Buying of just any ETFs is easy, but buying the right one without a time-tested strategy is incredibly hard. Hence which is best to buy now or put on a watchlist? I’ve been trying to grow my portfolio for sometime now, my major challenge is not knowing the best entry and exit strategies.
Before investing in any ETF, it's important to conduct thorough research. Understand the fund's objectives, track record, expense ratio, and the index it aims to replicate.
The best course of action if you lack market knowledge is to ask a consultant for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since 2023 January. I believe that is the most effective way to go about
The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny, to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
I did a backtest for someone near retirement from 2016. Starting investment 300000 and then 1500 per month for 5 years. Reinvesting dividends. Starting with 14000 shares, then accumulating around 12000 more in 5 years gives a yearly dividend income of $74,640. Total yield over 19% on 390k total investment.
@@donsachse buy the QYLD and only invest the dividends in TECL (It seeks to track 3x the daily performance of the Technology Select Sector Index). Try to do this backtest and tell us you conclusion!
@@marciomathias4288 I will when I have time. Looks interesting since one is not putting in new money into a highly volatile ETF and if the market crashes you can accumulate more shares each month and decide to use the monthly purchase cash into the ETF when the price is much lower.
I was one of the ones asking you to cover this ETF - thanks for doing so. I would say a very important consideration when buying QYLD is what is your goal. If your goal is long term capital appreciation then this may not be for you. However if your goal is immediate, reliable, stable, above average income then QYLD seems a good choice. It has been a good choice for me as someone who is 60+ and was looking for a vehicle that would produce higher yields than well regarded dividend payers (think J&J or MSFT). It pays monthly which is nice and the recent wrinkle of declaring the distribution as ROC is a big plus for me who, as someone who is interested in income primarily, never plans on selling these shares. If income is your goal then one of the biggest concerns you have before investing a chunk of your life savings is will this be reliable? The answer here is yes - QYLD has been paying above 11% annualized since mid 2014. I don't intend to sound like a QYLD cheerleader but it is a very important part of my soon to be retired/income strategy and so far it is doing its job very well.
Hey Maurice! Glad I could help, and thanks for sharing such a detailed comment! I agree with your assessment - for those looking for stable income, QYLD seems reasonable. But for younger investors like myself, I want to see a little more growth. 😁
@@rkingfarmer In this case, the QQQ ETF could be better for investors who are seeking growth, while the QYLD ETF trades that potential growth for dividends. But there are tons of growth-oriented stocks and ETFs out there!
30 year investor here and this is an excellent video and easy to understand. Really well done! I move some in an IRA (that I have to take RMDs) to it and also added some in my dividend/income portfolio. It is a nice offering if you are searching for high dividends/income and not concerned too much about growth. Just another part of the asset allocation mix.
extensive thorough explanation and simple examples. hard to find material like this, without getting pitched a course, good job man im impressed with this content.
Thanks for sharing, I recognize most of those! I held a lot of the same things when I was building a dividend portfolio. I was really excited about BDCs like ARCC, but got pretty intimidated when I tried to dig deeper into the BDC universe.
I am a recent investor of QYLD (20ish shares) and I’m hoping to slowly grow my position throughout the years and use as an income some point later down the road. I am young so my focus has been primarily on other stocks/ETFs/etc that will (hopefully) realize more returns in the form of capital gains.
@@erics9487 QYLG is a combo. 50% call income and 50% growth. Funds are best when they do ONE thing well. My favs are QYLD and RYLD for income and TQQQ and or FNGU for 3x growth.
Thanks Tyler! Some of the other RUclips channels that cover QYLD don’t explain the capital gain considerations with QYLD, and when I comment on their channel about it, they don’t seem to care. So, thanks for your more realistic approach to covering this..
Dude, just listening to your presentation skills left me super impressed ! You have a bright future in anything you choose to do ! Me, I am a long term holder of S&P 500, Total Stock Market and a sprinkle of Tech ETFs tossed in.
Good video! I've held QYLD for a couple years. I nice reliable high dividend ETF like this has a place in every investors portfolio. Especially with interest rates so low!
I hold QYLD, RYLD and XYLD in both my Investment Account and my Roth IRA, both of which I have begun to focus on dividend investments: currrently I am about 70% dividends and 30% growth/value. I am 54 years old. Within the next ten years, I would like to start to glide into retirement (go part time and work less and less - at the moment I have no desire to completely stop working). In order to kick up my tax sheltered savings, I have begun to live off some of the dividends from my investment account so I can direct a much larger percentage of my current income into my company 401K. The ROC dividends are great for my situation because it limits my tax liability and since I plan to hold these shares for the long term I am not really concerned about my cost basis. I do have two questions... 1) If I hold these shares for a long time is it possible for the ROC dividends to push the cost basis to go below zero? 2) If I am still holding these shares when I die, will the basis step up return the cost basis of the shares to the market price for my heirs? Thanks for the great analysis!
Hey AJ! Sure, it's definitely possible that the ROC can push your cost basis to zero, but it doesn't go into the negatives. Zero is as low as it can go! I can't speak to the effect on your cost basis when shares are passed down to your heirs. This is definitely a question for a professional - I imagine there are probably some different effects depending on the type of account and the underlying holdings. (Side note - the cost basis of MLPs resets when passed down, which is a really cool tax benefit - and they're typically very high yield) I hope this helps! Thanks for the comment 😀
@@The-Bitcoin-Revolution IRS pub. 550 for anyone who wants to torture themselves. If you acquired stock or bonds other than by purchase, your basis is usually determined by fair market value or the previous owner's adjusted basis, whichever is lower.
We are writing puts on QYLD since February 2020 and collect shares or earn the commission only. This way we build up a >10% interest on part of our portfolio. This year we also startet writing calls on the collected shares and keep a balance on the amount we hold. The best time to write the options is the one of high volatility.
@@The-Bitcoin-Revolution We trade those things maybe once in a quarter, after automatically being alerted of growing volatiliy. It's a question of purpose: We cannot buy those ETFs (same for Ark ETFs) in Europe as they do not meet MIFID II and we like to secure regular expenses with interest/dividends… so alongside the rather small dividend yield or accumulating of globally diversified ETFs such as Vanguard FTSE AW and Amundi Prime Global (cheaper alternative for MSCI products) the QYLD (in contrast to others like QYLG) is tradable via options and pays well.
Excellent presentation ……I understand these funds and options better now ….will split 50 percent of my retirement account ..,25 percent each in the QYLD and QQQ
I have seen a ton of videos on QYLD, but you did a really good job. I have had a ROTH IRA on M1 Finance for the last 2 years. I only have 1 holding, QYLD. I am not interested in capital appreciation, so I like the fact that the share price stays under $25 a share. The reason is I get about $120 a month in dividends. With my reinvestment I get an additional 5 shares per month. I have yet to invest $6000 for this year, but I will soon. Thinking about XYLD which does the same strategy but for the S&P 500. Its about $47 a share but it pays $0.36 to $0.40 per share every month.
Thanks Dan! That’s an interesting strategy. If I were withdrawing from my Roth IRA anytime soon, I might do something similar. I wonder if the lower volatility of the S&P compared to the Nasdaq 100 is responsible for the lower dividend. 🤔 I need to give XYLD a closer look!
