PFFD
Global X U.S. Preferred ETF
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SGOV is basically the same as a Money market fund or HYSA. I would rather deposit money into a high yeild fund like QQQI 13% yield. and turnoff dividend reinvestment and and led the dividned fill a money market account. build that up to 5 most of cash Anything more than 6 month would be reinvested for more dividend income Eventually the dividned income may be enough to allow you to start funding the Roth. So now you have dividends funding your Roth and keeping your emergency fund full. Eventually you could start using the dividned income to also start covering some of your monthly bills. Which would indirectly allow you to increase your 401K invsitment. Eventually I added other dividned funds like SPYI 11% yield. EMO 9%, UTF 7%, UTG 6% and PFFD 6%. All these funds are taxed at ta lower rate than your work income and they pay montly dividends. My taxable account now generates enough inome to cover all of my living expenses. it won't fix your problems overnight. It take time to build up the divine income . And the more income you have the easier it is to invest for retirment.
The fear and anxiety are from not knowing what to do and worry that the share price will suddenly move and you loose. You might be better off with dividned investing. Dividend are cash profit sharing payment directly to your brokerage acount. Dividned funds and stocks tend to smaller and less frequently price swings than growth stocks. And the dividend payments that occur montly or quarterly can be substantial if you have a lot of money. With dividend you will make a yearly profit without selling the share. All you have to do it simply hold them in a brokerage account. You could sell them but before you do work with a tax professional to dertermine The tax you will owe and then make sure the taxes are paid. Once taxes are paid you could reinvest them back into the same stocks. But I would recoment investing the money in another fund Such as SPYI 11% yeild, EMO 9%, UTF 7% UTG 6.4% and or PFFD 6%. All these funds pay cash profit sharing payments directly into your brokerage account. At that point you can either spend the cash or reinvest it for more dividends income or invest the dividneds into growth index funds or into a Roth account to save for retirment.
To get high yields and high liquidity means you need at minimum 2 funds. You also need to consider taxes because not all dividend funds are taxed a the same rate. And to have access to the money at any time it needs to be a taxable account. * At least one high dividend fund * A money market fund Basically you use the yield of the dividend fund to feed money into the money market fund. This means automatic dividend reinvestment is set to off. The dividends are gernerally not reinvested. But instead a portion is reinvested and the rest stays in the money market fund. So set a maximum limit on the cash level in the money market fund. 6 months of living expenses is a good level. If the money market fund exceeds 6 months of cash reinvest the excess into the dividned fund. A good dividend fund to shart out with is a quality covered call fund. Quality funds generally pay around 10% or a little higher or lower Say 8 to 13%. Some favorite are QQQI 13%, SPYI 11%, IAUI 11%, GPIX 8%, and GPIQ 10%. All of these fund generate about 90% ROC dividend that makes them very tax efficient. These funds are similar to growth index funds but the covered call strategy coverts the growth to income. The GP funds target more growth and lower dividned, While the NEOS funds (QQQI and SPYI) target more dividends and less but still positive growth. So the price of these funds will move up and down with the index they follow but have less growth and more dividend. IAUI (a NEOS fund is a bit different it follow the price of gold. You also want a maximum investment limit to the growth fund. You don't want to have all your money invested d in the same way You want to eventually have multiple funds generating income and feeding that into the money market acount. That way if you sector of the market has problems you still have income from other sectors of the market. This insures money will always flow in the money market account. So evernualy you will have multiple dividend funds and one high yield money market accounts. I started out the SPYI and QQQI in my fidelity acount. Now I also have UTF 7%, UTG 6.4% NAC 7%, PFFD 6% all feeding money into my money market account with 6 month cash reserve and montly dividend income feeding it. I also have a growth index fund in this account as a form of emergency saving with currently 4 times my living expenses. The dividned funds currently produce all of my living expenses in 1 year. This allowed me to retire in my 50s. But this type of account isn't just for the old. The young can and should start one as well as a standard retirement fund in Roth or 401K.
With investments you often can ignore them for weeks. With real eaistate get calls about maintenance issues. and you have to take care of taxes. And if you used alone to buy the property that lan reduces your earnings. Real estate is not an investmetnyou can ignore. Now you could with your 80k invest in QQQI and get $11,200 cash dividends per year and from my own experience with this fund you can ignore it and let the cash dividend build up or you can have it automatically reinvested. And you don't pay a lot of tax on the dividends you recieve. So this fund could be in taxable acount earning you money right now. And if you buy more shares with your own keney re reinvest the dividends you could in about 5 years have about 200K invest in the stock with an income of of about 2K a mont. i have investment in QQQI 13% yield, PBDC 9%, UTF 7%, UTG 6.4% and PFFD 6% and NAC 7%. overall I am getting about 5K a month of inomce form my taxable account. It allowed me to retire at 55 much earlier than expected.
i cannot answer that fully right now. I am doing a mental reset and need to reevaluate the market as a whole and calculate a strategy to get back in. my mind is leaning towards dividend stocks. something like: JEPI, JEPQ, QYLD, PFFD, BIZD, ARCC, TRIN, PFLT, AGNC part of this is some aggressive high yielding with more risk attached.
I am really interested in your post, but also a little confused on the details. If you wouldn't mind adding some clarification. >QQQI 13% Yield, ARDC 12%, SPAYI 11%, EIC 11%, PBDC 9%, UTF 7%, SCYB 7%, UTG 6.3%, PFFD 6% FAGIX 5%. * The above is only 50% of your portfolio, and the other 50% is in growth ETF not part of the list above? * Most important question: The 5K in monthly income you receive is based on what dollar amount invested in the above portfolio? * Those numbers add up to 87%. Where is the other 13%?
