Just for clarity - in the video I repeatedly say “JEPI’s covered call strategy limits the upside” what I mean is the combination of the low volatility stock holdings AND the S&P 500 index covered calls. 80% of the fund assets are holding low volatility stock holdings and the other 20% are using ELNs to do covered calls on the S&P 500 index. Both of those pieces together limit the upside. Sorry if it’s not clear in how I was saying it in the video. Let me know if you have questions!
I’m using JEPI and JEPQ in my brokerage to provide income in early retirement. They pay all my monthly expenses while my 401k and IRA continue to grow. I don’t care about upside at this point. Once I turn 62 in 4 years and start collecting pension and SS, I’ll move whatever is left into SCHD/DGRO.
Excellent analysis! Sadly, many people jumped in only because of the 12% yield it temporarily provided. The fund manager was clear in interviews, under normal market conditions the yield will be between 6-9% (a bit more for JEPQ). I’m retiring next year and own small equal positions of JEPI & JEPQ as a little hedge in down markets and eventually boost my income. I’m not disappointed, but wouldn’t invest large sums 😊.
Of all the videos and reports I've seen about JEPI, this one explains it best! Great contact! I’ve been holding JEPI for 3 years now, and you are absolutely right, when its bear market, it holds through the storm and preforms well at the end of the year, but when its bull market like this month and everything went up, it didn’t move a bit. The best Strategy is to hold a growth etf with it, like VGT, QQQ, SPY
For my tax situation, 22% federal and 6% state, the tax pretty much ruins it for me. Brings a 8% return down to 5.8% after tax in a taxable account. Better for me to shoot for qualified dividends and get just a 15% tax. In a Roth, sure, seems good.
You nailed it. I’m in the first special cases so it works for me as part of a income plan and it really helped in 2020 and 2021 when other yields were in the toilet. Now it makes a nice companion to my short term treasuries.
@@Utoobp24because there's a waiver for the type of work that I do. I'm a caregiver in Virginia and we operate a sponsored home for individuals that are intellectually disabled
One thing I had hoped you stressed, is that markets in the LONG term, have always gone up. Therefore using/purchasing and ETF that limits upside, unless income is a priority. (i.e. retired) it should, and usually does, have an inferior CAGR that does NOT limit upside. What that means to those investing for retirement, but not yet retired. IS DO NOT USE THESE., They will reduce how much your account will go up. SIMPLE,.
like now, when we think there is limited upside but high volatility in the near future (2024). Exactly. it is not about "for everyone" but "for this time"
@@arnoldbioursckii6639 Tax status is dependent on the IRA. In a traditional IRA, all dividens are actually taxed at normal earned income rates since they will just be IRA withdrawals. So even qualified dividends are taxed as normal income if the stock is held in a traditional IRA (or 401(k) or similar). On the other hand, all gains in a Roth IRA are tax-free since withdrawals from a Roth are not taxed. So qualified and non-qualified dividends in a Roth IRA are essentially tax-free (all other rules still apply like 5-year rule, age 59 1/2 etc).
@@arnoldbioursckii6639 in a Roth IRA all dividends, including qualified dividends, are tax free. All capital gains as well are tax free within a Roth IRA.
I'm a European and I mostly invest in SCHD, JEPI, JEPQ and TXF for dividend income AND wealth generation. The high monthly cash flows from JEPI and JEPQ are amazing and allow me to diversify my portfolio also towards individual dividend stocks. What I want to say: You Americans are so lucky with your tax-deferred accounts (we don't have these here in Europe). I have to pay 15% withholding tax on all dividends from US ETFs plus 35% local dividend tax in my country of residence. In other words: I pay 50% tax on every single dividend payment I receive and still manage to grow my portfolio. And so can you! If there is one advantage you have over there across the big pond, then it is your amazing investment possibilities.
Yep used to own JEPI, clipped a few weeks back. It served it's purpose at the time but I wasn't digging the direction. Also like JEPQ much better. Reallocated to that and other div.growth funds.
JEPI drops far less in market pullbacks than S&P index funds, but is giving a 7.5-9% dividend return paid monthly, it seemed to me it's a great replacement for a small bond position when I want a higher return than 4% that also may drop in value in a market crash coinciding with higher interest rate environment.
JEPI is ok, but the other reason you might have added it missed the mark in 2023, is because it didn't hold a lot of hi-tech which did well. So, for covered call ETFs, for now, I like JEPQ and SPYI better
Thanks for the thoughtful video. As more covered call ETFs are formed, it seems that could lead to high supply of call underwriting which would put downward pressure on the premiums.
This is the best video yet that I've watched about JEPI. Thank you for your clear speaking style. A lot of other investment experts on youtube cant speak without inserting a ton of fill words: Uhh, umm, and a.... If you want detailed clear info on stocks and ETFs, Matt is the go to guy on RUclips without a doubt.
Great Video. You were very polite. Basically JEPI is dividend smart and tax stupid 😂😂😂, unless it’s held in a tax sheltered account. Chasing dividends very often make’s some investors blind to Superior TOTAL RETURN opportunities via capital gains. I’ll get off my soapbox. This is a great video (educational) and balanced. Hope JEPI investors understand the “narrow role” it was designed for.
Sounds like JEPI is a great fund in an IRA that requires a RMD (required minimum distribution) yearly, using the dividend to meet the cashout requirements, while minimizing the need to sell assets. The IRA is absorbing the tax implications of JEPI, while just taxing the actual distribution?
Correct, distributions will be taxed as ordinary income regardless in that case (to my knowledge). Ultimately, JEPI is a good tool to use for an income portfolio - probably in combination with other things - but the idea is that your focus is on current income and not growth
Matt many thanks for the video. Personally I am not in ETFs yet but mostly looking for individual stocks. However I really find interesting your analysis process. All the best and greetings from Bogotá, Colombia.
Great commentary. Id consider adding a covered call component to my portfolio when I'm getting closer to retirement. Not much advantage outside of building up the income 10-5 years out of needing the money.
Well considering SPY is near 600.00 a share and QQQ is near 500.00 IDK you can own 10-12 shares of JEPI for those prices and it’s monthly dividends not quarterly. I have JEPI & JEPQ in my Roth. So not too worried about taxes. If they don’t work they can be sold.