Thanks! 😀 I can't make any promises - I have a couple other ideas lined up at the moment! But I'll definitely take a look and see what they're all about.
Tyler the "return of capital" component you mentioned suggests to me the fund is having a tough time maintaining double-digit returns on their CC strategy. You would have to back out the return of capital to establish the true yield. No relation, I don't think.
Hey Eugene! I agree, we can see the NAV has been on a downtrend over the last several years, so the return of capital seems like a red flag. This means total returns are likely less than 12%.
Very well done video! The only thing that I would add is using a Roth IRA as the investment account and then any worries about the taxes on this fund go away (as long as the government doesn't change the rules)
Brilliant analysis on QYLD, i am planning to invest in this for getting monthly regular income. Your video has thrown up lots of thoughts on tax planning etc. Thanks
Thanks to god I live in Russia and have to pay taxes at as low as 13% for dividends received and 13% of (sell price - buy price) upon selling if I owned the stocks for less than 5 years and no taxes upon selling if I owned the stock for 5+ years. 😊
@@The-Bitcoin-Revolution Yes, the long-term owning of the stocks benefit can be applied to foreign stocks, but there are some T&C's are applied (i.e. the company or a fund should own 50+% of its property outside of Russia and the individual must hold these stocks for at least 5 years and some other T&C's). This tax term was introduced just this year, so I'm waiting for the comments of the Government Tax Authorities on how this benefit is going to be treated, but the Tax Code definitely says that selling of foreign stocks is tax exempted if the individual held them for 5+ years and those T&C's are met. We have a similar tax terms regarding selling Russian stocks, but there are no T&C's at all and there's a shorter owning term: just 3 years instead of 5 (for several high-tech and bio-tech Russian companies this term is decreased to 1 year: so you can buy these companies' stocks, hold them just for 1 year, sell them and in this case you will get a tax exempt). And if an individual sells Russian stocks which he owned for 3+ years then he will have to pay taxes for income that is calculated using the following formulae: (Sell Price less Purchase Price less Brokerage Fees Paid less Tax Exempt) * 13%. And the Tax Exempt = $40,000 p.a. * number of years you held the stocks (the exempt is in Russian Rubles, of course; I just converted the amount into USD to make it more clear to you :-)). Thus if you owned the stocks for 3 years you will have tax exempt equal to $40,000 * 3 = $120,000; if you held the stocks for 5 years you will have $40,000 * 5 = $200,000 of tax exempt and so on.. So actually if a Russian citizen held Russian stocks for at least 3 years he can be mostly sure he will not need to pay any taxes on his capital gain upon selling the stocks :-)
I have seen other videos on QYLD and I think yours was by far the best one because some information you gave was missing in those others. For example the taxes. Nice Job!
Interesting opportunity for non American, non US resident investors, especially if one's home country doesn't tax capital gains (eg Singapore). Paying out as return of capital doesn't get taxed, as opposed to qualified dividends with a 30% withholding rate for foreign shareholders, so it's essentially tax free income. And a lowered basis just means a correspondingly higher capital gain, which for non US residents does not get taxed in either the US or Singapore. Love it!
@@Mark-el8sb thanks. Im from Chile and a week ago i bought mi first shares of NUSI and QYLD. I had those doubts about witholding taxes (30% in the case of chile)
I am using this ETF to try and obtain passive income through dividends quicker. If the share price stays around what it is or falls over time, that’s fine with me as long as I am still able to retain such high dividend yields. I can probably even buy more shares if the share price keeps decreasing over time. This particular stock I am okay with sacrificing capital gains if it helps me reach my dividend income goals faster. I am also invested in crypto so I am not concerned about getting enough exposure to assets with capital gains.
I think it would be a great investment for retirees who want to maximize their income. QYLD sacrifices participation in the growth of their holdings by writing "at-the-money" calls. They get large premiums but as often as not they will be giving any capital gains to the buyer of their calls. For many retirees with smaller portfolios being able to buy groceries is more important than portfolio growth. I do like your suggestion of "do it yourself" however. Can you tell me if the calls you write in this instance would also be European?
Thanks for the comment Bob! As I understand it, the covered calls written on an index (vs individual stocks stocks) are typically European. But if you did this with the QQQ ETF, I believe they would be American options. I don’t know the logistics of using index-based options as an individual investor so please verify this in your research. 👍🏼
Using it as apart of an accelerated account for dividend investment. Due to the tax deferment it will most likely be a very long term hold. Especially within my ROTH it also sits in. Just wish I could put more than $6k into it.🤣
Thank you for the simple explanation. This is a great video. Was wondering how this ETF worked and I feel like I know a lot about it now. You would make a great teacher!
This is very interesting. I would like to raise a question about Index options though. Index options are always settled Cash $100 per point rather than share settlement. This then makes the cost basis different end of the month because they are only paying out $ and not liquidating positions.
I have qyld and qylg and nusi. I think nusi is performing the best. Would like to see your thoughts on the covered call with protective put strategy. You did a great job explaining the strategy and seemed to have done a excellent investigation of the fund
Hey Tyler, another really great video!!! Came across QYLD looking for FIXED INCOME alternatives 2 months ago being newly retired and just saw first month of return of capital payments (very exciting!). In fact am considering moving out of my SCHD position into QYLD Monday as some downside might be in our short term future.
Thanks so much! QYLD certainly has an interesting strategy compared to standard dividend stock funds. But for the right investor, this could be the perfect ETF! Best of luck 😃
yeah, when the stocks are riding at or near record levels, you know at least a brief dip is coming in the future. Kind of like all the people who jumped in on crypto when it was at the peak because of all the news articles about "look how much money you could make if you went back in time and invested in this coin!" then the market dropped over 50% in a few days and still hasn't recovered
12% is pretty good, one could reinvest those dividends and do well as long as the etf doesn't break down long term or decrease their dividend. could be a nice side income for a retiree. Heck, refinance a $300k house and you could replace a modest income.
Hi Tyler. I'm asking these questions because you've responded to my questions/comments in the past and am hoping you will do so to these questions. A great many income ETF's these days are juicing their returns by selling covered calls. But who is buying these call options? I know pricing of these options depends on many factors not the least of which is the volatility of the underlying asset but isn't the price also influenced by the number of buyers? If there are fewer buyers I would think the price sellers could charge to clear market would decline. And finally, I would imagine many investors are reinvesting their dividends thus causing the ETF's to grow and thus increasing the number of calls they're selling. So do you think it possible for returns on these funds to go down because the number of sellers has increased more quickly than the buyers? Any insight you might have here would be greatly appreciated. Thanks so much. Bob
Hey Bob, those are great questions to consider! Let me first say I can't answer this with certainty, but I agree with your concern. It's tough to imagine demand being equal on both sides, but the Nasdaq is one of the most commonly traded indices, so I imagine there is plenty of activity to keep the call options flowing - even outside of the dividend ETF space. I do think the premium of these covered calls will vary depending on demand and market sentiment, and this is probably one of the biggest things to consider for anyone relying on QYLD (or covered call funds) for consistent income. If sentiment is bad, I doubt covered calls will fetch a large premium - providing lower dividends for QYLD holders (yet, in a bear or flat market, lower dividends are better than 0 returns by just tracking the index with an ETF like QQQ)! Overall, I wouldn't be too concerned with the depth of volume for covered calls on the Nasdaq, but the price of those calls will inevitably be affected by market conditions.