The solution to this cash reserve problem is not to use cash or growth index funds as a reserve for a market down turn. Instead consider investing your cash and taxa able brokerage holdings into dividend funds. For example if we take your 150K of cash and reinvested that for dividned. Now with 150K we cannot get enough cash to provide 9K a month. but with BTCI 25% yield you could get 3K a month of income Now normally I would recemond QQQI with its 13% yield due to my risk tolerance. BTCI is the maximum yield I would be comfortable with. But with your cash and taxable brokerage invested in BTCI you would bet very close to 9K a month. If you just use the cash in BTCI and reinvested all the money back into BTCI you will have 300K in BTCI and would have an income of 6K a month. If you don't need the money reinvest it in other funds to reduce single fund risk. or you could use the money to pay off a home loan or any debt you have. Reducing your living expenses. The key things to remember about dividneds is that the money is from the companies profits. And ever in 2008 and the dot. crash most companes were still profitable and still payed their dividends. I retired at 55 and I invested in QQQI 13% Yield, ARDC 12%, SPAYI 11%, EIC 11%, PBDC 9%, UTF 7%, SCYB 7%, UTG 6.3%, PFFD 6% FAGIX 5%. A mix high yield and lowe less risky yields And I still have 50% of my portfolio in growth index funds. My living expenses are about 4K and I currently get 5k from dividends so 80% of my income covers my living expenses with the remaining 20% being reinvested for more income. Now if there is a correction in the market most of my dividend income will continue. But if not I can sells some growth for additional income. A good book to read is the income factory. And armchair income on you tube invests the same way but does good reviews of funds that can be used for income.
I would recomend diversifying into high quality dividend funds That way when the market falls the dividends will help contract some of the decline. I am using dividend funds like QQQI 13% yield, ARDC 12%, SPYI 11% EIC 11%, PBDC 9%, UTF 7%, UTG 6.3%, PFFD 6%.
right now you have two choices, open a a roth or a taxable account. I don't know if you have access to a 401K. I am assuming right now you don't. with 800 a month you and the roth depoist limit of 7000 you will have enough to open a roth and taxable account. Max out your roth every year. Most just invest in growth index funds Like S&P500 index funds. but with he deposit limit in 20 yours you would longly have about 500K available for retirment and it would not generate any meaningful income. In my opinion The best Roth investment is a high yield dividend fund like BTCI 25% yield. In 20 years you will have about 3.9 million in the acount producing 900K of dividned income a year. Yes there are some risks with a yield at 25% but it is the highest reasonable safe yield I know of. Realistically in 10 years i would start diversifying your investments in the roth. I am currently investing in QQQI 13% yield, ARDC 12%, SPYI 11%, EIC 11%, PBDC 9%, UTF 7%, SCYB 7%, UTG 6.3%, PFFD 6%. All would would make good additions to your roth when you start diversifying away from BTCI. And all are good choices for a taxable account. Once you reach the 7000 limit in the roth open a taxable account and start investing for dividends. The purpose of the taxable account is to give you a backup source of income. having a lot of dividend income is great backup in case your are unemployed or cannot work for medical reasons. I am following an investment stratagy similar to the book The Income Factory. Armchair income on youtube also follows this stratagy. Both list the funds they use or have used and that that is 100 in total. Armchair income also does detailed reviews of his investment choices. Which give you a good look at why he picks the funds he insists in.
your could sell it off slowly and reinvest the funds for dividends. Dependinding on the yield the reinvestment you could get yearly cash income generation of 50k up to about 100K of income from your investments. Cash generated in the 401K will have to stay in the 401K until you reach age 60. But you can reinvest this cash to grow your earnings. IF the stock is in a taxable acount you could replace a immergeny fund with a passive income fund. I would read the book the income factory. It is about investing for dividend income. and list 68m funds the author has used plus several example portfolios. There ia also Armchair income on youtube. he list 38 funds has has in his dividend portfolio. and does detailed reviews of some of them and other funds that may be of interest. He also interviews fund managers and did interview the author of The Income Factory. That should give you enough ideas to on how to invest the money. I am currently using QQQI 13%, ARDC 12%, SPYI 11%, EIC 10%, PBDC 9%, UTF 7%, SCYB 7%, UTG 6.3%, PFFD 6%. 5
There is a lot of risk in yieldmax funds. That doesn't mean they will fail tomorrow or next year. We simply don't know how long they can keep paying these very high yields. There are a growing number of people that put in only the ammount they are willing to loose and then use the dividend income to buy less risky stocks. That is what i am thinking doing and and I suggest to do the same. Lower risk investements I use are PFFD 6% Yield, UTF,7%, UTG 7%, Scab 7%, PBDC 9%, EIC 10%, SPYI 11%, ARDC 12%, and QQQI 13%.
Target date funds gradually sift their investments from mostly growth to income over time. So when you retire you have enough income to cover living expenses with enough growth so that you can maintain that income over time. Ideally you want more income than you need in retirement with enough growth to insure you never run out of money. Target date funds as a result of their investment stratagy are actively managed. Most growth index funds are passively managed. Meaning more people are needed to select the income investments and trim investments that don't work out. More people means more expenses. 0.75 is actually normal for actively managed funds. while 0.3 or less is about normal for passively managed growth index funds. But if you want you could do it yours with say 50% growth index funds with the remainder invested for income from dividend funds. Many focus on bonds but the yield is often too low for that to work well. Bonds barely keep up with inflation. But excluding government bonds you can get much higher yields. 9%, UTF 7%, UTG 7%, SCYB 7%, PFFD 6%. And I do have FAGIX a bond dung that earns 5%. But the bulk of my earnings comes from yields greater than 6% With an average yield slower to 9%. My current income is about 5K a month.
This is why I switched from growth index fund to dividend ETF and CEF fund. I am currently invited in QQQi 113% yield, ARDC 12%, SPYI 11%, EIC, 10%, PBDC 9%, SCYB 7% UTF 7%, UTG7%, PFFD 6%. Overall these funds produce 5K a month of income. Most goes to living expenses including healthcare I retired at 55). But 1K a month is reinvested which will help minimize inflation. When the dividends come in they go straight into a money market. fund. So I always have cash on hand. But I plan on keep a sizable amount in growth index for emergency needs, Unexpected large bills, and if needed I can harvest some growth and use that to increase my income as an inflation adjustment. The funds can also be used to replace any fund if it starts having issues.
Personally I find I like cash dividends for income. I have minimal ammount. in government bonds because the yields are so low. Right now some my favorite investments are QQQI 13%, ARDC 12%, SPYI 11%, EIC 10%, PBDC 9% RLTY 8%, UTF 7%, UTG 7%, SCYB 7%. PFFD 6%. I am getting about 5K of income a month from these sources.
