Yep I'm only in it for the div. Bought in at 49 a share a year or so ago. I hope it stays flat forever. I have over 50k invested and take the dividend out monthly from my IRA. For growth I'm in VOO and VGT
It's highly unlikely to stay flat forever but as long as that's only part of your portfolio and you're getting your capital appreciation from elsewhere you should be ok. Best of luck!
I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more, creating a snowball effect that allows you compound over time.
Have you considered the possibility of cashing out some of those dividends for paying off your monthly expenses, instead of re-investing them? Bcos I need a lot as rent, inflation alone eat up almost all of what I make.
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
To say JEPQ isn't an attractive investment is a very simplistic opinion and doesn't give viewers the correct "advice". While you are correct that if you are looking for exposure to NASDQ appreciation, QQQ is a better choice. JEPQ is not meant to be a single investment ETF; but it serves an important part of an overall investment portfolio strategy. For those looking for income streams as they approach retirement, JEPQ (and JEPI) are solid choices to add as part of an overall portfolio, and purchasing them in IRAs (tax advantaged accounts) eliminates the ordinary income issue. JEPQ, or any etf or investment, should never be 100% of a portfolio. JEPQ/JEPI are not purchased INSTEAD of QQQ or SPY, they are suplemental to index stock etfs.
I addressed all of those points in my how to use jepi in a portfolio video. In short, for any purpose, I could see more attractive options than JEPQ and thus I do not think it's an attractive investment. For upside it's limited. For income it has too much risk and it's not tax efficient. Also there's no point in investing for income because any dollar in your account can be turned into income. Total return after tax and volatility and the only things that really matter. This is explained in greater detail in the jepi video, towards the end if I remember correctly.
Disclosure I own jepq. That said why is this better in any situation than QQQ. I get more income from QQQ then I will ever get from JEPQ. Is the appeal just that it pay monthly divs? What stopping me from selling log term share and simulating the payouts? I don't get why you would ever hold something that has a retun so much lower and the risk is really not mitigated to justify this at all? Is it purely physiological?
Good solid video, I believe JEPQ is very favorable to the retired individuals looking to seek passive income with attractive yield and some exposure to the NASDAQ 100. Holding this ETF in a Roth IRA in retirement is very solid. For pure growth QQQ, VGT, XLK, SCHG are the much better options.
Thank you! I think for most retirees it might be a little too aggressive but that depends on the person and what else is in their portfolio. Agree those others are better for long-term growth.
Ok, I understood there is a cap upside but as may ppl say the monthly dividends are fascinating. In case I re-invest those dividends, what are the actual loss/risks/downside of JEPQ? was where I got confused. I am def not retiring and heavily investing TQQQ for the last couple of years and I have seen some concerining dips but am standing with more than 100% returns. My
If you're reinvesting the dividends there's very little risk of losing money over time. Obviously anything is possible, and there can be down years, but it would take another tech crash for you to lose money on the long run. The share price will go down over time, but every month when you reinvest you'll be accumulating more shares, and the actual overall value of your investment should rise over time. I would think of this as like creating a lower risk/reward version of the nasdaq. Conversely, I think tqqq is highly likely to experience a big loss at some point. That doesn't mean don't invest in it... I've invested in it before, but I would be careful not to be too exposed to it. I like that you're selling it down periodically. That's the smart thing to do with any leveraged ETF that is up a lot. I think schd is a better complement to it than jepq because jepq is also a bet on the nasdaq and in a tech downturn it'll go down right with tqqq (although less cuz it's not leveraged). Of those 2, I'd rather reinvest my tqqq proceeds into schd because that might do better than jepq in a tech downturn but if you just really want to bet on tech but prudently take some risk off the table, I think your strategy is fine for that.
personally i believe jepq is mainly for produce incomes rather than growth, if anyone chasing for growth they should go for voo or schd or even vgt or some others. but for jepq if anyone using dividend for retirement income, i think its a good income source since it yields 12% and NAV isnt going down like TSLY or any yieldmax product... lol
That's because tesla's stock is going down and the nasdaq 100 is going up. It will not always be that way. Covered call ETFs are never optimized for upside potential. It's always always always limited by the covered calls, which cap your upside. IMO JEPQ is also not appropriate for retirement income in most cases. Too much downside risk. But ultimately that comes down to the situation of each individual person. I just wouldn't take its strong short-term results as predictive of the future.