@@The-Bitcoin-Revolution woops I missed some words in my previous comment, IRS does not charge non-resident aliens capital gains tax, but it swings both ways because you have to deal with the home country tax, but some places have weird tax laws that end up charging zero tax if you work it right.
Hey Tyler great content. Subscribed. Question if I’m in Robinhood and I have a lot of QYLD would I reinvest the dividends ? Or would I buy a different stock with dividend. Would I pay more tax ? What’s the best solution ? Thank you
Thanks Thien! The decision to reinvest is yours, it’s not automatic. Depends on your strategy! Both will be taxed the same amount, so there is no tax advantage to either. 🙂
I have 40% in my portfolio stored in QYLD, to get that passive money flow, I plan buy maybe some more or maybe something else, what pays so high dividend. After I get nearly 1000€ monthly dividend, I can start buying some other more value-adding shares
SUPER VIDEO. You are heading to be a Millionaire. I am earning in a Roth IRA $1500 to $2000 doing covered calls on stocks like NVDA, FAS, TSLA and just found TQQQ.
This may be something that is unique to writing calls on indexes, but it is explained here on the Global X ETFs website: www.globalxetfs.com/qylds-covered-call-options-explained/
@@The-Bitcoin-Revolution They wrote that very poorly and it could easily dissuade potential investors by jumping the gun and thinking it's a 60% or 40% tax that the company (or even the investor) is liable for. They are referring to the 60/40 rule, optionalpha.com/blog/taxes-on-options-trading#:~:text=Under%20the%2060%2F40%20rule,are%20lower%20capital%20gains%20taxes.
this was such a great video. easily explained everything, EVEN COVERED CALLS which everyone always explains in such a confusing way but you made everything so easy. just became a new sub🥳
Actually, the person who bought the call paid about $4.48 - which is how you were paid; so if the stock is at $140, they already have $4.48 or thereabouts into the trade; if the stock was at $145 they might want to buy it from you by paying the $140. Meaning, if you bought it at $134, you are not likely to part with it unless it goes up about $14+ Yes, you can be forced to sell at $140 if the stock reaches that; except for the fact that it would not make economic sense to the buyer (assuming they can understand total cost).
When you said "you don't have to pay taxes on your dividends until you sell your stock"... I find that a little confusing, because I thought dividends were taxable as capital gains if you did not reinvest them... Could you do a video where you explain this in more detail?... I know that QYLD is a Qualified Dividend, which I understand to mean that you don't pay taxes until you take a disbursement. I thought that included a disbursement on dividends only. Anyway- if what you are saying is what I think you are saying- you could just NEVER SELL your shares and basically have tax free money from the dividends???
This is because QYLD has recently been distributing a return of capital, which isn't immediately taxable. This gives it a unique tax treatment - but I understand that it can be a bit confusing at first! I'll definitely look into making a video on it, this is something that comes up in a lot of different investments and it's super important to understand. You have the right idea - if you receive dividends that are 100% return of capital, taxes on dividends are deferred until you sell your shares. But, if you never sell your shares, you never have to pay those taxes. This sounds great of course, but there are very few investments worth holding for a lifetime - so that's a big commitment!
@@The-Bitcoin-Revolution Yes... QYLD is a long position for me... I found out that by going to this ETF, I tripled my Monthly Dividend Average and a little bit of math on the potential and going on the premise that it continues to pay dividends at or greater than it currently does, I can use this as a source of realistic retirement income- especially since I am still looking at a good 20+ years until I am at the age of retirement (plenty of time).
I pretty much came to the same conclusion as you on what he was saying. Because I plan to keep this stock essentially for a very long time or not selling this is good news for me.
Not true, only a small portion of the dividend is a return of capital (12% of the dividend in 2019). This acts to reduce your cost basis, for example, if you paid $22 a share and after one year the return of capital portion of the dividend was $.28 like it was in 2019 then you would look in your brokerage account and should see that your cost basis for the shares are $21.72. If you then sell your shares for $22 each, you will pay taxes on that difference. Also if you read the tax primer, the dividends are not qualified dividends. In 2019 85% of the dividend was taxed at the ST rate and only 3% was taxed at the lower LT rate leaving the remaining 12% being the return on capital. Hope this clarifies the tax portion. www.globalxetfs.com/content/files/Global-X-Covered-Call-ETF-Tax-Primer.pdf
@@The-Bitcoin-Revolution Did you have a Discord or other community structure for discussing more in-depth portfolio management and/or talk about the channel?
I believe they repeat the process on a monthly basis - settling the covered call position (or letting it expire). So there are possible loss of gains there, but it keeps cash flow/dividends consistent.
Nice video. Sorry I didnt get this point on taxes. If I trade QYLD in, say a tax sheltered account, is it any different from any other investment, or is it to be sorted out differently (Roth vs Traditional). That will be a headache when it comes to "total" distribution when eligible at the time of retirement. Thoughts?
No worries, the tax situation is complicated, especially when retirement accounts are involved! If QYLD pays out dividends WITHOUT return of capital, there is nothing different here - Roth or traditional, the dividends accumulate tax free. The issue just comes down to whether return of capital is distributed in these retirement accounts. They're already tax sheltered accounts, so return of capital doesn't provide any benefits inside them (they still accumulate tax free). But you do have to consider the distributions - traditional IRA distributions are taxed as income. Therefore, if you've accumulated return of capital in this account, and you later withdraw that money, it will be taxed as income anyway. This would eliminate the tax benefits and actually cost you MORE than if you held it in a taxable account and took the long-term capital gains tax on the dividends (the only benefit is that you let them accumulate over time). From my understanding, this is not a problem in the Roth IRA - since any distributions are tax-free. But again, in this case, return of capital doesn't really offer an advantage to you - it'd be the same as any other dividend. However I am still doing research on this subject myself, so I would recommend consulting a professional who can verify this information and giving you the most accurate advice for your situation. 😁
@@The-Bitcoin-Revolution Wow. Awesome reply. It took me a few readings and played back your video a few times to get the idea. Basically if I understand right, QYLD have marked some portion of proceeds as ordinary income/short term gains, some as long term and some as return of capital (untaxed till sold). In a normal trading account, the cost price gets hit with the "return of capital" only at the time of sale, but the other 2 components are reported annually at the respective capital gain rate (short term vs long term). I hope the trading firms -- the Etrades, Merrill Lynchs, etc -- know how to keep track of this security if I sell 5 years down the road!! In a traditional IRA world, any dime coming from QYLD back to its investor has to be added to W2 income (and potentially taxed at high salary rate). And in a Roth account, there is nothing to worry about as nothing is taxable. Hope I got the summary right without complication. The problem with my tax-deferred account with Fidelity is they squash all the amount together (but keep track internally as to which is pre-tax, Roth and after-tax) so I wont be able to ear-mark how to trade this security. Maybe it is better that QYLD is suited to those with dedicated Roth accounts or simply use a trading account.
That is a sure way to lose money fast if the QQQ is rising. Covered calls are sucker bets in the stock market. You get called out of every winner and get stuck with every loser. Not a bright strategy.
Well the shares price may not be stratospheric but a person gradually buying more and more into it it seems like it could be on 🔥 like a 🚀 to the 🌚 in terms of total asset accumulation based on reinvesting dividends and continuing to buy in for the near-term if not long-term.