With CD the maximum yield you are likely going to find is about 6%. However with a und like QQQI you can get a yield of 13%. And there are lot of choices in the 6 to 9% ranks for dividend ETF or CEF funds. And it is also possible to find yields win the 20% range or higher. I am investing in QQQI 13%, ARDC 12%, SPYI 11%, EIC 10%, PBDC 9%, RLTY 8%, UTF / UTG / scab 7%, and PFFD 6%. And unlike CD they don't expire. meaning once you have built the portfolio the dividneds will continue to come in indefinitely. I currently get 5K a month of dividend income and I am retired.
I would not useChat AI for invesment advise. i would rather read the book The Income Factory. And youtube ArmChair income is an excellent resource. I am investing in these fund with the following yields; QQQI13% yield, ARDC 12% , SpYI 11%, EIC 10%, PBDC 9%, RLTY 8%, SCYB 7%, UTF 7%, UTG 7%, PFFD6% That work out to an average yeild of about 9%.
Just an example of what you could do with 300K. invest it in QQQI 13% yeild and put the dividneds into a money market fund. I April when you do your taxes the you will have to pay a tax on the dividneds. So use a portion of the cash to pay the tax, and then use money left over to pay off your home loan and any other debt you have. After the first year you will have an idea as to how much the dividend should be kept as cash for taxes and how much your can use immediently to pay off debt. Overall QQQI will generate about $39,000 a year pf Income before taxes. And as a further benefit QQQI takes steps to reduce the taxes you pay on the dividend. But keep in mind you will have to pay taxes on inherited money so in the end you might has about 200K instead of Also while the potential with QQQI it is just one fund and history has show you are better off using multiple funds, That way in the rare event that one goes bad the rest of your money will still be in god funds. So I have spread my money out over fund like PFFD 6% yield, UTF / UTG / scab 7%, RLTY 8%, PBDC 9%, EIC 10%, SPYI 11%, ARDC 12% and QQQI 13%. For my portfolio it generates enough to cover more than my monthly living expenses.
Most investors seek investments that earn around 10% to maximize ether growth of there protfolio Gold right now can be sold at a decent price but most of the time it isn't worth a lot and it doesn't pay a dividend. In may case I invest in dividend fund which earn me about 5K a month of income. 80% covers all of my living expenses. The rest is reinvested to grow my income Hopefully enough to keep up with inflation.I am invested in QQQI 13% yield, ARDC 12%, SPYI 11%, EIC 10%, PBDC 9%, RLTY 8% SCYB / UTF, UTG 7%, PFFD 6%
I would not expect your taxes to be zero but I don't know anything about taxes in puerto Rico. After you cover any taxes you will need to invest it. I would look at dividend investing. Over the last few years I started using growth I had to build a dividned portfolio. I retired earlier than expected and now I have 5K a month of dividend income. I have money invested in these funds PFFD 6% yield, UTG / UTF / SCYB 7%yield, PBDC 9%, EIC 10%, SPYI 11%, ARDC 12%, QQQI 13%.
I would open a taxable brokerage account. and move your mo money into it. put the money into into a money market fund. Then slowly move money into QQQI which has a dividned yield of 13%. Do not automatically reinvests the dividneds. The dividend payments should go directly into your money market fund.Eventually you will have a cash account that is bing fead by the dividends from QQQI. You could over time graually add other dividned funds. I have PFFD 6% yield, UTG / UTF / SCYB 7%, PBDC 9% EIC 10%, SPYI 11%, ARDC 12%. Any extra cash gets reinvested. Eventually you could build up the account to get enough income to cover all of your living expenses, utility bills, bills, food, clothing, car cost, insurance. and housing.
You need to invest for pasive income. For example. you could open a taxable brokerage account and inis a dividned fund. QQQI is nice one. it has 13% yield and takes steps to reduce the taxes you pay.. IF you put the roth depoist limit in this account yearly ns ewincwar raw siciswnsa,. IN 10 years you will have $100,000 in the fund and the yearly earnings willl be 13,000 or about 1K month. IN about 20 years you will have 600K with a yearly income 75K a year6 K a month of in come. This is a simple example of what is possible. But you don't generally want just one fund generating income. IF one goes bad you could loose a lot of money and time. If you spread your money equally over 10 funds then the impact of one bad investment is only 10% of your income. It is not unusual for people to have 20 funds in a portfolio. I didn't realize this until I was in my 50s. But I have did built up investments in index funds and other growth stocks in a taxable account over the years. So I started converting that to dividned investments. suing ufund like PFFD 6% yield, UTF / UTG, SCYB 7%, PBDC 9% EIC 10%, SPYI 11%, ARDC 12%, QQQI 13% I now have 5K of income a month. 4K Covers my living expenses including health insurance while 1K a month is reinvested for inflation protection. It still will be several years before I can use my well funded retirment accounts. And I still have more assets still available in my taxable account to fix any issues with what I have and increase my income. I wish I had done this at your age! Now this extra income does does come with additional tax. So I make quarterly estimated tax payments to the IRS. But that issues comes with the benefit that I have retired early and don't have to work. Some good resource es to guid you on this is the book "The Income fFactory. And ARmChair income on your tube. Both invest this way and the book list 68 funds the author has used, and Armchair income list 38 funds. Armshair income also does detailed review of some of the funds he uses. Don't ever withdrawal money from your regiment funds and pay the penalty. It is notworkth it. But you can pause investing new money into them and use that money to build your passive inc ome. Now many people will say dividends are very risky or not worth it. But most of these comments are from people that have never invested for dividends. My dividend portfolio has had no issues other than the taxe. I am also reworking my Roth for dividend income that will not be taxed when I can use it. And moving money from my 401K into the Roth.
I invest in dividend stocks and have been buying PFFD 6% yield, UTG 6.7%, UTF 7%, SCYB 7%, PBDC 9%. SPYI 11%, ARDC 12%, QQQI 13%
Yes it is worth it to have dividends in a roth. The dividneds allow you to get more cash into the account without violating the 7K deposit limit. Let say you add a dividend fund that adds 7000 to your account per year. This would double the amount of money going into the fund. And this would double the growth rate. There is however one group of companes you don't want to add to to a Roth The earnings from MLP are taxed in a roth. So you want to void those. However everything else is not taxed. Fund you should consider re PFFD8% yield, PBDC 9%, SPYI 11%, QQQI 13%, UTF 7%, Onenot of PBDC this fund list an expense ratio of 13%. This is not a real expense number for the funds. SEC rules requires this fund list it expense ratio + the expenses the companes it invests in. The ETF never pays the expenses of the companies in the fund. So if you correct for that the expense for the funned 0.75. This fund invests in comapanes that are required by law to pya out 90% of their earnings. So the dividend is always high.