@@FundamentalsofFinance " never optimized for upside potential", not so! You can only write 50% covered calls of the underlining stock, for example, or even less if you are bullish, the question is not so much "optimized", it's the guesswork of predicting the direction, which no body can do whatsever. It's impossible, the option market itself is eveident of that, otherwise there are NO financial markets, everything is gamble in a sense.
Well, what I mean is option strategies that systematically limit their upside potential like JEPQ. The nature of the stock market is that returns are lumpy. You don't get a lot of months up 1-2%. It's often either up a lot or down a lot and that smooths out over long periods of time to the 8-10% annualized returns we've historically gotten. Because of that, these kinds of strategies will typically limit the upside potential in the stock market. You can look at pretty much every covered call ETF with a 5+ year track record and compare it to its cousin ETF with no covered calls and see that in action.
@@FundamentalsofFinance It's not the option strategies that limit upside or downside, option itself has limitless flaxibility. The problem here with these covered call option ETFs is that actually the manages are trying to use the options to time the market, or the direction of the underlining securities plus charging their management fees, that's what dragging down the performance, every managed ETF is market timing, coverred call option ones are no exception.
These ones actually do it systematically. There are some out there that try to do it more actively and time the market. Either way you're going to limit your upside unless you time it right consistently, which is pretty much impossible to do
Dude for us retirees we know this. Me personally, I'm looking for a high monthly divs paying, with a relatively low expense ratio, without nav erosion ETF and this checks those boxes. So consider everyone's different goals b4 you say something isn't a good investment.
I'm afraid the "without NAV erosion" is unlikely to last forever. If it could, this would be a great investment. Amazing. But that's highly unlikely. Like, close to a 0% chance. I wish you the best of luck.
Ah yes, I'd expect that generally very few of its dividends will be qualified because they mostly come from the option income in the ELNs, and those are non-qualified.
Alguns comentários que vi por aqui dizem que o JEPQ não deve ser o único ETF em uma carteira, mas sim parte de uma estratégia diversificada. O JEPQ é mais adequado para investidores que buscam rendimento, como é o meu caso. Tenho pouco tempo no mundo dos investimentos em renda variável, e meu objetivo é ter uma renda passiva. Seria muito arriscado colocar 50% do que tenho neste ETF e tentar fazer o preço médio ao longo do tempo, comprando todos os meses e aproveitando quedas para comprar mais barato? Isso seria uma semelhante ao que muitos fazem com o Bitcoin. Alguém poderia me dar algumas recomendações?
You can’t really compare JEPQ to QYLD as QYLD does 100% ATM calls, while JEPQ does 20% OTM calls. There’s much more upside potential there, compared to QYLD which has literally 0 upside potential.
So basically, if I don't want to live off the monthly distribution yield immediately, I can pair something like SCHG or QQQ with SCHD as a viable alternative with a lower fee, and with lower risk because I'm not depending on successful options trading. JEPQ seems like it could be a good candidate for an ancillary position because it provides monthly payouts with some upside (though less than QQQ itself), but I've seen too many options trades blow up on people to feel safe depending on it.
Yeah it's fine if you're reinvesting the dividends. But if you're taking dividends I think the strategy you are laying out would probably be better. That said, if you try to take 10% annual dividends out of pretty much any strategy, it's likely to fail over time.
I really think that hold jepq in a roth to have a more stable form of tech exposure while stil having growth would probaly match the s&p if not pass it over time
I think that's very unlikely. 2 reasons. First, covered calls really limit the upside potential. Second, tech won't always beat everything else. Tech has been the best performing sector in the S&P over the last 10 years but do you know how many times any sector has been the best over a 10yr period and then the best over the next 10 years? 0. It's never happened. Could this time be different? Sure, but I certainly wouldn't consider it to be a given that it will. Then when you tack on the covered calls the odds of jepq beating the s&p over the next 10 years are very low imo.
You clearly don’t understand a covered call strategy. Selling covered calls on an index is generally one of the best option plays for most investors. Yes, there are options traders that can come up with better strategies but this one is pretty solid. Your research neglects the DRIP portion of owning an asset like JEPQ. I also find it funny that the woman you quickly made fun of in your video provided a more comprehensive and fact based explanation of these etfs. More than what we got here.