Great job explaining the concept of the investment and whose investment goals it may be aligned with. I am planning early retirement and looking for higher income. But I am looking at other similar funds rather than JEPI - SPYI for tax friendly dividends, EOS for longer track record and better balance btw high income and total return.
Wow, great eye-opener. I have been building up biggest part of retirement account with that because of income. I’m retired and use the monthly check. What else would you buy instead of JEPI for income for retired folks. Thanks, enjoyed the video
Thanks, just to be clear I think JEPI works well as part of a retirement portfolio. In terms of other things - it really depends on a lot of factors but the fact that you can get 5%+ virtually risk free treasuries would be a very strong consideration IMO
I own a sizable pc of JEPI, and I went in with eyes wide open! Your assessment seems spot on, and you pretty much nailed my exact scenario! I’m planning on holding it for at least 6 months, and will probably liquidate at least half at that time. I don’t like the tax implications, but it is what it is, and I knew that going in. Actually been thinking of adding some JEPQ to even it out with what’s left of the tech sector gains. The price is lower, and the dividends higher right now. As with everything, time will tell. NICE JOB!
Thanks, Matt. Your presentation was excellent and gave me some additional facts to think about going forward. Currently, I have a nice chunk of JEPI in an IRA and my strategy is to use the dividends to grow the portfolio's cash generation to invest in other stocks. I must say, the monthly dividends are helpful in that perspective since this account is from old rolled-over 401ks and I don't contribute to it since I have a new 401k with my current employer. But, going forward your data comparing JEPI to other vehicles (spx,qqq,schd) will give me something to think about as we come out of the current market situation.
Thank you, I don't have a video on JEPQ but my thought on it would be very similar to JEPI in that you won't get the full benefit of QQQ but should perform better in down or flat years. Ultimately the question for JEPI and JEPQ to me is are you investing for income that you plan to use now. If you are, then they are good options in a well rounded income portfolio. If you're investing for retirement 20-30 years away, I don't think it makes sense
I hold my JEPI shares in a ROTH. While I did not hear you speak to the tax protections offered in an ROTH you did make a big deal about the effects of tax implications for JEPI's overall return. So, my question is this, if you hold JEPI in a Roth does that change your assessment?
I talk about holding it in a tax advantaged account in the video. In terms of my assessment it's the same. If it's a part of a income portfolio then cool. If it's a long-term investor putting it into a roth, then I'm not really sure why since your overall returns will likely lag the market. Unless you are specifically trying to time the market and think it will be down / flat for a long period of time.
That's cool, definitely ok for a tax advantaged account, also gives you time to see how it performs over a longer time period - maybe it does get closer in rising markets, we don't know
Its part of my strategy to hold some covered call ETF's to lock in some "gains" but, its still only a small portion, and I still have the majority of my investments in single stocks and index funds. I likely won't make any major shifts until I near my desired retirement age though.
I'm 5 years from retirement. I hold JEPI at 20% of my Roth instead of bonds. It's paying about 7.5% tax free so far - not including a small price improvement. I don't really see anything better for a Roth that provides that kind of return with the downside stability it offers.
I guess my question is - what's the goal in that scenario? Do we think that will outperform just holding one of the indexes? Or do you mean just as a hedge in your portfolio in case the market has a longer downtrend?
@@mattderron I mean just using Jepi as a source of income to supplement what you can invest from your day job income. My goal would be to build a long term dividend portfolio with Schd as the core. And a small jepi position would just help me grow the SCHD position. I believe the strategy is called dividend waterfall.
I always enjoy the old school references, lol. I remember them! 😂 Thanks for the great info. I remember when everyone said JEPI was the retirement cheat code. And now it's supposedly Yield Max... Going to be interesting to see what happens.
anything 10+ years is long term to me - the only caveat I would say is if you're in retirement (which can be more than 10 years) and you have it has part of an income portfolio with other things - then that makes sense to me
The Miller lite comment broke the internet… jepi and jepq are 15% of our portfolio right now but I’m probably a bit older than most of the viewers and looking for more income than capital appreciation
That's great - that's definitely one of the scenarios where it makes sense (as part of an income portfolio along with other things). Glad it's working for you!
I switched from JEPI to SVOL in my ROTH IRA and have never looked back since. For $5k, the dividend is higher for SVOL and it’s not market correlative either.
Hi Matt, I totally agree with your analysis and assessment. I appreciate the thorough research on the purpose of the JEPI. I’ve been cautious about this ETF since it has such a short track record especially it was incepted during the COVID time where things were just wild. Just like you can’t chase after high dividend yield stocks, you can’t put all eggs in one basket in an ETF and forget about it. This further emphasizes the point of 1) understanding the purpose of the fund, 2) is the fund performing according to its objective 3) does it fit your financial goals.
Pair it with GARP stocks in tech , healthcare and in industrials with JEPI or the grandad XYLD. In a 30/70% combo and you will have your dividends skyrocketing. Or a 20/80 combo with DIVO etf. Will work for anyone, especially after age 50
I love your analysis. However, taxes are inevitable. One thing for sure, I’m 30, looking at JEPI long term for the monthly income potential due to my industry’s unpredictability. I work solely on commission as a W-2 employee. I have no tax benefits to begin with, but my income is very unpredictable depending on economy and what consumers purchase. This will make for a nice cushion month to month to eventually pay bills around the house or a gym membership or car note. Softening the blow of expenses as my business fluctuates.
That’s awesome, as part of an income portfolio to hedge against unpredictable primary income I think JEPI is great for that. Definitely one of the use cases where it makes sense
If you're a long-term investor that's not close to retirement, IMO SCHD has the greater potential for long-term gains as well as having basically all qualified dividends (which is more tax efficient if you're not in an IRA / HSA), basically because of how JEPI is designed to limit volatility. Obviously whether it's the right thing for you will depend on your personal situation and goals though.
Comparing jepi vs sp500 isn't a fair comparison given that's not the primary goal of the etf. You can't compare a mini van to a Fararri even though they use the same road and gets you from point a to b. What jepi should be compared to is other income producing investments such as BDCs or REITs or income stock etf. IMO, that would be interesting and a more apples to apples comparison.
