - PTY (Corporate Bonds) - BIZD (Private Equity) - CHY (Mezzanine Capital) I'll add others if I remember.
Generally, interest rates rising hits stocks two ways. First, interest expense increases now or in the future. Second, all valuations are some form of discounting future cash flow. When interest rates rise, discount rates should rise, making all valuations go down. Companies that get hit the most are companies that borrowed a lot to grow and companies that promise positive cash flow in the future. How far could interest rates rise? Depends on inflation. In the ‘70/‘80s the fed raised rates to ~15%. How to not get demolished by rising interest rates? Diversification. Everyone is worried about bonds selling off when interest rates go up and yet own stocks. Here is my experience owning BND. I bought at 84.75 (beginning of March) and entered additional orders at 84, 82, and 80. Not a single additional order has been triggered yet, while tech is off 10-20%. I bought some TIP at the beginning of Feb. it’s down 1%. You could also look to add something with variable rate loans like a BDC or an ETF like BIZD but these are higher risk loans.
If it's income you're looking for, securities like BIZD, AMJ, IEP, etc. provide relative stability and 10%+ dividends