Are you like a JEPQ salesman or something? Why are you so combative in your defense of it? With all due respect, I (Ethan) am a CFA charterholder and investment professional, and I probably understand covered calls and ETFs at a deeper level than anyone you've ever met. The returns I showed were total returns, which means dividends reinvested, which is what you're calling "DRIP." Unfortunately, the reality is that most people take the dividends instead of reinvesting them and will dwindle down their investment to nothing after like 10-15 years. Or sooner. Let's wait until there's a tech sell-off and then see how good of an option JEPQ is for retirees. Losing 30 or 40% is DEVASTATING in retirement. JEPQ is highly likely to do that in the next 10 years. So should retirees be relying on it for all their income? IMO that's a hard no.
@@FundamentalsofFinance no, I am not but I also am well aware of different portfolio strategies. This may not work for someone young but it would work for someone who retires early and is trying to make monthly income on a portfolio until they can access their retirement accounts. As for you scare tactic about a tech sell off, this is a covered call approach so you would see increased premiums and better off than in just a QQQ fund. We could also utilize this fund in conjunction with other approaches such are the 10 month moving average approach and still be better off than a buy and hold. I don’t own these fund. I own DGRO and QQQM. I wouldn’t rule this out though. I am more concern with the dividends being taxed as ordinary income.
This is not a scare tactic, just a dose of reality. Scroll through my whole channel. I don't do any of that sensationalist crap. The reality is that volatility is very important in retirement. Lots of people look at the last couple years and think they've found this golden goose that throws off huge income payments with tons of upside and it never goes down. That is not going to last. I don't know when there will be a tech sell-off but I'd bet every penny of my net worth that it'll happen at some point in the next 30 years. Whenever it happens, it has a strong chance to be devastating to anyone who relies on it for income. Sure, if it's a small enough part of your portfolio it won't kill you, but that's not what people are doing. 50%+ is very common. Or they pair it with qqq or spy.... something that is going to be highly correlated with it. Lots of people think income = conservative. It doesn't. I'm just trying to save people from making a huge mistake that they can't come back from. You can disagree with my opinion if you want, but I promise you mine is highly informed and has no other intention besides helping people.
@@FundamentalsofFinance If you have a solid backup plan and cash reserves you should be able to turn a shitty market into a win, win. If you have enough JEPQ to live off of and it tanks you can stop withdrawing, turn on DRIP and switch to the backup cash reserves until the market recovers. You would be buying tons of JEPQ at a cheap price and doing very well when it recovers. This is where I think cash value life insurance is a great tool. You have a cash pile that keeps up and eventually beats inflation. When you need it you can loan against it then when market recovers you will have that many more shares of JEPQ to payback the loan to be ready for the next market downturn. Rinse and repeat.
I actually bought some in early 2023 but sold out too early... hindsight is 20/20. Still made a nice gain, maybe 40%ish. I think it's great but I wouldn't touch it right now. I'm a deep value investor so I'm not really comfortable buying things that are up a ton and being overhyped. Now put leverage on that and I'm much less comfortable. My opinion is that tech's day in the sun is going to come to an end at some point. I don't know when that will be, but when that day comes tqqq will be down massively and I don't want to be invested in it. After it sells off a lot and everyone is saying tech is dead, that's when I'll be looking to get back in. It's just my style, and what's been most successful for me the last 20 years that I've been investing. It could certainly keep going up from here but buying leveraged ETFs at the top is a dangerous game so I'll be sitting on the sidelines for now.
Great content. Subscribed. I have some cash that i would like to invest over the next year or so. Where would you suggest i park those funds while i'm slowly drawing down from it. Thanks!
beta and return still more favourable than QQQE and SPY - with a high cash return via the divs - so the right comparison is not QQQ - its lower beta with a higher cash component, as an example - I use JEPq in my portfolio to lower my volatility and extract lower taxed cash.
Well beta is highly dependent on which benchmark you're using. I think standard deviation is a better gage of volatility that puts things on an even playing field but even that has flaws in this case. It is most useful for a normal distribution and the returns of JEPQ will be far from that. It'll have many small positive months and a few big negative months. We haven't really seen it in a major tech downturn yet so I don't think its past returns are a good indication of the potential volatility in the future. Also, it is less tax efficient than almost any other equity ETF that you'd plan to hold for at least one year. I would be careful assuming that its past returns are a good predictor of its future returns. There's a good chance that they won't be.
I'm making a video now about how to build a personalized asset allocation. It's going to go pretty in-depth including how to invest for multiple objectives at once. I think it'll be exactly what you're looking for!