Really awesome video Tyler! I am shocked you don't have more subs, but I know you will grow rapidly with such great videos. I am thinking about moving more money into the QYLD because I could literally retire today if I did so, but I feel really nervous about moving so much into this fund - it just seems to good to be true. Has there ever been a situation where a fund like this just goes to $0 and investors lose everything? Thanks again!
@@sptrader6316 Yeah I wouldn't go all in on this one, but yeah I have thought about moving 30-50% into QYLD over time. So far I just have about 10% in QYLD, but I plan to add more over time.
This may have been answered before but what if you make your investment back threw the dividends? Is the dividends taxed then? Like say you invest $100 and you don't reinvest and you eventually surpass $100 in dividends. I was under the impression that this would be taxed as you would no longer getting your own capital back.
I forgot to address this in the video! I have a full video on return of capital coming out soon - but you're right, after your cost basis reaches zero dollars (due to receiving many dividends over the years), the return of capital distributions are no longer tax-deferred. Instead, they'll be taxed at a long-term capital gains tax rate. 🙂
@@The-Bitcoin-Revolution I have read that after cost basis is 0 then your ROC is treated like Ordinary Income or Short Term Capitol Gains { currently the same tax rates}
A lot of people forgetting about the reinvest aspect of this You double your initial investment every 10y. Let’s say you start with 50k That’s 100k in 10y 200k in 20 y 400k in 30y 800k in 40y
Since it’s actively managed and having a strategy in place for any market condition they’ll probably be able to keep the yield on 10% +/- 1 for the next decades
I purchased some QYLD about 3 months ago and the dividends have not made up for the loss in NAV. Your video explains why it will be difficult for losses in NAV to be recovered. If the underlying stocks fall during a given month then the ETF will be buying calls the following month at a lower strike price (at the money) and have no possibility of capital appreciation if the stock rises the following month. How is this ever a good strategy? What am I missing?
Thanks for the comment Marc. I don’t think you’re missing anything - but the strategy does work well in some market environments! It just seems poorly suited for capital appreciation.
@@marcykaren Agreed, I'd rather hold QQQ. It's also better than a pure stock strategy in a bear/falling market... although I'd choose something like NUSI instead in that environment.
💰 Get started on M1 Finance w/ a $1,000 deposit and get a $30 bonus: m1finance.8bxp97.net/tyler
Not sure i get anything if you have 100 dollars will i get 12 dollars a month or is it divided by 12?
@@aarongottfried5595 12/yr....1/month
Buying of just any ETFs is easy, but buying the right one without a time-tested strategy is incredibly hard. Hence which is best to buy now or put on a watchlist? I’ve been trying to grow my portfolio for sometime now, my major challenge is not knowing the best entry and exit strategies.
Before investing in any ETF, it's important to conduct thorough research. Understand the fund's objectives, track record, expense ratio, and the index it aims to replicate.
The best course of action if you lack market knowledge is to ask a consultant for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since 2023 January. I believe that is the most effective way to go about
Market behavior can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?
The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny, to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
I did a backtest for someone near retirement from 2016. Starting investment 300000 and then 1500 per month for 5 years. Reinvesting dividends. Starting with 14000 shares, then accumulating around 12000 more in 5 years gives a yearly dividend income of $74,640. Total yield over 19% on 390k total investment.
Wow, it sounds pretty good when you put it like that. Now I just need $300,000 to get started. 😂
@@The-Bitcoin-Revolution The knock is that the return is much less than investment in QQQ.
@@donsachse buy the QYLD and only invest the dividends in TECL (It seeks to track 3x the daily performance of the Technology Select Sector Index). Try to do this backtest and tell us you conclusion!
@@marciomathias4288 I will when I have time. Looks interesting since one is not putting in new money into a highly volatile ETF and if the market crashes you can accumulate more shares each month and decide to use the monthly purchase cash into the ETF when the price is much lower.
@@The-Bitcoin-Revolution you’ll make that on youtube kid. 👏
I was one of the ones asking you to cover this ETF - thanks for doing so.
I would say a very important consideration when buying QYLD is what is your goal.
If your goal is long term capital appreciation then this may not be for you.
However if your goal is immediate, reliable, stable, above average income then QYLD seems a good choice.
It has been a good choice for me as someone who is 60+ and was looking for a vehicle that would produce higher yields than well regarded dividend payers (think J&J or MSFT).
It pays monthly which is nice and the recent wrinkle of declaring the distribution as ROC is a big plus for me who, as someone who is interested in income primarily, never plans on selling these shares.
If income is your goal then one of the biggest concerns you have before investing a chunk of your life savings is will this be reliable? The answer here is yes - QYLD has been paying above 11% annualized since mid 2014.
I don't intend to sound like a QYLD cheerleader but it is a very important part of my
soon to be retired/income strategy and so far it is doing its job very well.
Hey Maurice! Glad I could help, and thanks for sharing such a detailed comment! I agree with your assessment - for those looking for stable income, QYLD seems reasonable. But for younger investors like myself, I want to see a little more growth. 😁
@@The-Bitcoin-Revolution what stock would be considered a little more growth?
@@rkingfarmer In this case, the QQQ ETF could be better for investors who are seeking growth, while the QYLD ETF trades that potential growth for dividends. But there are tons of growth-oriented stocks and ETFs out there!
@@rkingfarmer SCHD is great for solid dividends and solid growth
30 year investor here and this is an excellent video and easy to understand. Really well done! I move some in an IRA (that I have to take RMDs) to it and also added some in my dividend/income portfolio. It is a nice offering if you are searching for high dividends/income and not concerned too much about growth. Just another part of the asset allocation mix.
Thank you, that’s a great compliment! I agree with your outlook, a steady addition to a dividend portfolio. 🙂
extensive thorough explanation and simple examples. hard to find material like this, without getting pitched a course, good job man im impressed with this content.
Thanks Fernando! 🍻
QYLD 25%, VTI 15%, VUG 10% NUSI 10%, SPYD 10%, VPU 10%, VYM 10%, ARCC 5%, and T 5%
This is my income based portfolio
Thanks for sharing, I recognize most of those! I held a lot of the same things when I was building a dividend portfolio. I was really excited about BDCs like ARCC, but got pretty intimidated when I tried to dig deeper into the BDC universe.
I am a recent investor of QYLD (20ish shares) and I’m hoping to slowly grow my position throughout the years and use as an income some point later down the road. I am young so my focus has been primarily on other stocks/ETFs/etc that will (hopefully) realize more returns in the form of capital gains.
Nice! I’m also focusing on growth investments at this stage, and plan to shift to an income strategy in the future. 🙂
me too. Welcome to the squad
Me too, also VUG is a good option for growth.
Qylg has a higher expense ratio. Just buy half of your investment in QQQ and half in QYLD to achieve the same thing but cheaper
Thanks for the comment, I missed that! That’s a good alternative. 😃
Or buy in QYLG
Wouldn't that lower yield though?
@@erics9487 QYLG is a combo. 50% call income and 50% growth. Funds are best when they do ONE thing well. My favs are QYLD and RYLD for income and TQQQ and or FNGU for 3x growth.
QQQ is too expensive compared to Qyld and Qylg.
Thanks Tyler! Some of the other RUclips channels that cover QYLD don’t explain the capital gain considerations with QYLD, and when I comment on their channel about it, they don’t seem to care. So, thanks for your more realistic approach to covering this..