The problem iwht bogleheads investing is you have to liquidate stock to generate income. Which means you could eventually run out of money. The solution to the problem that preserves captial is outlined in the Book The income factory. And Armchair income on youtube also discusses this. There are funds and company stocks that pay out a portion of their profits to you quarterly or monthly as cash to you. Say you invested 100K in a fund with 10% dividend yield of 10% and it pays monthly. Every month you will,$833. Dollars a month. while you are working you invest the money back into the fund. The fund will grow. in 7 years the fund will have about 200K deposited and will pay a dividend of 1,666 every moth. Over 30 years you should also have about 1 million in ht account producing about 10K a month of incomce. If you invest for dividends in addition to your growth index funds you should have substantial income when you retire. So you live off of the dividned income . IF you don't spend all of the income you reinvest the excess money. Hopefully you can reinvest enough to keep up with inflation. IF you have a bit unexpected expense in retirement you can sell the growth funds to generate the additionally income needed. Or you could periodically harvest 4% of the growth and reinvest the money for more dividend income to adjust for inflation. I retired and now get 5K a monty of income from dividends 4K covers my living expenses. and 1K a moat is reinvested. I also have growth funds I can tap if needed. It is working out very well. Some of the funds I am investing in for income are FAGIX 5% yield, PFFD 6%, UTG 6.7%, UTF 7%, SCYB7%, PBDC 9%, SPYI 11%, ARDC 12%, QQQI 13%.
I like dividends. I would put it in QQQI. it has a yield of 13% yield and would produce about 1000 in cash a month. If you reinvested all of the dividend the funds would double in size in about 5 year. If you don't reinvest the dividend you can buy other funds. In addition to the yield the fund also takes steps to reduce the tax you payoff the dividend. So in a taxable account it can be an alternative source of income I am retired with an income of 5K a month from dividends. Enough to cover all or my living expenses. I have the following funds UTG 6.7% yield, PFFD 6% UTF 7%, SCYB 7%, PBDC 9%, SPYI 11%, QQQI 13%, ARDC 12%.
Some companes have multiple classes of shares. Typically common shares that pay a low dividend. And a separate set of shares that pay a higher dividend. The higher paying dividend shares are often called preferred shares. They cost more do to the higher dividend. There are also some preferred shares that are structured similar to bonds. They pay a higher dividend but tha company can recall them at andy time and give you a preset cash amount for the shares. Some preferred shares may also have limited or no voting rights meaning then holders of the shares have no say in how the business is run. It can get very confusing so it is probably best for an individual to just buy an actively managed ETF that has people to to keep track of this. I know of 3 ETFs to deal with preferred shares PFFA 8% yield, PFF6%, and PFFD6%. These ETF also invest in BDCs and REITS which are generally not called preferred shares. PFFA has more BDCs and REITs than the other two funds. In your case you need to find out the specifics of the preferred shares you get. IF the shares are publicly traded you should able to buy and sell at any time. The fact they did this by investing in Crypto is a red flag for me. It might be a one time or intermittent dividend. It is also possible the company may go bankrupt if teh crypto market collapces.
Proffered stock EFT PFFD and PFF 6%yield. PFFA 9%, high yield corporate bond SCYB 7%
You will get a lot of replies that basically say it is too risky. Many believe anything above 5% is too risky. Furthermore most are not investing for income. But When I started looking at income investing I found quite a few good investments with yields of up to 10%. If you invest your 500K in a fund that yields 10% you will get about 50K a year of income. PFFA 8% yield, PFF 6%, PFFD 6% Some companes have multiple different shares they offer. Some have higher yields than the common shares. These funds target these higher yielding stock that are often call prefer stock. These fund target preferred stocks that and are highly reliable dividned payers. Some even pay monthly. BDCs funds BIZDn10% yield and PBDC. Business develoopemt corperatations were created by law about 40 years ago. These companes loan money to c9%ompany es. These companes are required by law to return most of their profit as dividend to investors. SEC also requires these ETF to list their expenses differently than regular ETFs. The . They must list The cany expenses tha the BDCs they hold as an ETF expense even through these expenses are never transferred to the ETF. PBDC for example list total expenses at 13% even through the fund itself averages 0.75% Many BDCs even payed there dividend through the 2008 market crash and the Covid Pandemic. Covered call funds KNG 9%, JEPI 7%, JEPQ 10%, SPYI 11%. Covered call ETF were approved by SEC only about a decade ago but are quickly becoming popular. These fund use a trading stratagy known as covered calls. Developed about 40 years ago have been in use by large trading firms and now some brokerages allow small investors to use covered calls. The main purpose of this stratagy is to oconver price volatility into income. Now some of the fund have become infamous for very high yield well over 20% and NAV erossion. But if you drop the yield down to a lower level NaV erosion is largely gone.N SPYI is notable in that it modified the covered call strategy to lower the tax on the dividend so your taxes are lower than they toerhwise would be. JEPI and SPYI write covered calls on the S%P500 JEPQ writes covered calls on the NASDAQ 100 index. Now covered call fund will not exceed there performance You can use mix of these fund to get significant income in a taxable account. As long as you don't sell the shares you the income will last indefinitely . If just reinvest the dividends you could have a million invested with a yield approaching Passive income is a great way to protect yourself from unemployment. Even the lowest yield of 6% I have listed will generate 3oK of income a year. I retired a at 55 using regular stocks and SPYI, and PBDC, and PFFD and now have an income of 4 K a month. with enough in growth funds to insure I can increase my income to compensate for inflation for some time.
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.
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.