I wouldn't touch it with a 10ft poll. If I wanted to bet on the fangs or whatever other backward looking acronym you wanted to use, I'd just do it without the covered calls to get the upside if they went up. From its October inception it's already behind the index by 15% through 3/31. It's never been tested in a down market but as I'm writing this it's down 1.65% vs. Qqq at -1.73% and SPY at -1.56% Same basic flaws as JEPQ but arguably more extreme because it's more concentrated in tech and just a few companies.
You can't buy an index. An index is just a list of companies. So, you can either pay for the licensing agreement to access to companies as they change and then pay for the people and systems to track it, or you can pay for an index fund. Neither option is expensive but neither is free.
@@FundamentalsofFinance I meant why don't they do the cover calls in the QQQ ETF instead to keep it simple, instead of buying most of the individual stocks that make up the Nasdaq 100?
This is what you do is this your job before you are in Medellin Colombia or after you exit it out of Medellin I saw one video you were like you tried that passport channel too
It's managed but it's not managed with the objective of minimizing risk the same way as JEPI is. That's a key differentiator. They're trying to keep the portfolio pretty close to the Nasdaq 100.
@@FundamentalsofFinance I was looking at some charts they almost parallel I would move between them but the plan is QQQ Jepi JepQ Vanguard split 1 million between just for monthly income
Well that's because jepi is based on the s&p 500 and Jepq is based on the nasdaq 100, which has been more volatile (leads to higher income from selling call options) and has been going up more lately. It probably will usually be more volatile but the growth part can just as easily go the other way if tech falls out of favor.
It's definitely a risk. You could always put some of it there and some of it elsewhere. Sounds simple but it's what even the best investors do. No matter how "sure" I am about something I know I'm not actually sure and invest accordingly. There have been a few times that I've been very thankful I did that!
JEPQ is perfect for retirees. I bought on the dip. If you just want to see unrealized gains on a graft, and you are young, absolutely do not invest in JEPQ.
Buying low is critical for the derivative funds because there is not a lot of room or circumstances to reap anything on top of the dividends and compound advantage.
Yes, after a bout of high volatility would be best. Income will be temporarily higher and there's theoretically less downside potential once it's already down a lot (though it won't feel that way in the moment lol)
@@FundamentalsofFinance as a trader, I can make money on selling call why can’t JEPQ do the same? You said limit upside potential. Yes! If you let it run over your strike. You already said who you are so you know that better than anyone. Base on what you said, I assume option sellers don’t make money. LOL (Sorry! If I misunderstand anything) Risk to downside???? Of course! you forgot to mention that growth portfolio will do the same as everyone else unless you sell covered calls to capture some premiums when IV crush. It’s just your thoughts and opinions, I respect that. There are many ways to invest. You do you. You like growth go with it. Whoever likes dividends go with dividends. Good or bad only time will tell. Personally, I see JEPI and JEPQ is good for diversifying beside SCHD.
It is absolutely not comparable to CDs. It has exponentially more risk. Retirees should be very careful with JEPQ. I'm sorry if I'm telling you what you don't want to hear, but I hope you take this to heart. I'm not trying to rain on your parade, I'm trying to save you from disaster.
1. Nothing on this channel is advice. 2. I'm not just a RUclipsr, I'm a CFA charterholder and very experienced investment professional who does this channel in my spare time to help people become better investors. 3. If other RUclipsrs weren't misleading people into making terrible investment decisions I wouldn't have to point that out in my videos.
Actually I try to avoid that as much as possible. Usually I say things like "some People will tell you that..." but if I feel like someone is actively harming people by giving misinformation then I consider it a public service. I actually think it hurts me to do it rather than helping me. But I don't make videos about physical therapy or how to do your makeup or anything other than investing because I'm not an expert in those things. Sadly lots of people who make investment content have no idea what they are talking about. This is people's livelihoods at stake. I take that seriously.
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Yep I'm only in it for the div. Bought in at 49 a share a year or so ago. I hope it stays flat forever. I have over 50k invested and take the dividend out monthly from my IRA. For growth I'm in VOO and VGT
It's highly unlikely to stay flat forever but as long as that's only part of your portfolio and you're getting your capital appreciation from elsewhere you should be ok. Best of luck!
I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more, creating a snowball effect that allows you compound over time.
Have you considered the possibility of cashing out some of those dividends for paying off your monthly expenses, instead of re-investing them? Bcos I need a lot as rent, inflation alone eat up almost all of what I make.