It’s so important to understand the capital gains, especially when return of capital is involved! Thanks for the comment, glad I could help. 💪🏼
Dude, just listening to your presentation skills left me super impressed !
You have a bright future in anything you choose to do !
Me, I am a long term holder of S&P 500, Total Stock Market and a sprinkle of Tech ETFs tossed in.
Thanks so much! That sounds like a responsibly diversified portfolio. 😃
High production value, and clean edit skills, with great screen presence. 10/10
Thank you! 😃
Good video! I've held QYLD for a couple years. I nice reliable high dividend ETF like this has a place in every investors portfolio. Especially with interest rates so low!
Thanks for the comment! 😃
I hold QYLD, RYLD and XYLD in both my Investment Account and my Roth IRA, both of which I have begun to focus on dividend investments: currrently I am about 70% dividends and 30% growth/value. I am 54 years old. Within the next ten years, I would like to start to glide into retirement (go part time and work less and less - at the moment I have no desire to completely stop working).
In order to kick up my tax sheltered savings, I have begun to live off some of the dividends from my investment account so I can direct a much larger percentage of my current income into my company 401K. The ROC dividends are great for my situation because it limits my tax liability and since I plan to hold these shares for the long term I am not really concerned about my cost basis.
I do have two questions...
1) If I hold these shares for a long time is it possible for the ROC dividends to push the cost basis to go below zero?
2) If I am still holding these shares when I die, will the basis step up return the cost basis of the shares to the market price for my heirs?
Thanks for the great analysis!
Hey AJ! Sure, it's definitely possible that the ROC can push your cost basis to zero, but it doesn't go into the negatives. Zero is as low as it can go!
I can't speak to the effect on your cost basis when shares are passed down to your heirs. This is definitely a question for a professional - I imagine there are probably some different effects depending on the type of account and the underlying holdings. (Side note - the cost basis of MLPs resets when passed down, which is a really cool tax benefit - and they're typically very high yield)
I hope this helps! Thanks for the comment 😀
@@The-Bitcoin-Revolution IRS pub. 550 for anyone who wants to torture themselves. If you acquired stock or bonds
other than by purchase, your basis is usually
determined by fair market value or the previous owner's adjusted basis, whichever is lower.
Check out SLVO, especially since silver is hot right now.
What the hell is a ROC???
@@hereweare9011 Thanks man, picked up some shares the other day, already have some decent gains.
We are writing puts on QYLD since February 2020 and collect shares or earn the commission only. This way we build up a >10% interest on part of our portfolio. This year we also startet writing calls on the collected shares and keep a balance on the amount we hold. The best time to write the options is the one of high volatility.
Nice! I like the cash secured put strategy, but I'm usually too impatient to let cash sit while I wait for the contracts to expire. 😂
@@The-Bitcoin-Revolution We trade those things maybe once in a quarter, after automatically being alerted of growing volatiliy. It's a question of purpose: We cannot buy those ETFs (same for Ark ETFs) in Europe as they do not meet MIFID II and we like to secure regular expenses with interest/dividends… so alongside the rather small dividend yield or accumulating of globally diversified ETFs such as Vanguard FTSE AW and Amundi Prime Global (cheaper alternative for MSCI products) the QYLD (in contrast to others like QYLG) is tradable via options and pays well.
It's really hard to find finance and investment videos that are so clearly explained. Really well done, you're one of the best out there!
Thanks so much! 🍻
Excellent presentation ……I understand these funds and options better now ….will split 50 percent of my retirement account ..,25 percent each in the QYLD and QQQ
Thanks Joseph! 🍻
I have seen a ton of videos on QYLD, but you did a really good job. I have had a ROTH IRA on M1 Finance for the last 2 years. I only have 1 holding, QYLD. I am not interested in capital appreciation, so I like the fact that the share price stays under $25 a share. The reason is I get about $120 a month in dividends. With my reinvestment I get an additional 5 shares per month. I have yet to invest $6000 for this year, but I will soon.
Thinking about XYLD which does the same strategy but for the S&P 500. Its about $47 a share but it pays $0.36 to $0.40 per share every month.
Thanks Dan! That’s an interesting strategy. If I were withdrawing from my Roth IRA anytime soon, I might do something similar.
I wonder if the lower volatility of the S&P compared to the Nasdaq 100 is responsible for the lower dividend. 🤔 I need to give XYLD a closer look!
Good review. Could you do a review of JEPI and NUSI?
Thanks! 😀 I can't make any promises - I have a couple other ideas lined up at the moment! But I'll definitely take a look and see what they're all about.
Tyler the "return of capital" component you mentioned suggests to me the fund is having a tough time maintaining double-digit returns on their CC strategy. You would have to back out the return of capital to establish the true yield. No relation, I don't think.
Hey Eugene! I agree, we can see the NAV has been on a downtrend over the last several years, so the return of capital seems like a red flag. This means total returns are likely less than 12%.
I just added jepi and qyld in my retirement portfolio as an income fund jepi & qyld (50 yrs) at 4% each in my portfolio. Thanks
Nice! Enjoy those dividends! 😃
Love JEPI. One of my biggest ETF holdings.
Very well done video! The only thing that I would add is using a Roth IRA as the investment account and then any worries about the taxes on this fund go away (as long as the government doesn't change the rules)
Thank you! And great point about the Roth IRA. 😃
Brilliant analysis on QYLD, i am planning to invest in this for getting monthly regular income. Your video has thrown up lots of thoughts on tax planning etc. Thanks
Thanks, glad I was able to help! 😃
Thanks to god I live in Russia and have to pay taxes at as low as 13% for dividends received and 13% of (sell price - buy price) upon selling if I owned the stocks for less than 5 years and no taxes upon selling if I owned the stock for 5+ years. 😊
Wow, that's an interesting tax rate! Definitely beats what we pay in the U.S. Does this hold true when you purchase/sell U.S. stocks?
@@The-Bitcoin-Revolution Yes, the long-term owning of the stocks benefit can be applied to foreign stocks, but there are some T&C's are applied (i.e. the company or a fund should own 50+% of its property outside of Russia and the individual must hold these stocks for at least 5 years and some other T&C's). This tax term was introduced just this year, so I'm waiting for the comments of the Government Tax Authorities on how this benefit is going to be treated, but the Tax Code definitely says that selling of foreign stocks is tax exempted if the individual held them for 5+ years and those T&C's are met.
We have a similar tax terms regarding selling Russian stocks, but there are no T&C's at all and there's a shorter owning term: just 3 years instead of 5 (for several high-tech and bio-tech Russian companies this term is decreased to 1 year: so you can buy these companies' stocks, hold them just for 1 year, sell them and in this case you will get a tax exempt). And if an individual sells Russian stocks which he owned for 3+ years then he will have to pay taxes for income that is calculated using the following formulae: (Sell Price less Purchase Price less Brokerage Fees Paid less Tax Exempt) * 13%.
And the Tax Exempt = $40,000 p.a. * number of years you held the stocks (the exempt is in Russian Rubles, of course; I just converted the amount into USD to make it more clear to you :-)). Thus if you owned the stocks for 3 years you will have tax exempt equal to $40,000 * 3 = $120,000; if you held the stocks for 5 years you will have $40,000 * 5 = $200,000 of tax exempt and so on..