I agree with you, that was a major point in the video. It’s not for people looking for long term growth and total return. It’s for income based portfolios. Part of the issue is that many people are just buying it assuming it’s good for their long term portfolio that is 30 years away from retirement. For income focused portfolios it’s a solid choice to be paired with other income producing assets
@@mattderron I think a comparison of jepi with the options i called out would be interesting as the examples your compared against were sp500 and schd which aren't exactly primarily income producing products. Or another way, does jepi and jepi are tops for income producing investments? I would assume it would get a lot of views given the products popularity. Another component not discussed much would be what % of the fund is sold as covered calls. I think other cc etfs have higher dividends because they write a larger %... which means more dividends, but less upside. What is the sweet spot on that mix... or there isn't one.
I’m not investing in Jepi but another covered call etf. Im currently doing that to get some benefits from the market and to reduce my downside potential bc I’m planning on selling everything and buy a house in the next 4 or 5 months
Hello Matt, I am retired and have bought a little bit of JEPI as a part of my portfolio. I never intend to make it a large percentage of my portfolio. I regularly buy SCHD and QUAL as foundational ETF holdings JEPI to me is a little to gimmicky to put big money into it. I enjoy your content. You are very clear in your explanations and thinking. Thanks
I have both JEPI and JEPQ, not high amounts. I'm 72 and retired, and I keep both in my traditional and Roth IRAs since the DIVs are not qualified. They've worked well for me.
If you're in retirement and have JEPI in your Roth, then yes it would. The main concern there would be the dependence on option premiums / market volatility for steady payouts. If you're a long-term investor, yes in a Roth you wouldn't have the tax implications but you'll likely underperform the market unless you build up a nest egg in a Roth with other investments and then switch to JEPI when you get close to retirement. Hopefully that makes sense
Consider the envirionment that we have based on current interest rates being at their highest, this fosters volatility. When the interest rates are lowered we will have volatility as it will not be done in one swoop so for the next two years you will do best with JEPI than with other instruments in my opinion.
The reality is that they have maintained a consistent dividend as the market has swung from very bearish to extremely bullish. I think you buy this as a higher yielding alternative to yield focused assets. It is going to be higher beta than some alternatives, but with a higher yield. Ideally you put this in a tax-free retirement account (IE IRA) and the ordinary dividend impacts are avoided. Personally, I put oil and gas MLPs and some dividend yielding stocks with qualified dividends in my taxable account and put as much ordinary income oriented assets into the tax deferred accounts. They also pay monthly so you can use this as a good place to park Cash while waiting for other opportunities.
As always, I think it will depend on your personal situation. If you're in or close to retirement and need income, then combining JEPI with something else can make a lot of sense. If you're looking to build up a portfolio or retirement account over time, I don't think that's what JEPI is meant for
That's how I am going. I have an IRA that is an experimental dividend bucket. It's all tax sheltered and won't be tapped for 10 years. I may transition into more conventional allocation getting closer to use.
I built a core holding in VZ starting price $38. by selling puts and calls, position is solid green plus dividends. Managing options daily is a wealth builder , TSLY manages on a daily basis!
That's cool I'm glad it's a strategy that's working well for you. It can definitely be a differentiator, but I do think a lot of folks wouldn't want or aren't comfortable with managing or worrying about it every day though.
5:28 At 76 years old I am getting very risk adverse and to me, the mention of derivatives means counterparty risk, i.e., if something very unexpected happens (for example, Lehman Brothers in 2008) there could be a very large loss. Not suitable for me in my opinion.
I’m new to your channel and want to mention how wonderful you explain your topics. If you ever have time, I would love to see one on comparing the fairly new JP Morgan investing platform compared to others like Schwab and Fidelity. Thanks
Thank you! Just curious when you say JP Morgan investing platform do you mean the Chase You Invest stuff? Or something else? I’ve used Chase You Invest and Schwab quite a bit but not Fidelity
I’ve used the Chase ones quite a bit. They work fine. They don’t have all the bells and whistles that Schwab and others have. But if you’re just buying stocks and ETFs it works just fine. I actually think the Chase analyst reports are some of the best. They have basic margin and options available if you’re in to that as well. If you bank there it’s nice to have them together and have transfers work same day / immediately. I recently moved stocks out of there to Schwab mostly so I could have my full portfolio to share on RUclips at Schwab. That way I can use the portfolio tools etc. In general I actually think Chase is easier to use but Schwab has more features and better customer service. If you have any specific things you want to know about just ask. Hope this helps a little
i wish there was a hybrid version of schd (or other) that did something like 25% cc and 75% normal buy & hold. youd get almost a normal schd but a boost in the dividend
Putting JEPI in a Roth definitely alleviates the tax concerns - but the main question I would have is "how close to retirement are you?". JEPI is an ETF that is about generating current income, not long term growth. So if you have it as part of an income portfolio - totally cool. If you are investing in it with a 20-30 year time horizon - then I would question why? Hopefully that makes sense.
I haven’t dug into that one. I can definitely look at what it’s aiming to accomplish but since it’s so new it’s almost impossible to evaluate performance
So really the short answer to this is place JEPI/JEPQ in your IRA in retirement best place is probably a ROTH IRA. Place other instruments in your taxable account for 15%. TLTW also in Roth or IRA Not sure why you think there are special tax rules for tax deferred IRA distribtions beyond 59 1/2 in retirement. There are none. It is ordinary income 100%
JEPI is fine as part of an overall income portfolio so I only agree with your “short answer” if you are close to or in retirement. If retirement is decades away there’s no reason to hold an ETF with an objective of current income. Better to focus on something with long term growth prospects
I don't know enough about it - my only question would be why limit growth on Nasdaq holdings that are meant for....growth? But I haven't read the details of the ETF to know what it's trying to accomplish, so that may not apply.
@@mattderron a 60/40 portfolio between stocks and bonds is a good mix. After a correction it’s good to go 70/30 if it’s a deep correction 80/20. I’m using the high yield as a part of the bond allocation so 60/20/20, the last 20 being the high yield investments. This seems to be working well in the current scenario. I think the response from the market to interest rate cuts will not be positive. We will likely be horizontal for awhile so JEPI and JEPQ may be a good place to be.
A current 7% dividend with no growth and a shrinking dividend payout over the past two years does not entice when compared to any number of other similar ETF's that are performing much better.