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
@Msmelissa lot of people let their dividends ride for the long-term given its solid returns effects overtime
To say JEPQ isn't an attractive investment is a very simplistic opinion and doesn't give viewers the correct "advice". While you are correct that if you are looking for exposure to NASDQ appreciation, QQQ is a better choice. JEPQ is not meant to be a single investment ETF; but it serves an important part of an overall investment portfolio strategy. For those looking for income streams as they approach retirement, JEPQ (and JEPI) are solid choices to add as part of an overall portfolio, and purchasing them in IRAs (tax advantaged accounts) eliminates the ordinary income issue. JEPQ, or any etf or investment, should never be 100% of a portfolio. JEPQ/JEPI are not purchased INSTEAD of QQQ or SPY, they are suplemental to index stock etfs.
I addressed all of those points in my how to use jepi in a portfolio video. In short, for any purpose, I could see more attractive options than JEPQ and thus I do not think it's an attractive investment. For upside it's limited. For income it has too much risk and it's not tax efficient. Also there's no point in investing for income because any dollar in your account can be turned into income. Total return after tax and volatility and the only things that really matter. This is explained in greater detail in the jepi video, towards the end if I remember correctly.
This channel is for the stupid. I got tricked into watching this video.
Disclosure I own jepq. That said why is this better in any situation than QQQ. I get more income from QQQ then I will ever get from JEPQ. Is the appeal just that it pay monthly divs? What stopping me from selling log term share and simulating the payouts? I don't get why you would ever hold something that has a retun so much lower and the risk is really not mitigated to justify this at all? Is it purely physiological?
Good solid video, I believe JEPQ is very favorable to the retired individuals looking to seek passive income with attractive yield and some exposure to the NASDAQ 100. Holding this ETF in a Roth IRA in retirement is very solid. For pure growth QQQ, VGT, XLK, SCHG are the much better options.
Thank you! I think for most retirees it might be a little too aggressive but that depends on the person and what else is in their portfolio. Agree those others are better for long-term growth.
@@FundamentalsofFinance start like high heels, savings account
Ok, I understood there is a cap upside but as may ppl say the monthly dividends are fascinating. In case I re-invest those dividends, what are the actual loss/risks/downside of JEPQ? was where I got confused.
I am def not retiring and heavily investing TQQQ for the last couple of years and I have seen some concerining dips but am standing with more than 100% returns. My
If you're reinvesting the dividends there's very little risk of losing money over time. Obviously anything is possible, and there can be down years, but it would take another tech crash for you to lose money on the long run. The share price will go down over time, but every month when you reinvest you'll be accumulating more shares, and the actual overall value of your investment should rise over time. I would think of this as like creating a lower risk/reward version of the nasdaq.
Conversely, I think tqqq is highly likely to experience a big loss at some point. That doesn't mean don't invest in it... I've invested in it before, but I would be careful not to be too exposed to it. I like that you're selling it down periodically. That's the smart thing to do with any leveraged ETF that is up a lot. I think schd is a better complement to it than jepq because jepq is also a bet on the nasdaq and in a tech downturn it'll go down right with tqqq (although less cuz it's not leveraged). Of those 2, I'd rather reinvest my tqqq proceeds into schd because that might do better than jepq in a tech downturn but if you just really want to bet on tech but prudently take some risk off the table, I think your strategy is fine for that.
personally i believe jepq is mainly for produce incomes rather than growth, if anyone chasing for growth they should go for voo or schd or even vgt or some others. but for jepq if anyone using dividend for retirement income, i think its a good income source since it yields 12% and NAV isnt going down like TSLY or any yieldmax product... lol
That's because tesla's stock is going down and the nasdaq 100 is going up. It will not always be that way. Covered call ETFs are never optimized for upside potential. It's always always always limited by the covered calls, which cap your upside. IMO JEPQ is also not appropriate for retirement income in most cases. Too much downside risk. But ultimately that comes down to the situation of each individual person. I just wouldn't take its strong short-term results as predictive of the future.
@@FundamentalsofFinance " never optimized for upside potential", not so! You can only write 50% covered calls of the underlining stock, for example, or even less if you are bullish, the question is not so much "optimized", it's the guesswork of predicting the direction, which no body can do whatsever. It's impossible, the option market itself is eveident of that, otherwise there are NO financial markets, everything is gamble in a sense.