So actually if a Russian citizen held Russian stocks for at least 3 years he can be mostly sure he will not need to pay any taxes on his capital gain upon selling the stocks :-)
Welp look likes im starting a small Russian llc 🤣
Never heard about these until now. Thanks!
This is the fourth video I’ve watched to understand covered calls and it’s the first one I actually understand. Nice.
Thank you, that’s great to hear! 😃
This is high end information. Congratulations!
You deserve more folowers.
Thank you Daniel! I appreciate the kind words! 🍻
Agree. I am impressed. Informative, TMI (too much) if anything. No complaint here. Thank you young man.
I agree and he just got one more follower!
I have seen other videos on QYLD and I think yours was by far the best one because some information you gave was missing in those others. For example the taxes. Nice Job!
Thank you, I appreciate that feedback! 😃
Thanks for explaining how covered calls work, your description was very easy to understand.
Glad to hear it, thanks Rob! 😃
Interesting opportunity for non American, non US resident investors, especially if one's home country doesn't tax capital gains (eg Singapore). Paying out as return of capital doesn't get taxed, as opposed to qualified dividends with a 30% withholding rate for foreign shareholders, so it's essentially tax free income. And a lowered basis just means a correspondingly higher capital gain, which for non US residents does not get taxed in either the US or Singapore. Love it!
Wow those are some serious advantages for non-US investors!
But your broker discount the witholding tax, and in the next year they return the taxes? or how it works?
There's no withholding tax on capital gains or return of capital, only applies if dividends are paid...
@@Mark-el8sb thanks. Im from Chile and a week ago i bought mi first shares of NUSI and QYLD. I had those doubts about witholding taxes (30% in the case of chile)
I am using this ETF to try and obtain passive income through dividends quicker. If the share price stays around what it is or falls over time, that’s fine with me as long as I am still able to retain such high dividend yields. I can probably even buy more shares if the share price keeps decreasing over time. This particular stock I am okay with sacrificing capital gains if it helps me reach my dividend income goals faster.
I am also invested in crypto so I am not concerned about getting enough exposure to assets with capital gains.
Nice, that’s a cool way to think about it! It’s all about understanding your own goals & the strategy that will help you get there. 👏🏼
I think it would be a great investment for retirees who want to maximize their income. QYLD sacrifices participation in the growth of their holdings by writing "at-the-money" calls. They get large premiums but as often as not they will be giving any capital gains to the buyer of their calls. For many retirees with smaller portfolios being able to buy groceries is more important than portfolio growth. I do like your suggestion of "do it yourself" however. Can you tell me if the calls you write in this instance would also be European?
Thanks for the comment Bob!
As I understand it, the covered calls written on an index (vs individual stocks stocks) are typically European. But if you did this with the QQQ ETF, I believe they would be American options. I don’t know the logistics of using index-based options as an individual investor so please verify this in your research. 👍🏼
Very well put together video sir
Thanks Nikolai!
Thanks! Very easy to understand and not a lot of fluff. Watching your video was an excellent use of my time. Oh, did I mention... excellent content!
Haha thanks so much! I appreciate the feedback! 😃
Using it as apart of an accelerated account for dividend investment. Due to the tax deferment it will most likely be a very long term hold. Especially within my ROTH it also sits in. Just wish I could put more than $6k into it.🤣
Nice! I feel that - wish I could be putting even more in my Roth IRA!
Thank you for the simple explanation. This is a great video. Was wondering how this ETF worked and I feel like I know a lot about it now. You would make a great teacher!
Thanks Richard, that's awesome feedback! I appreciate the comment. 🍻
great video, I was thinking of buying QYLD since I have my goal met and now want to buy some higher risk dividends for more income.
Thank you! If I may ask, what other options are you considering?
@@The-Bitcoin-Revolution for extra semi risky income? I just started looking today met my goal last week and now can play a little riskier.
This is very interesting. I would like to raise a question about Index options though. Index options are always settled Cash $100 per point rather than share settlement. This then makes the cost basis different end of the month because they are only paying out $ and not liquidating positions.
I have qyld and qylg and nusi. I think nusi is performing the best. Would like to see your thoughts on the covered call with protective put strategy. You did a great job explaining the strategy and seemed to have done a excellent investigation of the fund
Thank you! That's a strategy I've been meaning to look into more myself. 😀
This was a great explanation. Thanks. I subscribed.
Thank you! 🙌🏼
Hey Tyler, another really great video!!! Came across QYLD looking for FIXED INCOME alternatives 2 months ago being newly retired and just saw first month of return of capital payments (very exciting!). In fact am considering moving out of my SCHD position into QYLD Monday as some downside might be in our short term future.
Thanks so much! QYLD certainly has an interesting strategy compared to standard dividend stock funds. But for the right investor, this could be the perfect ETF! Best of luck 😃
yeah, when the stocks are riding at or near record levels, you know at least a brief dip is coming in the future. Kind of like all the people who jumped in on crypto when it was at the peak because of all the news articles about "look how much money you could make if you went back in time and invested in this coin!" then the market dropped over 50% in a few days and still hasn't recovered
Same! It's my largest holding by far (after cash)
Great explanation. I have QYLD in my retirement account so I don't have to worry about the tax issue.
Thanks! 🍻
how about holding QYLD and QQQ? get the premium and the upside
Definitely a valid option! Then you can adjust the weighting between the two as desired. 👍🏼
wow, excellent. I'm glad I watched and will buy QYLD
Thank you for the comment! 😃
Great video!
Thank you! 🍻
It’s Q-wild, baby!
That’s the second time I’ve heard that... but I still kinda like q-yield 😂
12% is pretty good, one could reinvest those dividends and do well as long as the etf doesn't break down long term or decrease their dividend. could be a nice side income for a retiree. Heck, refinance a $300k house and you could replace a modest income.
Yep, seems to me one of the biggest risks here is the decreasing NAV over time. Maybe that will turn around, but it is something to consider!
Very interesting. Thankyou for the information.
Thanks for the comment Alex. 👍🏼
Amazing video! Detailed explanation and easy to understand... subscriber for life
Love to hear that, thanks Frank!
Hi Tyler. I'm asking these questions because you've responded to my questions/comments in the past and am hoping you will do so to these questions. A great many income ETF's these days are juicing their returns by selling covered calls. But who is buying these call options? I know pricing of these options depends on many factors not the least of which is the volatility of the underlying asset but isn't the price also influenced by the number of buyers? If there are fewer buyers I would think the price sellers could charge to clear market would decline. And finally, I would imagine many investors are reinvesting their dividends thus causing the ETF's to grow and thus increasing the number of calls they're selling. So do you think it possible for returns on these funds to go down because the number of sellers has increased more quickly than the buyers? Any insight you might have here would be greatly appreciated. Thanks so much. Bob
Hey Bob, those are great questions to consider! Let me first say I can't answer this with certainty, but I agree with your concern. It's tough to imagine demand being equal on both sides, but the Nasdaq is one of the most commonly traded indices, so I imagine there is plenty of activity to keep the call options flowing - even outside of the dividend ETF space. I do think the premium of these covered calls will vary depending on demand and market sentiment, and this is probably one of the biggest things to consider for anyone relying on QYLD (or covered call funds) for consistent income. If sentiment is bad, I doubt covered calls will fetch a large premium - providing lower dividends for QYLD holders (yet, in a bear or flat market, lower dividends are better than 0 returns by just tracking the index with an ETF like QQQ)! Overall, I wouldn't be too concerned with the depth of volume for covered calls on the Nasdaq, but the price of those calls will inevitably be affected by market conditions.