I really like how this fund provides me with over $400 extra per month. I don’t care about the taxes or the growth. I have growth funds for growth and “Uncle Sam” always takes anyway. That’s why we have Roth IRAs for the taxes. Having a few extra hundred dollars every month improves my lifestyle by treating myself. Life is short and I’m not waiting or relying on social security. Let your money work for you while you can enjoy it and go treat yourself.
@@mattderron yup that's it, thanks! Any free tools for people starting out and is almost as good as SA? I don't want to start out in the negatives just yet! haha
Who cares about being “tax inefficient”. It’s income…so you pay income tax. Does anyone say, I don’t want a company pension because it’s tax inefficient…NO! Please stop with the tax inefficient nonsense.
I've been on record in videos saying that calling dividends "tax inefficient" is dumb because it's income. However, JEPI has a double whammy with taxes - nonqualified dividends (whatever, REITs have the same I suppose) as well as a high turnover ratio which means you pay more when you sell your shares. So those amazing returns and dividend yields are effectively lower when you take that into account, compared to other things with less turnover and qualified dividends. The point is that if all you want is 10% yield and willing to pay the highest possible tax on that - great. If your goals are more complicated then that (long term price appreciation, building a retirement nest egg, etc) then yes, it does matter.
My point is people want a 10% yield for INCOME. The highest possible tax rate is ordinary income. If my employer offered me a retirement pension of $3,000 per month, am I going to say...."no thanks, I'm not interested...that's going to tax me at the highest possible rate.."? No! I'll take the extra income all day long...paying income tax for income is part of life. Give me a steady 10% yield all day long.
your post lacks any understanding of investments. I hope you hire someone to help you. Anyone would accept more income and pay taxes, that is a silly point to make. That completely misunderstands investing. After tax income is what matters if you are analyzing multiple investment options. But the opposite is true, some people spend more time on saving taxes than they do looking for good investment ideas.
You forgot the scenario where JEPI is in an IRA. Then maybe SCHD is better, but not the last two years. I will likely convert to SCHD when I think the inflation/interest-rate story is fully played out.
I forgot to complement you on your excellent analysis and delivery. I really like your channel. More analysis is needed on my part on what’s better in a tax deferred account. I really expect a lot of volatility for the next year.
No worries thank you. Taxes are weird - they do matter but everyone’s situation is different and goals are different. I think in general taxes on dividends are overblown as an issue but in JEPIs case it has 2 different tax related disadvantages so I thought it was important to call that out
Just for clarity - in the video I repeatedly say “JEPI’s covered call strategy limits the upside” what I mean is the combination of the low volatility stock holdings AND the S&P 500 index covered calls. 80% of the fund assets are holding low volatility stock holdings and the other 20% are using ELNs to do covered calls on the S&P 500 index. Both of those pieces together limit the upside. Sorry if it’s not clear in how I was saying it in the video. Let me know if you have questions!
What about Jepq is it a good investment for a 5-7 year term ?
I’m using JEPI and JEPQ in my brokerage to provide income in early retirement. They pay all my monthly expenses while my 401k and IRA continue to grow. I don’t care about upside at this point. Once I turn 62 in 4 years and start collecting pension and SS, I’ll move whatever is left into SCHD/DGRO.
I'd recommend DGRW or QUAL instead. They outperform vs DGRO and SCHD.
What would SCHD and DGRO do that JEPI doesn’t is it to have appreciation while also having dividends
@@Soulastro12SCHD/DGRO will have dividend growth each year. JEPI is just income no growth of dividends.
@@me-myself-i787 I've invested in SCHD/DGRO for dividends 3.75% and 2.3% respectively. DGRW/QUAL are 1.45% and .99% and fees are a lot more as well.
Thanks for providing some clarity.
Excellent analysis! Sadly, many people jumped in only because of the 12% yield it temporarily provided. The fund manager was clear in interviews, under normal market conditions the yield will be between 6-9% (a bit more for JEPQ). I’m retiring next year and own small equal positions of JEPI & JEPQ as a little hedge in down markets and eventually boost my income. I’m not disappointed, but wouldn’t invest large sums 😊.
Nice, and the scenario you described for yourself was one of the ones I mentioned where it makes perfect sense. Glad it's working for you!
What other holdings do you have?
Of all the videos and reports I've seen about JEPI, this one explains it best! Great contact!
I’ve been holding JEPI for 3 years now, and you are absolutely right, when its bear market, it holds through the storm and preforms well at the end of the year, but when its bull market like this month and everything went up, it didn’t move a bit.
The best Strategy is to hold a growth etf with it, like VGT, QQQ, SPY
Thanks I appreciate it!
Good analysis. JEPI is a good choice for low income retired people who are not in a large tax bracket who want monthly income and decent returns.
Have both jepi and jepq. Just shy of 40K$ in jepi, it has been making me (average) 250$/month. Im up on share price as well. I can't complain!
If it's working for you, that's great!
Yeah about 8 percent you would most likly make more and pay less taxes by just buying regualr index funds
For my tax situation, 22% federal and 6% state, the tax pretty much ruins it for me. Brings a 8% return down to 5.8% after tax in a taxable account. Better for me to shoot for qualified dividends and get just a 15% tax. In a Roth, sure, seems good.
You nailed it. I’m in the first special cases so it works for me as part of a income plan and it really helped in 2020 and 2021 when other yields were in the toilet. Now it makes a nice companion to my short term treasuries.
My income isn't taxable so I believe this to be a great option for my retirement strategy along with annuities and other ETF(S) and stocks
What else so you invest in ETF wise
@@bloxer9563 QQQ, SCHD, VOO, SOXX, SCHE, XLP, VWO,
@@bloxer9563 Looking for high dividends?
Why isn't it taxable?
@@Utoobp24because there's a waiver for the type of work that I do. I'm a caregiver in Virginia and we operate a sponsored home for individuals that are intellectually disabled
One thing I had hoped you stressed, is that markets in the LONG term, have always gone up. Therefore using/purchasing and ETF that limits upside, unless income is a priority. (i.e. retired) it should, and usually does, have an inferior CAGR that does NOT limit upside. What that means to those investing for retirement, but not yet retired. IS DO NOT USE THESE., They will reduce how much your account will go up. SIMPLE,.
Jepi should be considered a “protector” when bad times in the market occur.
like now, when we think there is limited upside but high volatility in the near future (2024). Exactly. it is not about "for everyone" but "for this time"
SVOL?