Well, what I mean is option strategies that systematically limit their upside potential like JEPQ. The nature of the stock market is that returns are lumpy. You don't get a lot of months up 1-2%. It's often either up a lot or down a lot and that smooths out over long periods of time to the 8-10% annualized returns we've historically gotten. Because of that, these kinds of strategies will typically limit the upside potential in the stock market. You can look at pretty much every covered call ETF with a 5+ year track record and compare it to its cousin ETF with no covered calls and see that in action.
@@FundamentalsofFinance It's not the option strategies that limit upside or downside, option itself has limitless flaxibility. The problem here with these covered call option ETFs is that actually the manages are trying to use the options to time the market, or the direction of the underlining securities plus charging their management fees, that's what dragging down the performance, every managed ETF is market timing, coverred call option ones are no exception.
These ones actually do it systematically. There are some out there that try to do it more actively and time the market. Either way you're going to limit your upside unless you time it right consistently, which is pretty much impossible to do
What if I’m just buying for a dividend and an alternative than using a saving account at my bank?
Dude for us retirees we know this. Me personally, I'm looking for a high monthly divs paying, with a relatively low expense ratio, without nav erosion ETF and this checks those boxes. So consider everyone's different goals b4 you say something isn't a good investment.
I'm afraid the "without NAV erosion" is unlikely to last forever. If it could, this would be a great investment. Amazing. But that's highly unlikely. Like, close to a 0% chance. I wish you the best of luck.
So far so good and if Nav erosion kicks in, I will fire them. This isn't complicated. If it performs, keep it. If it doesn't, dump it.
Jepq is the best. And I like svol
k you are paying pretty large expense ratio compared to simple vanguard etfs and you are getting less return. Why would you ever think tis is good?
JEPQ pay dividend today and I wasn't expecting that, "Non-Qualified Div" ......I didn't know that, it's frustrating. I learn something today.
Ah yes, I'd expect that generally very few of its dividends will be qualified because they mostly come from the option income in the ELNs, and those are non-qualified.
@@FundamentalsofFinance Yep. So I get the monthly dividend in my IRA. So I guess it doesn't matter for tax purposes.
Alguns comentários que vi por aqui dizem que o JEPQ não deve ser o único ETF em uma carteira, mas sim parte de uma estratégia diversificada. O JEPQ é mais adequado para investidores que buscam rendimento, como é o meu caso. Tenho pouco tempo no mundo dos investimentos em renda variável, e meu objetivo é ter uma renda passiva. Seria muito arriscado colocar 50% do que tenho neste ETF e tentar fazer o preço médio ao longo do tempo, comprando todos os meses e aproveitando quedas para comprar mais barato? Isso seria uma semelhante ao que muitos fazem com o Bitcoin. Alguém poderia me dar algumas recomendações?
Não te posso dar conselhos mas no meu opinião, acho essa estratégia ruim. Sim falo português
You can’t really compare JEPQ to QYLD as QYLD does 100% ATM calls, while JEPQ does 20% OTM calls. There’s much more upside potential there, compared to QYLD which has literally 0 upside potential.
The calls are not 20% out of the money. More like 2% on average. What is your source for that info?
@@FundamentalsofFinancejepq writes calls OTM on 20% of jepq portfolio
So basically, if I don't want to live off the monthly distribution yield immediately, I can pair something like SCHG or QQQ with SCHD as a viable alternative with a lower fee, and with lower risk because I'm not depending on successful options trading. JEPQ seems like it could be a good candidate for an ancillary position because it provides monthly payouts with some upside (though less than QQQ itself), but I've seen too many options trades blow up on people to feel safe depending on it.
Yeah it's fine if you're reinvesting the dividends. But if you're taking dividends I think the strategy you are laying out would probably be better. That said, if you try to take 10% annual dividends out of pretty much any strategy, it's likely to fail over time.
I really think that hold jepq in a roth to have a more stable form of tech exposure while stil having growth would probaly match the s&p if not pass it over time
I think that's very unlikely. 2 reasons. First, covered calls really limit the upside potential. Second, tech won't always beat everything else. Tech has been the best performing sector in the S&P over the last 10 years but do you know how many times any sector has been the best over a 10yr period and then the best over the next 10 years? 0. It's never happened. Could this time be different? Sure, but I certainly wouldn't consider it to be a given that it will. Then when you tack on the covered calls the odds of jepq beating the s&p over the next 10 years are very low imo.