For fire you want income. CD and municipal bonds have the lowest yileld so you would need a very large amount of money to invest to cover your living expenses. Bonds are not much better and don't keep up with inflation. You need a yield of 6% to safely stay ahead of inflation. The only way to get the yield you need is to invest in dividend stocks. There are also a lot of companies with yields around the 5 to 6% range. AT&T and Verizon are two good ones SCHY is an international dividend stocks with a yield of close to 5% There are also ETF that invest in preferred stocks like PFF, and PFFD each with a yield of 6%. And then there are covered call funds. A covered call is a trading stratagy that has been in use for about 40 years successfully. But only recently have covered call ETF become available. KNG produces a dividned of 9%, KEPII 7%, and JEPQ 10%, DIVO4.7% Some offer dividends of 20%. You can creat o mix of funds to target any yield you want. And you could add some corporate bonds bond or lower yield but long term very stable businesses Dividneds are generally less risky than index funds like S&P500 which can gain or loos 20 to 30% in a single year. During a major market correction or recession the average dividned payment only looses about 2%. During the pandemic I saw my portfolio loos e 50% of it value but the dividneds kept coming in. After the pandemic the share price recovered and the dividend payment continued. For a fire account I think it is best to have passive income equal to grater than your living expenses and reinvest anything you don't spend. Never sell you dividend stocks. You should also have some index funds for growth .You can periodically harvest the growth to increase your dividned income to compensate for inflation. Or if you get a big unexpected bill you can sell your growth funds to cover the expense. I currently have 4000 a month of dividned income with a large amount still in index funds for growth. .
After several years, I’ve turned away from dividend investing. The dividend eats the share prices too much. It’s definitely not free money. PFFD lost 22% of its value in three years (I used to invest in preferred). SCHY is down 9% in three years. The market is up 25%. If you want steady income - SGOV pays 5% with zero risk of equity value.
With the vas majority of people investing in index funds there is a lot of risk if the market goes into a long bear market. From 2000 to 2010, (the lost decade) were index funds did poorly. One group of stocks however did very well. Dividend stock did well. Dividend stocks have significantly less price volatility than index funds and pay cash dividends every quarter. During bear markets the average dividend drop is only 2% while the price of index funds will drop 10% to 20%. And index fund have a very small dividend.. So for a roth I would consider shifting money to dividend ETF. I currently have scud, SCHy and PFFD which collectively generate about 5% yield . I also have funds like PBDC and JEPQ that generate a higher yield about 10% 1 million invested in in ETF yielding 5% would earn you $50,000. Enough to cover most living expenses. At 10% you only need 500,000 to generate %50,0000. IF you dividend income exceeds your living expenses you wouldn't need to sell shares of your index funds to generate income.
A new Roth will only grow as fast as you put the money in. The maximum deposit limit is $7000.. but you can use an investment to greatly increase teh amount of money depoisteied into the account legally by using a dividend fund. You could start out with a high dividend coved call fund SPYI for example your fund will quickly stat liking out dividends which you can reinvest. by the time teh fund hits $100,000 invested the dividends will total $12,000 a year plus your personal deposit of 7000. That 19,000 a year cash deposits. At this point you could turn off the automatic and freeze sPYI at 100K. then reinvest the dividned s in other funds to deversify your dividend income and add one or two capital gains growth funds. For example you could for dividneds add SCHD, SCHY, PFFD and PBDC for dividends. For capital gains you you can use SCHG or QQQM. These will grow much faster than S&P500 index funds because they are capital gains specific with almost no dividend (0.6%). When you are ready to retie the fund should have substantial amount invested in growth fund plus dividend funds. Then when you retir only spend the dividends income and if you don't spend all of it reinvest the excess. If you need need extra income for an unexpected expense sell some of the gowth funds. to cover the expense. Or if necessary to compensate for inflation you can sell the growth fund and use the money to grow your dividend income.
Try a dividend stock PFFD you earn you about 6% on the amount deposited and as long as you don't sell the shares the cash will keep coming in every month. Then the is PBDC which has a di vivdned yield of 9%
You could use the 75 dollar to buy at least 2 shares of the following companies and get a higher yield than you were likely getting at the banks: 4.65% yield T (AT&T), $23 a hare 4.6%yield ARCC $22, 8.64% PFFD $20, 6% SCHD 28% 3.31% FAGIX $10, 5% There are little hundreds of low cost dividend funds with a decent yield that is has as good or higher yield US than US bonds or bank interest.
Cherish the good memeories. It helps. Well if you invest the money in PFFD you would get 6% dividend. and then there is PBDC that pays 9%. I have both of these funds and in my opinion the risk is low. PBDC invest in ibuisness development companies. They loan money to businesses. By law they are required to return most of their earnings as dividends. That is why the dividend it high. Even higher dividends are possible JEPQ uses trading activity called covered call to confer stock volatility into dividends. it has a dividend of 10%. I have all of these funds in my portfolio. A 10% yield will earn you 20,000 a year Which could be reinvested or placed in a money market account. You could use the money to slowly pay off any debt left over from your wife's medical treatments. or use it as an emergency fund that will slowly refill if you use some of the money. Or you could reinvest the dividends and let it build. in 7 years you would have an account worth 400K with a dividend of 40K a year. The you would have to pay tax on the dividends each year. you cold use a portion of the dividend income to cover the tax. I have a taxable account that earns me 4K a nomth that covers most of my living expenses. Over time you should also deversify the income with other dividend ETFs
many older people with index funds in there portfolios. Often hear of a market crash panic and sell most of their Locking in the loss. It happens all the time. So I would eliminate VOO don't focus on growth for now.. Focus on Dividend funds or stocks with yields of around 4 to 5%. These would provide income which you mom needs most. If she puts as much money as she can in dividends stocks she might get enough income from dividends to cover living expenses. SCHD is a good fund consider adding PFFD, PBDC, and VYMI. These three are very stable and have a higher dividend than SCHD. I also have no problem with stocks like KO, O, KHC, and T. which all have But AAPL and MFST are fairly old companies with high shar costs and low yields and don't grow like they did 20 years ago. So I would avoid these because they will suck up a lot of your moms money and provide little benefit to her.
If you shift 1 million of your 401K to dividend funds you could avoid the effects market downfalls1 million in paffD which has a dividend yield of 5% would provide 50K of income you can use to cover living expenses without having to sell shares of stock. IF you use JEPQ with a yield of 10% you would get $100K a year of income. The rest of the 3 million could be left were it is and the if there is a market correction you jet let it ride through. Dividned income is largely unaffected by market crashes. [ The dividend income may drop by 2% but then recover.](https://www.reddit.com/r/dividendgang/comments/18q1vjj/debunking_the_myth_of_dividend_cut_during/) Index funds on the other hand can 30% or more very quickly and then it may take a year or more to recover. In my retirement account I and adding these dividend ETFs, JEPQ,PBDC, FAGIX, VYMI, SCHD,PFFD.. using dividend income would largely elevate your wife's concern and one set up you wouldn't have to do anything more. And you could avoid the advisor fees. As to rolling over your 401K into a roth keep in imd you likely would have to pay taxes on the rollover amount which will be substantial . You should consider the tax impact carefully before making a decision.