Solid info. Very well produced video. Subbed.
Thanks Alex! I'll keep the videos coming! 😃
That tax strategy is also good for foreign investors who do not pay capital gains tax but do get a 15% withholding tax on dividends.
That's an interesting point! I've got to dig deeper into investment taxes in other countries... and then maybe move to them. 😂
@@The-Bitcoin-Revolution woops I missed some words in my previous comment, IRS does not charge non-resident aliens capital gains tax, but it swings both ways because you have to deal with the home country tax, but some places have weird tax laws that end up charging zero tax if you work it right.
This was really helpful thanks
Glad I could help, thanks for the comment! 😃
Hey Tyler great content. Subscribed. Question if I’m in Robinhood and I have a lot of QYLD would I reinvest the dividends ? Or would I buy a different stock with dividend. Would I pay more tax ? What’s the best solution ? Thank you
Thanks Thien! The decision to reinvest is yours, it’s not automatic. Depends on your strategy! Both will be taxed the same amount, so there is no tax advantage to either. 🙂
@@The-Bitcoin-Revolution thanks Tyler appreciate it!!!
@@The-Bitcoin-Revolution is the dividend payment taxed or how does that work?
Great explanation! Thank you.
Thanks for the comment Eric! 🍻
Watched, liked, and subscribed! Thanks.
Thanks so much Jason!
I have 40% in my portfolio stored in QYLD, to get that passive money flow, I plan buy maybe some more or maybe something else, what pays so high dividend. After I get nearly 1000€ monthly dividend, I can start buying some other more value-adding shares
That's a good point, it could be fun to use that QYLD income to invest elsewhere every month!
@@The-Bitcoin-Revolution yes, it looks promising, I all ready did it little bit :)
Nice video! Another nice alternative would be NUSI that uses a protective collar steategy
Thanks Werner, I’ll give that a look! 😃
Nice and clear!
Thank you Kai!
I think this might be a good choice for people looking for income, but idk that I'm willing to sacrifice overall growth for it myself
I agree Jay! I prefer growth at this stage in my life. 😁
Dude, thank you for this video! I'm looking heavily into QYLD now to see if it aligns with my investing portfolio!
Nice, glad I could help! 😁
Dude! Excellent video. You have just explained this better than anyone else I’ve seen.
Thanks so much! 😃
You are a legend for the time stamps!!! 👊🔥🔥🔥
Glad you appreciate them, I know how useful they can be! 🙌
@@The-Bitcoin-Revolution when you got good info its awesome to be able to jump to the gold nuggets you need for sure, thx again broski 👍
Great thorough explanation
can't find the QYLD ion y platform
Like your in depth reviews. The more detailed the better.
Thanks Stan! Agreed, glad you appreciate it! 😃
Solid CC explanation.
Thanks Boris! 🍻
SUPER VIDEO. You are heading to be a Millionaire. I am earning in a Roth IRA $1500 to $2000 doing covered calls on stocks like NVDA, FAS, TSLA and just found TQQQ.
Thanks Bill! Nice job getting that cash inside your Roth. 👏🏼
Excellent presentation.
Thank you! 🍻
Where are you getting that writing calls = 60% and 40% capitol gains tax?
This may be something that is unique to writing calls on indexes, but it is explained here on the Global X ETFs website: www.globalxetfs.com/qylds-covered-call-options-explained/
@@The-Bitcoin-Revolution
They wrote that very poorly and it could easily dissuade potential investors by jumping the gun and thinking it's a 60% or 40% tax that the company (or even the investor) is liable for. They are referring to the 60/40 rule,
optionalpha.com/blog/taxes-on-options-trading#:~:text=Under%20the%2060%2F40%20rule,are%20lower%20capital%20gains%20taxes.
Good analysis, very useful since I hold QLD in my Retirement Account. Thank you.
Thanks for the comment Ashraf!
You look like Dori from finding Nemo, good advice though
Haha okay 😂
Clean, simple, timestamps, I'm a new sub! Keep it up man.
Thanks Frank! I'll keep at it 😃
Great video🤗👍 thank you!!😊
Thank you for the comment Lori!
Subscribed!
Thanks George!
Thanks I've been in ryld which is about the same thing
Yup, same strategy, different index! 😃
Very informative. I believe the options QYLD uses expire on the 3rd Friday of the month, not the end of the month.
Good to know, thank you!
Excellent explanation.
Thanks Larry!
this was such a great video. easily explained everything, EVEN COVERED CALLS which everyone always explains in such a confusing way but you made everything so easy. just became a new sub🥳
Thanks for the feedback and the sub! 😃
Extremely well presented information.
Thanks Ian! 🍻
This is the first video in which I actually gained some knowledge. New sub here, Great job!
Awesome, thanks Jonathan! 🍻
Excellent video, very well explained.
Thanks Vinny! 🍻
Actually, the person who bought the call paid about $4.48 - which is how you were paid; so if the stock is at $140, they already have $4.48 or thereabouts into the trade; if the stock was at $145 they might want to buy it from you by paying the $140. Meaning, if you bought it at $134, you are not likely to part with it unless it goes up about $14+ Yes, you can be forced to sell at $140 if the stock reaches that; except for the fact that it would not make economic sense to the buyer (assuming they can understand total cost).
That's a good point Tim! Larger volatility + larger premiums might lead to extra room for upside.
When you said "you don't have to pay taxes on your dividends until you sell your stock"... I find that a little confusing, because I thought dividends were taxable as capital gains if you did not reinvest them... Could you do a video where you explain this in more detail?... I know that QYLD is a Qualified Dividend, which I understand to mean that you don't pay taxes until you take a disbursement. I thought that included a disbursement on dividends only. Anyway- if what you are saying is what I think you are saying- you could just NEVER SELL your shares and basically have tax free money from the dividends???
This is because QYLD has recently been distributing a return of capital, which isn't immediately taxable. This gives it a unique tax treatment - but I understand that it can be a bit confusing at first! I'll definitely look into making a video on it, this is something that comes up in a lot of different investments and it's super important to understand.
You have the right idea - if you receive dividends that are 100% return of capital, taxes on dividends are deferred until you sell your shares. But, if you never sell your shares, you never have to pay those taxes. This sounds great of course, but there are very few investments worth holding for a lifetime - so that's a big commitment!
@@The-Bitcoin-Revolution Yes... QYLD is a long position for me... I found out that by going to this ETF, I tripled my Monthly Dividend Average and a little bit of math on the potential and going on the premise that it continues to pay dividends at or greater than it currently does, I can use this as a source of realistic retirement income- especially since I am still looking at a good 20+ years until I am at the age of retirement (plenty of time).
I pretty much came to the same conclusion as you on what he was saying. Because I plan to keep this stock essentially for a very long time or not selling this is good news for me.
