Bought a bunch of JEPQ and TLTW ETF's 6 months ago for the 12% to 15% annual divy in my ROTH. The share price is higher than what I paid. Happy so far, I'll see how it works out. I like that they are both monthly payers.
CEFs have been around since the mid to late 1800s and have generally- always beat the market. Even through the 1929 debacle and the upending of the housing/financial markets of 2008. The big target in CEFs should be to buy the funds that trade at a premium in market value and drip at a discount or the net asset value. Otherwise, you’ll never see the benefit of your discount unless the fund goes under and the payout is more than you paid. Keep in mind that CEFs do not move much in share price (up or down ). The growth is the income and not the share price. The correct CEFs beat the brakes off of any and all ETFs
What I have noticed with CEFs is that the payout can be either income only or a managed distribution. I do not want to have ROC as part of my payout, and thus, I stick with income only. Mind you, even income only CEFs pay ROC occasionally, but the managed stuff I steer away from.
One big issue with CEFs is just like stocks...wait for opportunities. Have a bargain list when its time to buy. Recognize quality. Keep up with the news.
CEF's are risky and you should understand anything you invest in.There is risk in everything you invest in so only invest that allows you to sleep at night.I have some CEF'S,MLP'S,CLO'S, Stocks,gold,silver,and platnium.I also sell options against stocks I own.I sleep well at night.I also have no debt including home. CEF'S are not for everyone thats for sure.Diversify your holdings never go all in anything.Thanks for the video.Happy investing/stacking.
I totally agree! get rid of debt first. That will be your biggest return on your money. Diversify and understand what you are investing in and the possible risks. Sleeping well at night is highly underrated.
Or just invest in the best CEF’s.. no more risky then anything else in the market. You can buy muni CEF’s if you are risk adverse or you can buy equity CEF’s and there are many that match the returns of the overall markets. These are a great tool that few retail investors understand
@@FinanciallyAware With both communist dummies in the White House. Student loans debts are forgiven. Soon personal debts too. It sucks BIG time to have zero debts!!!
Thanks for the comment. Definitely something to look into if you are in a high tax state. I was thinking of doing a video on Munis. Maybe I will compare the CEF and ETF versions.
They leveraged 27.5% only and that cost them 1.38% (interest payment on borrowed funds). If they leveraged 100% how much would it cost them? 100/27.5 = 3.636363 The interest would cost them 3.636363 times more than they are paying when only using 27.5% leverage. So 3.636363 x 1.38% = 5%
If a CEF investor just holds for the long term, does it matter if the CEF price goes up or down, when receiving higher yield? Good presentation, well explained, and good example with UTG. Was also curious of tax implications and this helped. With the capital distributions, you would have to lower the cost basis of your stock as well. Don't own any but was considering. I'll take a pass.
As the NAV goes down, there is less money invested to continue to make returns which means they are giving back more capital instead of dividends. It is like getting a new car to drive Uber and all the money you make driving is barely enough to buy a new car when you wear out your car driving all those miles.
It won’t allow anyone to reply to your recent video of the breakdown of what happened in Pennsylvania on Saturday. I’ve tried at least 20 times to comment and reply and it won’t allow either. It’s stuck on 27 comments. Just wanted to let you know. Great video and breakdown of everything!
Thank you. I am not surprised and I have seen the same comments on other people's videos about the Trump shooting. They are trying to discourage people from talking about the obvious questions. Mre info coming out already. I will probably do another video tonight.
Thanks for another wonderful video Nick! I would like to see a video on "best ways" to protect your portfolio in the coming market downturn. Puts are so cheap but there has to be some good low cost options. Thanks!
I'm glad you liked it. Puts may be cheap but you have to keep buying them. This market seems like 1999 when just a few stocks accounted for all the gains and large cap dividend stocks were obsolete. When the market turned, the boring stocks held up much better.
There's a channel on RUclips called "unconventional wealth ideas" and that guy constantly shills the cornerstone CEF. Just the way he talks is very sleazy and gives car salesman vibes. Seems like a lot of people are falling for it because he likes to flaunt that he's earning half a million dollars in yearly dividends. I think he's misleading but I'm just a newbie trying to understand CEFs so I don't know the exact mechanics. But like you said there's no free lunch in investing. Can you maybe analyze his videos and do a video on whether he's doing is feasible for others? I think he's actually earning a lot more from this discord memberships which is sus. Thanks for this video.
It doesn't matter how much his dividends are if you don't know how much principle he has. Is he making 10% on $5 Million ($500K), or is he making 2% on $25 Million (also $500K).
