One man's feast is another man's poison. I too see it differently. With no illusions, lower volatility, as in limited upside as well as limited downside, along with a decent monthly dividend, is exactly what I was looking for at age 84. This fund, as well as a number of other buy-write funds, plus other income funds, are providing my wife and I an income averaging $2,500.00 each month In our Roth IRAs, meaning the income will never be taxed. What's not to like about that? The options market is played by professionals at JPM with a beta of 0.51 for this fund. Check out JEPQ, a buy-write covering Nasdaq, with monthly returns considerably higher yet, as well as some noted appreciation in this years market runup. John Harville
So sorry to hear the tragic end for your father Jonathan. Brings a tear to the eye. You are indeed fortunate to have the time to put everything in order for your loved ones, to be sure everything goes to where you want it to go. A reminder to the rest of us that we may not be so lucky and that now is the time to tie up all loose ends. At age 84, this writer is currently working with my estate attorney and tax account to do exactly that. I admire your attitude and feel privileged to have read your writings. John Harville
Berrien Springs, Michigan
Offering a different take. I understand the sentiments for the S&P 500 Index and why, but there are indeed funds out there that do beat the Index, especially easy to find if they use the S&P 500 Index as their benchmark for comparisons. They aren't hard to find. Check the 1 yr, 3 yr, 5 yr, 10 yr. returns always given for Fidelity funds as opposed to their benchmarks. Ironic that Contrafund is cited because it has been one of the better funds, managed by iconic fund manager Will Danoff for 30 years, beating the Index in 3 of the 4 above time periods, currently with a 16% turnover rate and a reasonable .55% expense ratio. Pay attention to returns over expenses. Are they worth it? Or not? My point is there are a number of other good funds out there. This reporter has done extremely well using mostly mutual funds in retirement accounts over the last three decades. While ETFs generally have lower expenses and can be successful, they are mostly unmanaged (to the delight of some), though that is changing some. I like knowing someone is watching the store and therefore stay mostly with lower cost mutual funds.
To Mark P Agreed that Roth conversion taxes are best paid from taxable accounts. Another method exists once you are taking required minimum distributions, if you happen to be in the enviable situation of not needing RMD monies for anything else. As one making substantial Roth conversions each year (with an eye on Medicare premiums/penalties), I use RMDs to pay the taxes, monies that MUST come out of the trad IRA anyway. Painless for me.
A thorough accounting of the many decisions that await retirees, before and after retiring, after many years of 401Ks/IRAs on autopilot. Every individual situation is different with no one size fits all. At age 82, I am living proof that these decisions/evaluations will go on to death. Awareness is key, which is exactly what Jonathan's article does here. Thank you.
Could have also said that I don't buy a stock unless it has a sustainable 3% dividend yield, or higher. There are many. Further, I am the proverbial buy and hold investor, paying no capital gains taxes because I sell nothing, except for occasional tax loss harvesting. That will fall to my children on their updated basis. Good luck Michael !
Buffett-esque strategy? Don't tell this to Warren. As per a recent Kiplinger article, his $300-billion portfolio is expected to yield more than $6-billion dollars in dividend income over the next 12 months. If that's crazy, the rest of us are gone down the road loco. More down to earth, my own 34 stock portfolio generated $10,085.00 in dividend income for 2021. Yes I paid taxes on it, to the tune of 24%, or $2,420.40. A net gain of $7,664.60. Shabby you think? Had nothing to do with beating markets, and a number of the long held stocks have appreciated immensely. Further, I paid taxes on the dividends only because my retired income was high due to large Roth conversions. Tax rates for 2023 qualified dividends are zero per cent for individuals with income up to $44,625 and $89,250 for married couples.