I hold JEPI in my Roth. No taxes!
Are non qualified dividends tax free if in an IRA?? Thanks
@@arnoldbioursckii6639 Tax status is dependent on the IRA. In a traditional IRA, all dividens are actually taxed at normal earned income rates since they will just be IRA withdrawals. So even qualified dividends are taxed as normal income if the stock is held in a traditional IRA (or 401(k) or similar). On the other hand, all gains in a Roth IRA are tax-free since withdrawals from a Roth are not taxed. So qualified and non-qualified dividends in a Roth IRA are essentially tax-free (all other rules still apply like 5-year rule, age 59 1/2 etc).
@@arnoldbioursckii6639 in a Roth IRA all dividends, including qualified dividends, are tax free. All capital gains as well are tax free within a Roth IRA.
@@arnoldbioursckii6639 I believe when you pull $$ out of your IRA it's considered ordinary income
@@arnoldbioursckii6639yes if it’s a Roth IRA, no-just deferred- if held in a traditional IRA, just like any other gains.
I'm a European and I mostly invest in SCHD, JEPI, JEPQ and TXF for dividend income AND wealth generation. The high monthly cash flows from JEPI and JEPQ are amazing and allow me to diversify my portfolio also towards individual dividend stocks. What I want to say: You Americans are so lucky with your tax-deferred accounts (we don't have these here in Europe). I have to pay 15% withholding tax on all dividends from US ETFs plus 35% local dividend tax in my country of residence. In other words: I pay 50% tax on every single dividend payment I receive and still manage to grow my portfolio. And so can you! If there is one advantage you have over there across the big pond, then it is your amazing investment possibilities.
Yep used to own JEPI, clipped a few weeks back. It served it's purpose at the time but I wasn't digging the direction. Also like JEPQ much better. Reallocated to that and other div.growth funds.
Curious about JEPQ since usually Nasdaq stocks are about growth? Haven't dug into that one though so not sure what the goals are for it
JEPI drops far less in market pullbacks than S&P index funds, but is giving a 7.5-9% dividend return paid monthly, it seemed to me it's a great replacement for a small bond position when I want a higher return than 4% that also may drop in value in a market crash coinciding with higher interest rate environment.
JEPI is ok, but the other reason you might have added it missed the mark in 2023, is because it didn't hold a lot of hi-tech which did well. So, for covered call ETFs, for now, I like JEPQ and SPYI better
Thanks for the thoughtful video. As more covered call ETFs are formed, it seems that could lead to high supply of call underwriting which would put downward pressure on the premiums.
this is a really great point, thanks
What if I own JEPI in a Roth to minimize tax impact. I do believe that the market will be highly volatile due to many factors. Please respond
So which is the perfect dividend fund to invest in that gives monthly returns?
There's really no such thing as "perfect" - it all depends on people's individual goals, risk tolerance, and investment timeline
Some think we're headed for a "lost decade" like we had from 2000-2010. If that turns out to be the case, JEPI will greatly outperform
Definitely agree. If that’s the case it for sure will
I think we’ll continue with a roller coaster stock market for the whole decade. I’m 63, still working and have Jepi in tax deferred accounts
doesnt have to be true. if the swings are too big, jepi will lose alot and have trouble to recover due to the nature of limited upside
JEPI 6-9%
(low risk)
SPYI 12%
(??? risk)
JEPQ 11.59%
(mid risk)
SVOL 17%
(mid risk)
SCHD ??%
(??? risk)
This is the best video yet that I've watched about JEPI. Thank you for your clear speaking style. A lot of other investment experts on youtube cant speak without inserting a ton of fill words: Uhh, umm, and a.... If you want detailed clear info on stocks and ETFs, Matt is the go to guy on RUclips without a doubt.
Thanks! Much appreciated!
Great Video. You were very polite. Basically
JEPI is dividend smart and tax stupid 😂😂😂, unless it’s held in a tax sheltered account. Chasing dividends very often make’s some investors blind to Superior TOTAL RETURN opportunities via capital gains. I’ll get off my soapbox.
This is a great video (educational) and balanced. Hope JEPI investors understand the “narrow role” it was designed for.
Thanks!
I 100% agree with your point about how so many people overlook total return when it comes to dividend stocks or purely chasing stocks.
Good for IRA accounts nearing retirement or in it and want to reduce risk. Thanks for extensive analysis and highlighting your points.
Sounds like JEPI is a great fund in an IRA that requires a RMD (required minimum distribution) yearly, using the dividend to meet the cashout requirements, while minimizing the need to sell assets. The IRA is absorbing the tax implications of JEPI, while just taxing the actual distribution?
Correct, distributions will be taxed as ordinary income regardless in that case (to my knowledge). Ultimately, JEPI is a good tool to use for an income portfolio - probably in combination with other things - but the idea is that your focus is on current income and not growth
Matt many thanks for the video. Personally I am not in ETFs yet but mostly looking for individual stocks. However I really find interesting your analysis process. All the best and greetings from Bogotá, Colombia.
Thank you!
Great commentary. Id consider adding a covered call component to my portfolio when I'm getting closer to retirement. Not much advantage outside of building up the income 10-5 years out of needing the money.
Well considering SPY is near 600.00 a share and QQQ is near 500.00 IDK you can own 10-12 shares of JEPI for those prices and it’s monthly dividends not quarterly. I have JEPI & JEPQ in my Roth. So not too worried about taxes. If they don’t work they can be sold.
Great job explaining the concept of the investment and whose investment goals it may be aligned with. I am planning early retirement and looking for higher income. But I am looking at other similar funds rather than JEPI - SPYI for tax friendly dividends, EOS for longer track record and better balance btw high income and total return.
Wow, great eye-opener. I have been building up biggest part of retirement account with that because of income. I’m retired and use the monthly check. What else would you buy instead of JEPI for income for retired folks. Thanks, enjoyed the video
Thanks, just to be clear I think JEPI works well as part of a retirement portfolio. In terms of other things - it really depends on a lot of factors but the fact that you can get 5%+ virtually risk free treasuries would be a very strong consideration IMO
I own a sizable pc of JEPI, and I went in with eyes wide open! Your assessment seems spot on, and you pretty much nailed my exact scenario! I’m planning on holding it for at least 6 months, and will probably liquidate at least half at that time. I don’t like the tax implications, but it is what it is, and I knew that going in. Actually been thinking of adding some JEPQ to even it out with what’s left of the tech sector gains. The price is lower, and the dividends higher right now. As with everything, time will tell. NICE JOB!