Nice video. Reminds me of a time when I worked for a large teleco and when they came out with new plans I asked one of the architects what kind of idiot would sign up for these plans that give you less value for a 30% higher price than my small teleco. He said that the company's business plan was based on customers who were idiots. These companies know their markets and customers, how they can misrepresent or distort the facts so people buy into them despite offering no value and still get a regulatory approval. This is a lot easier business than outperforming the indices especially if you have no skills at picking stocks but are talented at marketing. That's why a lot more people are doing it.
He is telling us that we can replicate what CEFs can do by buying individual stocks without remembering that individual stocks fall harder and more than CEFs and some of them don't even recover there original value vs CEFs. First thing is the beta number for example Microsoft, Microsoft have a beta number of 1.11 vs BCAT .44. So you are going to lose less money buying BCAT when the stock goes down vs buying Microsoft + you have a stable dividend of 14.27% if you make sure to invest constantly and keeping you base cost down you will protect your main balance and you will make some extra money when the CEFs goes up in value. I have some CEFs that I bring my cost bases down from 7.90 to 7.41 and now they are selling for 8.42 so I'm making 600 extra dollars just on that with a 17% dividend. Just 4 months investing and making almost 300 dollars a month in dividend payments. So CEFs are not a bad investment has long has you understand them and you dollar cost average them.
I pick CEFs for stable dividends. I don't care about volatility or price as long as they have a long history of paying stable income.
As long as the NAV is not decreasing.
@@FinanciallyAware True enough unless I can see a reasonable underlying cause such as interest rates. Then it just might be a bargain in disguise.
Bought a bunch of JEPQ and TLTW ETF's 6 months ago for the 12% to 15% annual divy in my ROTH. The share price is higher than what I paid. Happy so far, I'll see how it works out. I like that they are both monthly payers.
CEFs have been around since the mid to late 1800s and have generally- always beat the market. Even through the 1929 debacle and the upending of the housing/financial markets of 2008. The big target in CEFs should be to buy the funds that trade at a premium in market value and drip at a discount or the net asset value. Otherwise, you’ll never see the benefit of your discount unless the fund goes under and the payout is more than you paid. Keep in mind that CEFs do not move much in share price (up or down ). The growth is the income and not the share price. The correct CEFs beat the brakes off of any and all ETFs
What I have noticed with CEFs is that the payout can be either income only or a managed distribution. I do not want to have ROC as part of my payout, and thus, I stick with income only. Mind you, even income only CEFs pay ROC occasionally, but the managed stuff I steer away from.
One big issue with CEFs is just like stocks...wait for opportunities. Have a bargain list when its time to buy. Recognize quality. Keep up with the news.
Yes, when there is market turmoil, they may get mispriced temporarily. Have a list ready.
CEF's are risky and you should understand anything you invest in.There is risk in everything you invest in so only invest that allows you to sleep at night.I have some CEF'S,MLP'S,CLO'S,
Stocks,gold,silver,and platnium.I also sell options against stocks I own.I sleep well at night.I also have no debt including home. CEF'S are not for everyone thats for sure.Diversify your holdings never go all in anything.Thanks for the video.Happy investing/stacking.
I totally agree! get rid of debt first. That will be your biggest return on your money. Diversify and understand what you are investing in and the possible risks. Sleeping well at night is highly underrated.
Or just invest in the best CEF’s.. no more risky then anything else in the market. You can buy muni CEF’s if you are risk adverse or you can buy equity CEF’s and there are many that match the returns of the overall markets. These are a great tool that few retail investors understand
@@FinanciallyAware With both communist dummies in the White House. Student loans debts are forgiven. Soon personal debts too. It sucks BIG time to have zero debts!!!
Muni bond CEFs are a better deal than Muni bond ETFs. And they are tax exempt. Even with the higher Fed rates now on the CEF's leverage.
Thanks for the comment. Definitely something to look into if you are in a high tax state. I was thinking of doing a video on Munis. Maybe I will compare the CEF and ETF versions.
Great explanation. Now, has anyone told you that you sound like Raymond from the sitcom, Everybody loves Raymond...?
No, I haven't heard that.
Have you ever heard of a cef doing a reverse stock split. Ty
I have not heard of that, but it is possible. There are a lot of CEFs out there.
21:42 how did you arrive at the 5% interest? Can you please show the calculations?