Both value investing and index investing have their place. Warren Buffett to a dying textile company and made it into an investing company. Since then one single stare of the company is now worth $600,000. People have done very well with index funds for retirement savings. You can do just as well with value investing. Value stocks often pay a dividend. Many people (myself included) have a signitficant income from value stocks. Which can be used to cover living expense. Dividend income is more stable and can last for decades. Many people today put money in money market funds for emergency cash savings. But if you added a dividend fund like PFFD to the money market account you could get enough money every month to cover basic living expeneses. So If you loos your job you still have money coming in. With a money market fund once you deplete the money it's gone. With dividends they keep coming until you sell the shares.
The answer to your problem is to invest Differently than you are now. VTSAX is best at earning capital gains. Meaning the price per share increases over time. What you need now is cash. Meaning you need to invest for dividends. Dividends is portion of a companies profit that is returned to shareholder as a cash deposit into your brokerage account. Most companies pay a dividend 4 times a year. For example if you moved all of your savings int PBDC you would earn a field of 9% on your money. That is $8370 year. of income. which is $697 a month Now right now you cannot do this because you need your savings for current living expenses. But when earnings season starts for you invest as much as you can in dividend ETF or stocks that pay a dividend. So gradually over time build up your dividend income to generate enough income to cover all of your living expenses. And when the dividend arrives put the money into your savings or reinvest it for more income. For VTSAX if it is in a tax deferred retirement account leave it alone. But if it is in a Tax able account you can use the money in it generate the income you need. Technically VTSAX does produce a 1.3% dividend. But that is probably not enough to meaningfully help with living expenses. Also it is best to invest in wide veriety of dividend stocks to produce a diversified passive income stream. There are many more than the one I mentioned above . You want about 10 sources of dividend income with each producing an equal portion of the income you need. that way if one goes bad and fails to pay you loose lonely 10% of your income.Don't put it all on one fund. Funds that I currently have in my account arej JEPQ, PBDC, PFFD, SCHD, FAGIX, VYMI, FUTY,FTXG. I CURRENTLY HAVE $50K a year of passive income. Enough to cover my basic living expenses
You job covers most of your day to day living expenses with a bit left over for other things like vacations, repairs to car home, or investing. But at the end of each month most of that is gone. But every once in while something happens and you need more money. Credit cards and personal loans are expensive due to high interest. A savings account is cheeper. But is don't have to be in a bank. You could set up a taxable account at a brokerage such as fidelity. They offer money market cash accounts. so you can put a few months to a full your of money in it with decent interest to cover unexpected cash needs. And they can issue you a debit card to give your easy access to the money. But you do have to pay taxes on the interest. If the interest in your money market account gets high you start being stocks or funds that either don't pay a dividend or pay a very small dividend. like amazon or the S&P%00 index fund like VOO. You could save several years or more of money this way with minimal to no aditiaional tax. And if thinks go well you get some capital gains which grows your savings even more with minimal or no tax. To accesss this savings you would have to enter sell order to sell some stocks or some of the fund. This at a minimum will fake a few days or sometimes about a week. Once complete the money will be in your cash account. The size of the each or long term savings is up to you. I personally have about 6 months of cash on hand and currently have about 3 years in stocks that don't pay a dividend. Now there is one other thing you can do with a taxable account. Build a living income fund or fire account.(Financial Independence Retire Early). In this portion of the account you can invest ins stock or ETF that pay a higher dividend than money market account. Depending on your risk tolerant you can get a dividend yield of up to 10%. And this money would go into your cash account so you can use it for living expenses such as food , utility bills medical insurance or anything you want. I have an ETF PFFD that tas a yield of 6% and several stocks that pay a similar or higher yeild. My taxable account currently generates about $4000 a month which covers most of my living expenses. Due to this job equivalent income I have to plan for taxes So I estimate my earnings and either set the money aside for the april tax bill or send pay the tax to the IRS ahead of time.
The easiest way is to simply buy a dividend ETF such as SCHD, PFFD or many others. The dividends are then simply depoisted into your brokerage account. ETF are naturally diversified which lowers the risks and consequences of one company in your portfolio suddenly going bankrupt.
We don't know if the market will stall but but JP Morgan and Goldman Sachs are prediciting it. Partially due to the most of the gains being from the S&P500 magnificent 7 stocks. But mathematically the sooner you start the better. So I think the best approach is to assume it will happened and invest accordingly in stocks that historically have done will in bear markets. Div addend stocks. such as SCHD. or PFFD. And if you still want an index funds invest in equal weighted S&P500 fund has been suggestedto reduce the significants of the magnificent 7. OR you could use a total market fund with a significant International portfolio and US stocks such as VXUS. So for now I would suggest you state with a total market index with international stocks and US stock and a dividend fund of your choice.
This risk is dependent on what you invest in. Dividend ETF have a much lower risk of capital gains loss than low dividend ETF like VOO. I invest some of my money in PFFD with a yield of 6% but the share price since I bought it 2 years ago. is consistently within 2 dollars of what i bought it at Or look at ARCC share price has been about $20 for about 12 years and yet pays a dividend of 9% The only major drop is stock price were the pandemic in 2020 and the bank crisis in 2008.
i you have a "considerable" 401K you may easily enough dividend income off of your investments to afford a decent plan. 1 million invested in VOO would have a yield of 1.3%. This is $13K a year of passive income. If you cheange the investment to SCHD the yield would be $33K. You could easily get a dividend of 5% with PFFD which would provide a passive income stream of $50K. and it pays out monthly. I retired early at age 55. I had some luck on an investment that allowed me to do it. I live in Ca and I wanted to keep my own doctor At Kaiser. I looked on line and found they had a health plant for $844 a month without subsides. A little adjustment to my dividend investments cover the expense. My living expense right now with medical and dental is about 48K a year. Which my taxable account can easily supply indefiinittely. And my 401K is currently not available and I don't have a pension.