Not true, only a small portion of the dividend is a return of capital (12% of the dividend in 2019). This acts to reduce your cost basis, for example, if you paid $22 a share and after one year the return of capital portion of the dividend was $.28 like it was in 2019 then you would look in your brokerage account and should see that your cost basis for the shares are $21.72. If you then sell your shares for $22 each, you will pay taxes on that difference. Also if you read the tax primer, the dividends are not qualified dividends. In 2019 85% of the dividend was taxed at the ST rate and only 3% was taxed at the lower LT rate leaving the remaining 12% being the return on capital. Hope this clarifies the tax portion.
www.globalxetfs.com/content/files/Global-X-Covered-Call-ETF-Tax-Primer.pdf
Great video and thanks for your work!
Thanks for the comment David! 🍻
Great video. Knowledgeable. I can't believe you don't have more subscribers.
Thanks Jon! The subscriber base is growing day by day. 🙌🏼
Ive said the initials QYLD so many times and will now credit you for just saying Q-yield to simplify lol
Haha it makes things so much easier 😂
Dude. This is *really* well laid out! Get ready to accrue more subs!
Thanks so much Mark! I’m ready 😈
@@The-Bitcoin-Revolution Did you have a Discord or other community structure for discussing more in-depth portfolio management and/or talk about the channel?
What do they do when the call is itm? Do they buy it back for a loss and sell another one?
I believe they repeat the process on a monthly basis - settling the covered call position (or letting it expire). So there are possible loss of gains there, but it keeps cash flow/dividends consistent.
Nice video. Sorry I didnt get this point on taxes. If I trade QYLD in, say a tax sheltered account, is it any different from any other investment, or is it to be sorted out differently (Roth vs Traditional). That will be a headache when it comes to "total" distribution when eligible at the time of retirement. Thoughts?
No worries, the tax situation is complicated, especially when retirement accounts are involved! If QYLD pays out dividends WITHOUT return of capital, there is nothing different here - Roth or traditional, the dividends accumulate tax free.
The issue just comes down to whether return of capital is distributed in these retirement accounts. They're already tax sheltered accounts, so return of capital doesn't provide any benefits inside them (they still accumulate tax free). But you do have to consider the distributions - traditional IRA distributions are taxed as income. Therefore, if you've accumulated return of capital in this account, and you later withdraw that money, it will be taxed as income anyway. This would eliminate the tax benefits and actually cost you MORE than if you held it in a taxable account and took the long-term capital gains tax on the dividends (the only benefit is that you let them accumulate over time).
From my understanding, this is not a problem in the Roth IRA - since any distributions are tax-free. But again, in this case, return of capital doesn't really offer an advantage to you - it'd be the same as any other dividend. However I am still doing research on this subject myself, so I would recommend consulting a professional who can verify this information and giving you the most accurate advice for your situation. 😁
@@The-Bitcoin-Revolution Wow. Awesome reply. It took me a few readings and played back your video a few times to get the idea. Basically if I understand right, QYLD have marked some portion of proceeds as ordinary income/short term gains, some as long term and some as return of capital (untaxed till sold). In a normal trading account, the cost price gets hit with the "return of capital" only at the time of sale, but the other 2 components are reported annually at the respective capital gain rate (short term vs long term). I hope the trading firms -- the Etrades, Merrill Lynchs, etc -- know how to keep track of this security if I sell 5 years down the road!! In a traditional IRA world, any dime coming from QYLD back to its investor has to be added to W2 income (and potentially taxed at high salary rate). And in a Roth account, there is nothing to worry about as nothing is taxable. Hope I got the summary right without complication. The problem with my tax-deferred account with Fidelity is they squash all the amount together (but keep track internally as to which is pre-tax, Roth and after-tax) so I wont be able to ear-mark how to trade this security. Maybe it is better that QYLD is suited to those with dedicated Roth accounts or simply use a trading account.
Awesome video !!
Thanks Amer!
Super!!!! Really great video
Thanks Alex! 🍻
high value, well explained content. +1 sub
That’s what I’m going for! Thanks Bradley! 🍻
Great video thank you
Thanks for the comment!
QYLD always buys back their contracts at the end of the month.
Thanks for sharing! Do you have any resources I cold look into to learn more about this?
That is a sure way to lose money fast if the QQQ is rising. Covered calls are sucker bets in the stock market. You get called out of every winner and get stuck with every loser. Not a bright strategy.
@@tylerdurden639 It’s a great strategy in a bear market
@@tylerdurden639 you can be far in the OTM. You won’t be called out if you know to choose your strike rate.
Very well presented.....great job Tyler!
Thanks Howard! 😃
Well the shares price may not be stratospheric but a person gradually buying more and more into it it seems like it could be on 🔥 like a 🚀 to the 🌚 in terms of total asset accumulation based on reinvesting dividends and continuing to buy in for the near-term if not long-term.
Really awesome video Tyler! I am shocked you don't have more subs, but I know you will grow rapidly with such great videos. I am thinking about moving more money into the QYLD because I could literally retire today if I did so, but I feel really nervous about moving so much into this fund - it just seems to good to be true. Has there ever been a situation where a fund like this just goes to $0 and investors lose everything? Thanks again!
Thanks Matthew! I see what you mean. I don’t know of any off the top of my head.. might be a good topic for me to research for a future video. 😃
QYLD has been pretty stable for the past 7 years of monthly dividends but as always it's best to diversify into more than just 1 fund (QYLD).
@@sptrader6316 Yeah I wouldn't go all in on this one, but yeah I have thought about moving 30-50% into QYLD over time. So far I just have about 10% in QYLD, but I plan to add more over time.
This may have been answered before but what if you make your investment back threw the dividends? Is the dividends taxed then?
Like say you invest $100 and you don't reinvest and you eventually surpass $100 in dividends.
I was under the impression that this would be taxed as you would no longer getting your own capital back.
I forgot to address this in the video! I have a full video on return of capital coming out soon - but you're right, after your cost basis reaches zero dollars (due to receiving many dividends over the years), the return of capital distributions are no longer tax-deferred. Instead, they'll be taxed at a long-term capital gains tax rate. 🙂
@@The-Bitcoin-Revolution I have read that after cost basis is 0 then your ROC is treated like Ordinary Income or Short Term Capitol Gains { currently the same tax rates}
A lot of people forgetting about the reinvest aspect of this
You double your initial investment every 10y.
Let’s say you start with 50k
That’s 100k in 10y
200k in 20 y
400k in 30y
800k in 40y
But if QYLD drops in value, the yield won’t be as significant and your money won’t actually grow as fast. 🤔
Since it’s actively managed and having a strategy in place for any market condition they’ll probably be able to keep the yield on 10% +/- 1 for the next decades
I purchased some QYLD about 3 months ago and the dividends have not made up for the loss in NAV. Your video explains why it will be difficult for losses in NAV to be recovered. If the underlying stocks fall during a given month then the ETF will be buying calls the following month at a lower strike price (at the money) and have no possibility of capital appreciation if the stock rises the following month. How is this ever a good strategy? What am I missing?
Thanks for the comment Marc. I don’t think you’re missing anything - but the strategy does work well in some market environments! It just seems poorly suited for capital appreciation.
@@The-Bitcoin-Revolution in what market environment does it make sense other than a flat market? Your qqq and covered calls looks much better.
@@marcykaren Agreed, I'd rather hold QQQ. It's also better than a pure stock strategy in a bear/falling market... although I'd choose something like NUSI instead in that environment.
Nice information thanks
Sure thing, thanks for the comment Leo! 🍻