Comments
One man's feast is another man's poison. I too see it differently. With no illusions, lower volatility, as in limited upside as well as limited downside, along with a decent monthly dividend, is exactly what I was looking for at age 84. This fund, as well as a number of other buy-write funds, plus other income funds, are providing my wife and I an income averaging $2,500.00 each month In our Roth IRAs, meaning the income will never be taxed. What's not to like about that? The options market is played by professionals at JPM with a beta of 0.51 for this fund. Check out JEPQ, a buy-write covering Nasdaq, with monthly returns considerably higher yet, as well as some noted appreciation in this years market runup. John Harville
Post: A Foolish Option
Link to comment from August 24, 2024
So sorry to hear the tragic end for your father Jonathan. Brings a tear to the eye. You are indeed fortunate to have the time to put everything in order for your loved ones, to be sure everything goes to where you want it to go. A reminder to the rest of us that we may not be so lucky and that now is the time to tie up all loose ends. At age 84, this writer is currently working with my estate attorney and tax account to do exactly that. I admire your attitude and feel privileged to have read your writings. John Harville Berrien Springs, Michigan
Post: On the Clock
Link to comment from August 17, 2024
Offering a different take. I understand the sentiments for the S&P 500 Index and why, but there are indeed funds out there that do beat the Index, especially easy to find if they use the S&P 500 Index as their benchmark for comparisons. They aren't hard to find. Check the 1 yr, 3 yr, 5 yr, 10 yr. returns always given for Fidelity funds as opposed to their benchmarks. Ironic that Contrafund is cited because it has been one of the better funds, managed by iconic fund manager Will Danoff for 30 years, beating the Index in 3 of the 4 above time periods, currently with a 16% turnover rate and a reasonable .55% expense ratio. Pay attention to returns over expenses. Are they worth it? Or not? My point is there are a number of other good funds out there. This reporter has done extremely well using mostly mutual funds in retirement accounts over the last three decades. While ETFs generally have lower expenses and can be successful, they are mostly unmanaged (to the delight of some), though that is changing some. I like knowing someone is watching the store and therefore stay mostly with lower cost mutual funds.
Post: Get Your Hands Dirty
Link to comment from November 23, 2023
To Mark P Agreed that Roth conversion taxes are best paid from taxable accounts. Another method exists once you are taking required minimum distributions, if you happen to be in the enviable situation of not needing RMD monies for anything else. As one making substantial Roth conversions each year (with an eye on Medicare premiums/penalties), I use RMDs to pay the taxes, monies that MUST come out of the trad IRA anyway. Painless for me.
Post: Juggling for Retirees
Link to comment from January 21, 2023
A thorough accounting of the many decisions that await retirees, before and after retiring, after many years of 401Ks/IRAs on autopilot. Every individual situation is different with no one size fits all. At age 82, I am living proof that these decisions/evaluations will go on to death. Awareness is key, which is exactly what Jonathan's article does here. Thank you.
Post: Juggling for Retirees
Link to comment from January 21, 2023
Could have also said that I don't buy a stock unless it has a sustainable 3% dividend yield, or higher. There are many. Good luck Michael!
Post: Death to Dividends
Link to comment from January 15, 2023
Could have also said that I don't buy a stock unless it has a sustainable 3% dividend yield, or higher. There are many. Further, I am the proverbial buy and hold investor, paying no capital gains taxes because I sell nothing, except for occasional tax loss harvesting. That will fall to my children on their updated basis. Good luck Michael !
Post: Death to Dividends
Link to comment from January 15, 2023
Buffett-esque strategy? Don't tell this to Warren. As per a recent Kiplinger article, his $300-billion portfolio is expected to yield more than $6-billion dollars in dividend income over the next 12 months. If that's crazy, the rest of us are gone down the road loco. More down to earth, my own 34 stock portfolio generated $10,085.00 in dividend income for 2021. Yes I paid taxes on it, to the tune of 24%, or $2,420.40. A net gain of $7,664.60. Shabby you think? Had nothing to do with beating markets, and a number of the long held stocks have appreciated immensely. Further, I paid taxes on the dividends only because my retired income was high due to large Roth conversions. Tax rates for 2023 qualified dividends are zero per cent for individuals with income up to $44,625 and $89,250 for married couples.
Post: Death to Dividends
Link to comment from January 15, 2023