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.
i you accepted 500 a month you would be by age 65 a total of $222K If you invested in PFFD an ETF with a \^% yelled you would get 500 a month. Or invest in PBDX 9% yield you would get $750 a month. this of course Assuming No Taxes if you accept the $100 option. The other option if you accepted the $500 a month optio and invested the $ 500 in PFFD and reinvested the dividends it would grow to a $475K a year after 30yiers. If you added additional money it could easily reach $1Million. If this money is kept in a taxable account it would gradually grow to a good emergency fund or eventually a passive income fund. The best option all depends on the lump sum tax and personal circumstances and preferences.
there are two basic ways people grow money. 1. Invest in the stock market wait for the value of the stock to increase and then sell the some stock to get the cash you need. Typically people invest in index fuds like VOO (S&P500 index) and VTI (Total market index) but there are many more. 2. Invest in a stock or bond that has a yield. Yield is interest earned on the investment. For Stock it is called a dividend. Bonds call if a yield. But the math is basically the same. Say you buy stock in AT&T which pays a 5% yield. They yield is your share of the profit the company makes. So 10000 invest in AT&T would earn about $500 a year. For you you want to invest in a dividend ETF. You can get yields of 1 to 10% or more but the safest range that keeps pace with inflation is between 3 and 10% yield. Dividends ETFs you might want to consider are SCHD, PFFD, SDIV, [FUTY.You](http://FUTY.You) can have the the dividends automatically reinvested or you could collect the cash. There is no secret to investing. Just and endless debat as to which statuary is best, and what ar the best investments. As to avoiding taxes, you can't. All you can do is to try and minimize it. All of the funds I mentioned above pay a dividend which generates a tax. If you minimize the yield you pay less in taxes. Many prefer methods 1 beaus index funds have a minimal 1% dividend. Method 2 you pay more in taxes because you get more dividends. Another way of minimizing tax is to invest in a retirement account. IN these accounts there is no tax while the money remains in the retirement account. But there is a down side in that you cannot access the money until you reach the age of 60. In 401K account the money goes in without without a tax, You do however have to pay a tax when you take money out. In a Roth IRA you pay a tax when you put money in and there is not tax while the money grows. and then when you remove the money there is no tax. But again you cannot access the money until age 60 and you're limited to depositing $7000 a year. You might want to toal to financial planner before you invest to get a better understanding about investing and your specific situation. As long as you are just talking there will be no fee for the service. fees mainly start coming when they start investing it fore your or manage your account.
PFFD is down 19% over the last 5 years. Nothing like opening up your brokerage app and finding that while VOO, QQQ and SCHG went up 150% over the last 5 years, your ETF managed to lose a thousand dollars.
You have a few different options. Most people will say VOO and leave it which isn’t bad advice so something similar like VT or VTI. Those types of indexes are going to be the easiest for set it and forget it. You can also go more specific into a sector and example IHE which is a Pharmaceutical ETF (not recommending just an example). Or if you want to generate some income with the money you can look at preferred stock since rates will hopefully start dropping soon preferred will go up in value there is PFFD. But if you goal is to set it and forget I’d look at a larger index fund like the ones I recommend
Bonds and preferred stock could be a potential alternative. Example ETFs to consider would be: TLT AGG, BND PFF PFFD PFEF If you just shoved all your money 50/50 into AGG and PFF, you'd do ok and with lower volatility than SPY. If things ever crash hard, you could always rebalance towards SPY at that time.
Dividends are something you want to do AFTER your retired. It’s a good way to receive income without having to sell your holdings. The problem with dividends is you need a LOT of shares for it to make a difference. I have half of my IRA in dividend stocks. In conjunction with my pension I’m actually making more each month than when I was working. So it really depends on your situation. There’s even a fund that’s up 10% this year. GCOW Global Cash Cow. Or PFF (I think that’s it?) Could be PFFD?
Preferred Share ETFs like PFF and PFFD as a riskier alternative to cash or bonds. I Bonds too but everyone is all over those in these subreddits now
Thanks! Down about 100k YTD., which feels a little extreme for an allegedly moderate-conservative allocation with valuation hovering around 2.32M at this point, with about 35k in cash. Presumably those in 60/40 or higher equity PF's have taken a worse hit. Good perspectives to help me frame some questions for the advisor. I too question so much in SCHO. IT's safe but a pretty large allocation, and to me might as well be in MINT ultra-ST bond or money mkt. I don't have immediate significant withdrawal plans...just scaling back on work in the next 2 years and figuring on needing 40k a year from the PF once I "fully" retire which perhaps would be in 2-3 years officially. That 10% of the PF I left out is scattered across a lot of smaller positions...in equity, PFFD (Preferred) at about 2.7%, CCD and VCSH another 1%, VNQI/VNQ (Real Estate) about 2.7%, and the rest each fractions of a percent...comprising a diversified mix; Small/Mid-Cap, Healthcare fund GRX...a few individual stock positions. I just left them out for the sake of simplicity. Arguably having so many funds isn't productive for the greater good of the PF but my advisor feels it doesn't hurt so long as the sum total is reasonably diversified overall. I think he'd also be of the opinion that yields may not go much higher which is possible as you point out.
Maybe you just need a break to rethink - move your balance to an etf that pays a dividend, set it to drip, and forget about it. Maybe even set up a recurring investment (even $5 or $10 a week) and let it go until you’re ready to try actively trading again. XLE, SPYD, PFFD would be worth considering.
Anyone further from retirement (20+ years) and using a preferred stocks fund like PFFD to add some stability to your retirement portfolio?
I'm interested in the middle ground - preferred shares. they act like a combination of stocks and bonds. They are stocks, but they pay a fixed dividend, around 4 percent. check out the ETF PFFD as an example.
maybe a preferred stock ETF like PFFD. 5% return and the price doesn't change much. fwiw Ford gives stockholders x-plan pricing on new cars. There's also affinity credit cards, apparently you can earn points towards a new car.