Thank you, I appreciate it!
Thanks, Matt. Your presentation was excellent and gave me some additional facts to think about going forward. Currently, I have a nice chunk of JEPI in an IRA and my strategy is to use the dividends to grow the portfolio's cash generation to invest in other stocks. I must say, the monthly dividends are helpful in that perspective since this account is from old rolled-over 401ks and I don't contribute to it since I have a new 401k with my current employer. But, going forward your data comparing JEPI to other vehicles (spx,qqq,schd) will give me something to think about as we come out of the current market situation.
Have you a video on JEPQ?
Great explanation. I'm now a subscriber 😎
Thank you, I don't have a video on JEPQ but my thought on it would be very similar to JEPI in that you won't get the full benefit of QQQ but should perform better in down or flat years. Ultimately the question for JEPI and JEPQ to me is are you investing for income that you plan to use now. If you are, then they are good options in a well rounded income portfolio. If you're investing for retirement 20-30 years away, I don't think it makes sense
@@mattderron thank you so much. Really want the income for the short term (2 to 3 years) to reinvest for the longer term.
I hold my JEPI shares in a ROTH. While I did not hear you speak to the tax protections offered in an ROTH you did make a big deal about the effects of tax implications for JEPI's overall return. So, my question is this, if you hold JEPI in a Roth does that change your assessment?
I talk about holding it in a tax advantaged account in the video. In terms of my assessment it's the same. If it's a part of a income portfolio then cool. If it's a long-term investor putting it into a roth, then I'm not really sure why since your overall returns will likely lag the market. Unless you are specifically trying to time the market and think it will be down / flat for a long period of time.
I put some in my roth. I'm going to leave it there. I like consistent cash flow in my roth.
That's cool, definitely ok for a tax advantaged account, also gives you time to see how it performs over a longer time period - maybe it does get closer in rising markets, we don't know
Its part of my strategy to hold some covered call ETF's to lock in some "gains" but, its still only a small portion, and I still have the majority of my investments in single stocks and index funds. I likely won't make any major shifts until I near my desired retirement age though.
I'm 5 years from retirement. I hold JEPI at 20% of my Roth instead of bonds. It's paying about 7.5% tax free so far - not including a small price improvement. I don't really see anything better for a Roth that provides that kind of return with the downside stability it offers.
JEPI works very well as part of an income focused portfolio for sure
Another scenario i would say it to invest a small amount and use those dividends to help build something like SCHD.
I guess my question is - what's the goal in that scenario? Do we think that will outperform just holding one of the indexes? Or do you mean just as a hedge in your portfolio in case the market has a longer downtrend?
@@mattderron I mean just using Jepi as a source of income to supplement what you can invest from your day job income. My goal would be to build a long term dividend portfolio with Schd as the core. And a small jepi position would just help me grow the SCHD position. I believe the strategy is called dividend waterfall.
I always enjoy the old school references, lol. I remember them! 😂 Thanks for the great info. I remember when everyone said JEPI was the retirement cheat code. And now it's supposedly Yield Max... Going to be interesting to see what happens.
Yeah I think it can have a place for folks in retirement but I just don’t see how / why anyone is holding long term
@mattderron how long do you consider long term?
anything 10+ years is long term to me - the only caveat I would say is if you're in retirement (which can be more than 10 years) and you have it has part of an income portfolio with other things - then that makes sense to me
Watching this is a must do part of due diligence before jumping into JEPI
Thank you!
The Miller lite comment broke the internet… jepi and jepq are 15% of our portfolio right now but I’m probably a bit older than most of the viewers and looking for more income than capital appreciation
That's great - that's definitely one of the scenarios where it makes sense (as part of an income portfolio along with other things). Glad it's working for you!
How well does JEPI compare with JEPQ?
I switched from JEPI to SVOL in my ROTH IRA and have never looked back since. For $5k, the dividend is higher for SVOL and it’s not market correlative either.
That's cool, hadn't heard of SVOL
Hi Matt, I totally agree with your analysis and assessment. I appreciate the thorough research on the purpose of the JEPI. I’ve been cautious about this ETF since it has such a short track record especially it was incepted during the COVID time where things were just wild. Just like you can’t chase after high dividend yield stocks, you can’t put all eggs in one basket in an ETF and forget about it. This further emphasizes the point of 1) understanding the purpose of the fund, 2) is the fund performing according to its objective 3) does it fit your financial goals.
Pair it with GARP stocks in tech , healthcare and in industrials with JEPI or the grandad XYLD. In a 30/70% combo and you will have your dividends skyrocketing.
Or a 20/80 combo with DIVO etf.
Will work for anyone, especially after age 50
I love your analysis. However, taxes are inevitable. One thing for sure, I’m 30, looking at JEPI long term for the monthly income potential due to my industry’s unpredictability. I work solely on commission as a W-2 employee. I have no tax benefits to begin with, but my income is very unpredictable depending on economy and what consumers purchase. This will make for a nice cushion month to month to eventually pay bills around the house or a gym membership or car note. Softening the blow of expenses as my business fluctuates.
That’s awesome, as part of an income portfolio to hedge against unpredictable primary income I think JEPI is great for that. Definitely one of the use cases where it makes sense
Is SCHD still a better bet than JEPI if not for income generation?
If you're a long-term investor that's not close to retirement, IMO SCHD has the greater potential for long-term gains as well as having basically all qualified dividends (which is more tax efficient if you're not in an IRA / HSA), basically because of how JEPI is designed to limit volatility. Obviously whether it's the right thing for you will depend on your personal situation and goals though.
The last three months of JEPI dividends have been trash.
Comparing jepi vs sp500 isn't a fair comparison given that's not the primary goal of the etf. You can't compare a mini van to a Fararri even though they use the same road and gets you from point a to b. What jepi should be compared to is other income producing investments such as BDCs or REITs or income stock etf. IMO, that would be interesting and a more apples to apples comparison.
I agree with you, that was a major point in the video. It’s not for people looking for long term growth and total return. It’s for income based portfolios.