They leveraged 27.5% only and that cost them 1.38% (interest payment on borrowed funds). If they leveraged 100% how much would it cost them? 100/27.5 = 3.636363 The interest would cost them 3.636363 times more than they are paying when only using 27.5% leverage. So 3.636363 x 1.38% = 5%
If a CEF investor just holds for the long term, does it matter if the CEF price goes up or down, when receiving higher yield? Good presentation, well explained, and good example with UTG. Was also curious of tax implications and this helped. With the capital distributions, you would have to lower the cost basis of your stock as well. Don't own any but was considering. I'll take a pass.
As the NAV goes down, there is less money invested to continue to make returns which means they are giving back more capital instead of dividends. It is like getting a new car to drive Uber and all the money you make driving is barely enough to buy a new car when you wear out your car driving all those miles.
It won’t allow anyone to reply to your recent video of the breakdown of what happened in Pennsylvania on Saturday. I’ve tried at least 20 times to comment and reply and it won’t allow either. It’s stuck on 27 comments. Just wanted to let you know. Great video and breakdown of everything!
Thank you. I am not surprised and I have seen the same comments on other people's videos about the Trump shooting. They are trying to discourage people from talking about the obvious questions. Mre info coming out already. I will probably do another video tonight.
Thanks for another wonderful video Nick! I would like to see a video on "best ways" to protect your portfolio in the coming market downturn. Puts are so cheap but there has to be some good low cost options. Thanks!
I'm glad you liked it. Puts may be cheap but you have to keep buying them. This market seems like 1999 when just a few stocks accounted for all the gains and large cap dividend stocks were obsolete. When the market turned, the boring stocks held up much better.
Good explanation. I dabbled in CEFs for a short while, but no more.
I'm glad you liked it. When you look at the details, you see most are not worth it unless you are buying at big discounts to NAV maybe.
There's a channel on RUclips called "unconventional wealth ideas" and that guy constantly shills the cornerstone CEF. Just the way he talks is very sleazy and gives car salesman vibes. Seems like a lot of people are falling for it because he likes to flaunt that he's earning half a million dollars in yearly dividends. I think he's misleading but I'm just a newbie trying to understand CEFs so I don't know the exact mechanics. But like you said there's no free lunch in investing. Can you maybe analyze his videos and do a video on whether he's doing is feasible for others? I think he's actually earning a lot more from this discord memberships which is sus. Thanks for this video.
It doesn't matter how much his dividends are if you don't know how much principle he has. Is he making 10% on $5 Million ($500K), or is he making 2% on $25 Million (also $500K).
@FinanciallyAware he's making $500k/year in dividends on around $300k of capital + $300k of broker margin. Which is insane.
Nice video. Reminds me of a time when I worked for a large teleco and when they came out with new plans I asked one of the architects what kind of idiot would sign up for these plans that give you less value for a 30% higher price than my small teleco. He said that the company's business plan was based on customers who were idiots. These companies know their markets and customers, how they can misrepresent or distort the facts so people buy into them despite offering no value and still get a regulatory approval. This is a lot easier business than outperforming the indices especially if you have no skills at picking stocks but are talented at marketing. That's why a lot more people are doing it.
Sounds like the large telco I worked at.
I stick with REITS, preferred ETFs that generate 8% or more. With income ETFS, when NAVS go down, yields go up if distributions stay the same.
And dividends are unlikely to stay at the same level as the NAV goes down.
@@FinanciallyAware Agree but if NAV goes up again, I have bigger yields.
A lot to absorb (for me)! Will have to watch twice! Thank you.
Glad it was helpful!
He is telling us that we can replicate what CEFs can do by buying individual stocks without remembering that individual stocks fall harder and more than CEFs and some of them don't even recover there original value vs CEFs. First thing is the beta number for example Microsoft, Microsoft have a beta number of 1.11 vs BCAT .44. So you are going to lose less money buying BCAT when the stock goes down vs buying Microsoft + you have a stable dividend of 14.27% if you make sure to invest constantly and keeping you base cost down you will protect your main balance and you will make some extra money when the CEFs goes up in value.
I have some CEFs that I bring my cost bases down from 7.90 to 7.41 and now they are selling for 8.42 so I'm making 600 extra dollars just on that with a 17% dividend. Just 4 months investing and making almost 300 dollars a month in dividend payments.
So CEFs are not a bad investment has long has you understand them and you dollar cost average them.
I like investing in these close-end funds that pay monthly dividends:
IGD, NRO, &. MGF.
I am considering adding NCZ & CMU in the near future!😊
I'm not familiar with them. Just don't pay a big premium to NAV.
Another good job
I'm glad you liked it.
Great
I'm glad you liked it.