I put mine in the PFFD preferred stock ETF.
in rough order of stability (starting with more stable options) you could look at... MUB is US municipal bonds, pays about 1.8-2%. very stable over time, generally. BND, US high-grade corporate bond fund from Vanguard, also pays 1.8-2% ANGL is high-yield US corporate bonds, pays over 4%. potentially more volatile than treasury or corporate bonds, because the companies are distressed with poor credit ratings. but still pretty dull when you look at the chart long-term. HYEM is emerging market corporate bonds, pays about 5% and is relatively stable when you look at the charts. but there's more political and currency risk because it's nations like China, Turkey, Brazil, etc that can be unstable relative to the US, Japan and Western Europe. PFFD is US 'preferred stock' that pays higher dividends than 'common stock'. typically less volatile than the general stock market, pays about 4%. ACWV is a global 'low volatility stock' index, stocks that are less likely to see dramatic shifts up or down in share price. big mature boring stable companies like Roche, Deutsche Telecom, Verizon. pays about 1.8% dividend. HDV is US high-dividend stocks, pays about 3%. it's more volatile than SHY but more stable than the overall stock market, because it's got big boring stable old companies like Exxon, Johnson & Johnson, Chevron, etc.
I’m very interested in this as I always have 10% or more in cash. QYLD pays twice the dividend. Do you not put all your cash there because it’s more volatile than PFFD?
I keep cash in 2 ETF's... QYLD (a NASDAQ covered call ETF) and PFFD (a preferred shares ETF). Neither of these fluctuate in value very much, but they both pay a really generous monthly dividend. I can sell shares of these at anytime with zero regret or FOMO, and collect the dividend while I hold it. Adds a little bit of complication when filing taxes, but it's worth it to be generating income vs. just holding cash that does nothing.
NMG, PFFD and a new REIT ETF called RIET (not a typo).
I am doing the same thing. Primarily in S&P 500 index funds with a sizeable allocation to cash and $PFFD, a preferred etf.
Preferred stock ETF like PFFD Or other option is USDC stable coins Both offer much better interest than bonds and are pretty stable
Now this is a nice portfolio, 27% of yearly return since 01-10-2017 compared to 14% of SPY. Max drawdown of 20%, less than SPY of 23.79%. Most of the items with more than 10y of history which is plus in my mind. Very nice returns! Good balance, not a lot of risk, high Sharpe ratio. If we remove PFFD since it's a new to gain more history data, we can backtest to 2015 (PYPL start date): We see 28.74% return per year, compared to SPY 13.75%, but your portfolio has a lower yearly VaR which is at 19.63% compared to SPY which is at 21.37%. ​ Now, that is very good if you ask me, double the return with less risk!
Preferred stock shares... basically shares of stock with no voting rights, but dividends are paid to owners of preferred stock before owners of common stock, so it's more protected. I use a preferred stock ETF called PFFD to hold cash. It's not at all volatile, but still pays a 4.7% dividend.
>Bunch of different ways. ETFs that track an index and sell options on the basket and distribute the income, e.g. NUSI, QYLD. Some REIT ETFs e.g. SRET. Preferred stock ETFs like PFFA, PFFD. Master limited partnership ETFs like AMZA or MLPX. ETFs that focus on high-div yield stocks e.g. SDIV. Not a comprehensive list. i understood some of these words
Bunch of different ways. ETFs that track an index and sell options on the basket and distribute the income, e.g. NUSI, QYLD. Some REIT ETFs e.g. SRET. Preferred stock ETFs like PFFA, PFFD. Master limited partnership ETFs like AMZA or MLPX. ETFs that focus on high-div yield stocks e.g. SDIV. Not a comprehensive list.
My absolute "safest" investment - PFFD which is where I hold cash, dropped 27% last march. Nothing is really safe during a crash. Some stuff may not drop as much as others, but even stuff that doesn't usually go down can go down a lot.
I really don't understand why anyone would invest in bonds. There are ETF's like PFFD which have proven to be just as safe as bonds but pay a 5% or more dividend.
I hold cash in high dividend/low volatility ETF's like PFFD. It's basically a savings account that pays 5% every month. The value of PFFD is basically flat. Never seems to fluctuate by more than a few cents in either direction. I can sell it anytime I need cash without having to worry about significant gains or losses.
I am in a similar situation as you. I have money in an IRA, but most of my assets are in a taxable brokerage account. I am currently sitting on 20% cash because I believe the market is overvalued (I usually am fully invested). Most of my assets in both the IRA and brokerage account are in S&P 500 index funds. I am happy to receive the 9% annual gain on average if you reinvest the dividends. I also invest a small portion of my portfolio in individual securities. If you need a high paying liquid dividend alternative to live on, I utilize the Global X Preferred ETF, $PFFD. It has an expense ratio of only 23 basis points and nets over 5% annually. Although the principal fluctuates, and will probably be put under pressure if interest rates continue to rise, it allows me to only withdraw the minimal amount from my IRA for living expenses.
> PFFD, that pays a 5% monthly dividend, and the value of it never fluctuates Wow that sounds too good to be true, I'm checking this out.
I honestly don't understand why anyone invests in bonds. I have an ETF in my portfolio called PFFD, that pays a 5% monthly dividend, and the value of it never fluctuates more than a few cents in either direction. It's basically a high interest savings account. PFFD isn't the only non bond option like this.
Lot's of options... I actually prefer ETF's over individual stocks for these types of investments. The ones I (and lots of others) recommend are DVY, DGRO and VYM. These will fluctuate up and down with the market, but you just buy and hold, and keep capturing those gains through the dividend. If you ever need to sell out of those, try to wait until after the next dividend pay date. If you want individual stocks, take your pick: https://www.fool.com/investing/stock-market/types-of-stocks/dividend-stocks/dividend-aristocrats/ Just make sure to diversify. Other options: PFFD - Preferred shares ETF, extremely safe but a solid monthly dividend. Think of this like a savings account that pays good interest. QYLD - Similar to PFFD, but slightly more volatile. USOI - Higher risk, but higher growth potential. Insane dividend - you'll recoup your initial investment in 18 months just from the dividend.
PFFD and USHY both pay about 5.3% dividend and I believe they both pay monthly. These are both very stable in price and rarely fluctuate more than a few cents per day. QYLD is a covered call ETF that pays over 11% dividend. It does fluctuate in price more than the other 2, but it's still not one I would consider "risky". Virtually zero chance of losing money unless something major happens that affects the entire market. Worse case scenario is it drops enough in value to offset the dividend and then you've just broken even.