Part of the issue is that many people are just buying it assuming it’s good for their long term portfolio that is 30 years away from retirement.
For income focused portfolios it’s a solid choice to be paired with other income producing assets
@@mattderron I think a comparison of jepi with the options i called out would be interesting as the examples your compared against were sp500 and schd which aren't exactly primarily income producing products. Or another way, does jepi and jepi are tops for income producing investments? I would assume it would get a lot of views given the products popularity. Another component not discussed much would be what % of the fund is sold as covered calls. I think other cc etfs have higher dividends because they write a larger %... which means more dividends, but less upside. What is the sweet spot on that mix... or there isn't one.
I’m not investing in Jepi but another covered call etf. Im currently doing that to get some benefits from the market and to reduce my downside potential bc I’m planning on selling everything and buy a house in the next 4 or 5 months
Hello Matt, I am retired and have bought a little bit of JEPI as a part of my portfolio. I never intend to make it a large percentage of my portfolio. I regularly buy SCHD and QUAL as foundational ETF holdings JEPI to me is a little to gimmicky to put big money into it. I enjoy your content. You are very clear in your explanations and thinking. Thanks
Thank you very much, I appreciate it!
I have both JEPI and JEPQ, not high amounts. I'm 72 and retired, and I keep both in my traditional and Roth IRAs since the DIVs are not qualified. They've worked well for me.
That’s great. JEPI and others like it work great as part of an income portfolio, glad it’s working for you!
excellent explains
thank a lot for this video
No worries, glad it's helpful!
Wouldn't having this in a Roth negate the tax ramifications?
If you're in retirement and have JEPI in your Roth, then yes it would. The main concern there would be the dependence on option premiums / market volatility for steady payouts. If you're a long-term investor, yes in a Roth you wouldn't have the tax implications but you'll likely underperform the market unless you build up a nest egg in a Roth with other investments and then switch to JEPI when you get close to retirement. Hopefully that makes sense
Consider the envirionment that we have based on current interest rates being at their highest, this fosters volatility. When the interest rates are lowered we will have volatility as it will not be done in one swoop so for the next two years you will do best with JEPI than with other instruments in my opinion.
Idk monthly dividend is soooooo freaking nice it feels like buying a tiny house and getting paid rent as a landlord.
Great info. I will stick with SCHD.
Thanks!
12:45 what tool is that? Can you share the link please?
That’s just the JP Morgan website for JEPI
The reality is that they have maintained a consistent dividend as the market has swung from very bearish to extremely bullish. I think you buy this as a higher yielding alternative to yield focused assets. It is going to be higher beta than some alternatives, but with a higher yield. Ideally you put this in a tax-free retirement account (IE IRA) and the ordinary dividend impacts are avoided. Personally, I put oil and gas MLPs and some dividend yielding stocks with qualified dividends in my taxable account and put as much ordinary income oriented assets into the tax deferred accounts. They also pay monthly so you can use this as a good place to park Cash while waiting for other opportunities.
Best approach could be creating blend of JEPI and SCHD as long as JEPI is within tax sheltered accounts
As always, I think it will depend on your personal situation. If you're in or close to retirement and need income, then combining JEPI with something else can make a lot of sense. If you're looking to build up a portfolio or retirement account over time, I don't think that's what JEPI is meant for
That's how I am going. I have an IRA that is an experimental dividend bucket. It's all tax sheltered and won't be tapped for 10 years. I may transition into more conventional allocation getting closer to use.
I built a core holding in VZ starting price $38. by selling puts and calls, position is solid green plus dividends.
Managing options daily is a wealth builder , TSLY manages on a daily basis!
That's cool I'm glad it's a strategy that's working well for you. It can definitely be a differentiator, but I do think a lot of folks wouldn't want or aren't comfortable with managing or worrying about it every day though.
How about a review of TSLY
Yeah, I have the YieldMax ETFs on my list so hopefully soon
My entire Roth IRA is Jepi, for the taxes. I split the rest of my investment with vgt, vti, and schd.
This is an amazing review. Thank you for your time
Thanks I appreciate it!
Well covered fairly easy to understand. To me your reasoning is ''spot on''. Thx
Thanks!
5:28 At 76 years old I am getting very risk adverse and to me, the mention of derivatives means counterparty risk, i.e., if something very unexpected happens (for example, Lehman Brothers in 2008) there could be a very large loss. Not suitable for me in my opinion.
Thank you for the amazing explanation and making it easy to understand
No worries, glad it was helpful!
Jepi should only be used in retirement accounts. And should be apart of the bond allocation in say an 80/20 portfolio.
I’m new to your channel and want to mention how wonderful you explain your topics. If you ever have time, I would love to see one on comparing the fairly new JP Morgan investing platform compared to others like Schwab and Fidelity. Thanks
Thank you! Just curious when you say JP Morgan investing platform do you mean the Chase You Invest stuff? Or something else? I’ve used Chase You Invest and Schwab quite a bit but not Fidelity
@@mattderron Yes, Chase. I’m starting to do my own investing and I already have accounts with Chase. But I want to use the most friendly one.
I’ve used the Chase ones quite a bit. They work fine. They don’t have all the bells and whistles that Schwab and others have. But if you’re just buying stocks and ETFs it works just fine. I actually think the Chase analyst reports are some of the best. They have basic margin and options available if you’re in to that as well. If you bank there it’s nice to have them together and have transfers work same day / immediately. I recently moved stocks out of there to Schwab mostly so I could have my full portfolio to share on RUclips at Schwab. That way I can use the portfolio tools etc. In general I actually think Chase is easier to use but Schwab has more features and better customer service. If you have any specific things you want to know about just ask. Hope this helps a little
@@mattderron thanks
i wish there was a hybrid version of schd (or other) that did something like 25% cc and 75% normal buy & hold. youd get almost a normal schd but a boost in the dividend
Well analyzed.
Might be a great option for my HSA
Yeah actually that's an interesting idea, if it's one where you will regularly use some cash (for medical payments) as you go
Excellent analysis and presentation!
Thanks, I appreciate it!
I appreciate the very thorough analysis and critique. Good Man👍
Thanks!
How about buying JEPI in a Roth IRA with no tax concerns at all?
Putting JEPI in a Roth definitely alleviates the tax concerns - but the main question I would have is "how close to retirement are you?".
JEPI is an ETF that is about generating current income, not long term growth. So if you have it as part of an income portfolio - totally cool. If you are investing in it with a 20-30 year time horizon - then I would question why? Hopefully that makes sense.
@@mattderron Appreciate your input. Thank you!
@@ckgoogl No worries!
How about SPYI?
I haven’t dug into that one. I can definitely look at what it’s aiming to accomplish but since it’s so new it’s almost impossible to evaluate performance
So really the short answer to this is place JEPI/JEPQ in your IRA in retirement best place is probably a ROTH IRA. Place other instruments in your taxable account for 15%.
TLTW also in Roth or IRA
Not sure why you think there are special tax rules for tax deferred IRA distribtions beyond 59 1/2 in retirement. There are none. It is ordinary income 100%
JEPI is fine as part of an overall income portfolio so I only agree with your “short answer” if you are close to or in retirement. If retirement is decades away there’s no reason to hold an ETF with an objective of current income. Better to focus on something with long term growth prospects
You're a legend Matt, thank you for shedding light on this fund!
No worries, glad it was helpful!
I dont care about the growth during bear or bull. Its design for income while perserving capital. It's doing a good job of that.
well reasoned analysis and thorough one too. Thank you!
Thanks!
many new covered calls ETFs are available now, even ones that are stock specific e.g. TSLY
Yup I’m going to look at the YieldMax ones next. I’m assuming they have similar properties / risks as JEPI but we’ll see
Those yeildmax funds 🤦🏼♂️
@@shaneomack5018 They are great. I'm making $2600 a month in dividends from them.
Thanks for the explanation really appreciate it
No worries!
What do you think of JEPQ?
I don't know enough about it - my only question would be why limit growth on Nasdaq holdings that are meant for....growth? But I haven't read the details of the ETF to know what it's trying to accomplish, so that may not apply.
@@mattderron a 60/40 portfolio between stocks and bonds is a good mix. After a correction it’s good to go 70/30 if it’s a deep correction 80/20. I’m using the high yield as a part of the bond allocation so 60/20/20, the last 20 being the high yield investments. This seems to be working well in the current scenario. I think the response from the market to interest rate cuts will not be positive. We will likely be horizontal for awhile so JEPI and JEPQ may be a good place to be.
being close to retirement it seems like a good fit for me, but coupled with growth ETFs, not all by itself.
A current 7% dividend with no growth and a shrinking dividend payout over the past two years does not entice when compared to any number of other similar ETF's that are performing much better.
JEPI should be part of a well-diversified retirement account. It would not own JEPI in a taxable account.
Very informative video! love the arguments you make, made me think twice before buying into JEPI.
Thanks!
I really like how this fund provides me with over $400 extra per month. I don’t care about the taxes or the growth. I have growth funds for growth and “Uncle Sam” always takes anyway. That’s why we have Roth IRAs for the taxes. Having a few extra hundred dollars every month improves my lifestyle by treating myself. Life is short and I’m not waiting or relying on social security. Let your money work for you while you can enjoy it and go treat yourself.
What tool did you use to view info about JEPI in the beginning like history and graphs?
Not sure which part you're talking about but it's probably the Seeking Alpha website
@@mattderron yup that's it, thanks! Any free tools for people starting out and is almost as good as SA? I don't want to start out in the negatives just yet! haha
Treat these covered calls options ETFs as annuities with the exception that you keep your money when you get out. They are for retirees actually.
Excellent description of JEPI!
Thanks!
Well presented!
Thanks!
Super duper breakdown, thank you! New sub here as a result of this fantastic video!
Thanks, glad it was helpful!
I put a decent amount of my wife’s retirement fund into JEPI because she doesn’t like volatility and gives me a headache if she ever down a lot LOL.
You give me monthly dividends I be happy though. DIA has a beautiful monthly dividend lol.
Maybe about some Jepi in a 401K without taxes for diversification
Thank-you for the video!
Yep hold a few shares
Who cares about being “tax inefficient”. It’s income…so you pay income tax. Does anyone say, I don’t want a company pension because it’s tax inefficient…NO! Please stop with the tax inefficient nonsense.
I've been on record in videos saying that calling dividends "tax inefficient" is dumb because it's income. However, JEPI has a double whammy with taxes - nonqualified dividends (whatever, REITs have the same I suppose) as well as a high turnover ratio which means you pay more when you sell your shares. So those amazing returns and dividend yields are effectively lower when you take that into account, compared to other things with less turnover and qualified dividends.
The point is that if all you want is 10% yield and willing to pay the highest possible tax on that - great. If your goals are more complicated then that (long term price appreciation, building a retirement nest egg, etc) then yes, it does matter.
Taxes can cut into your return quite a bit depending on your bracket so you need to factor that in.
My point is people want a 10% yield for INCOME. The highest possible tax rate is ordinary income. If my employer offered me a retirement pension of $3,000 per month, am I going to say...."no thanks, I'm not interested...that's going to tax me at the highest possible rate.."? No! I'll take the extra income all day long...paying income tax for income is part of life. Give me a steady 10% yield all day long.
Cool, maybe you didn’t watch the video though because I talked about this exact scenario. Either way, good luck to you man
your post lacks any understanding of investments. I hope you hire someone to help you. Anyone would accept more income and pay taxes, that is a silly point to make. That completely misunderstands investing. After tax income is what matters if you are analyzing multiple investment options. But the opposite is true, some people spend more time on saving taxes than they do looking for good investment ideas.
You forgot the scenario where JEPI is in an IRA. Then maybe SCHD is better, but not the last two years. I will likely convert to SCHD when I think the inflation/interest-rate story is fully played out.
I didn’t, I specifically talked about it being in a tax advantaged account like an IRA or HSA
I forgot to complement you on your excellent analysis and delivery. I really like your channel. More analysis is needed on my part on what’s better in a tax deferred account. I really expect a lot of volatility for the next year.
No worries thank you. Taxes are weird - they do matter but everyone’s situation is different and goals are different. I think in general taxes on dividends are overblown as an issue but in JEPIs case it has 2 different tax related disadvantages so I thought it was important to call that out
Thank you so much
you explained jepi much better than anyone I ever seen in the last 3 years 👍👍👍
No worries, you're welcome!
JEPI Good income investment etf
I actually don't disagree with this at all