You clearly don’t understand a covered call strategy. Selling covered calls on an index is generally one of the best option plays for most investors. Yes, there are options traders that can come up with better strategies but this one is pretty solid. Your research neglects the DRIP portion of owning an asset like JEPQ. I also find it funny that the woman you quickly made fun of in your video provided a more comprehensive and fact based explanation of these etfs. More than what we got here.
Are you like a JEPQ salesman or something? Why are you so combative in your defense of it?
With all due respect, I (Ethan) am a CFA charterholder and investment professional, and I probably understand covered calls and ETFs at a deeper level than anyone you've ever met. The returns I showed were total returns, which means dividends reinvested, which is what you're calling "DRIP."
Unfortunately, the reality is that most people take the dividends instead of reinvesting them and will dwindle down their investment to nothing after like 10-15 years.
Or sooner. Let's wait until there's a tech sell-off and then see how good of an option JEPQ is for retirees. Losing 30 or 40% is DEVASTATING in retirement. JEPQ is highly likely to do that in the next 10 years. So should retirees be relying on it for all their income? IMO that's a hard no.
@@FundamentalsofFinance no, I am not but I also am well aware of different portfolio strategies. This may not work for someone young but it would work for someone who retires early and is trying to make monthly income on a portfolio until they can access their retirement accounts. As for you scare tactic about a tech sell off, this is a covered call approach so you would see increased premiums and better off than in just a QQQ fund. We could also utilize this fund in conjunction with other approaches such are the 10 month moving average approach and still be better off than a buy and hold. I don’t own these fund. I own DGRO and QQQM. I wouldn’t rule this out though. I am more concern with the dividends being taxed as ordinary income.
This is not a scare tactic, just a dose of reality. Scroll through my whole channel. I don't do any of that sensationalist crap. The reality is that volatility is very important in retirement. Lots of people look at the last couple years and think they've found this golden goose that throws off huge income payments with tons of upside and it never goes down. That is not going to last. I don't know when there will be a tech sell-off but I'd bet every penny of my net worth that it'll happen at some point in the next 30 years. Whenever it happens, it has a strong chance to be devastating to anyone who relies on it for income. Sure, if it's a small enough part of your portfolio it won't kill you, but that's not what people are doing. 50%+ is very common. Or they pair it with qqq or spy.... something that is going to be highly correlated with it. Lots of people think income = conservative. It doesn't. I'm just trying to save people from making a huge mistake that they can't come back from. You can disagree with my opinion if you want, but I promise you mine is highly informed and has no other intention besides helping people.
@@FundamentalsofFinance I am still learning but thanks for your taking the time in making the video
@@FundamentalsofFinance If you have a solid backup plan and cash reserves you should be able to turn a shitty market into a win, win. If you have enough JEPQ to live off of and it tanks you can stop withdrawing, turn on DRIP and switch to the backup cash reserves until the market recovers. You would be buying tons of JEPQ at a cheap price and doing very well when it recovers. This is where I think cash value life insurance is a great tool. You have a cash pile that keeps up and eventually beats inflation. When you need it you can loan against it then when market recovers you will have that many more shares of JEPQ to payback the loan to be ready for the next market downturn. Rinse and repeat.
I’d like your thoughts on TQQQ?
I actually bought some in early 2023 but sold out too early... hindsight is 20/20. Still made a nice gain, maybe 40%ish. I think it's great but I wouldn't touch it right now. I'm a deep value investor so I'm not really comfortable buying things that are up a ton and being overhyped. Now put leverage on that and I'm much less comfortable. My opinion is that tech's day in the sun is going to come to an end at some point. I don't know when that will be, but when that day comes tqqq will be down massively and I don't want to be invested in it. After it sells off a lot and everyone is saying tech is dead, that's when I'll be looking to get back in. It's just my style, and what's been most successful for me the last 20 years that I've been investing. It could certainly keep going up from here but buying leveraged ETFs at the top is a dangerous game so I'll be sitting on the sidelines for now.
Thanks ! That makes sense to me !
No prob!
Good job comparing both etfs. I subscribed.
Thank you! Any others you'd like to see compared? I plan on doing more of these. I used to do this professionally for financial advisors and RIAs.
Great content. Subscribed. I have some cash that i would like to invest over the next year or so. Where would you suggest i park those funds while i'm slowly drawing down from it. Thanks!
Thank you! I'd check out the CD Killers section of this video for a few ideas. ruclips.net/video/1bBM7RrjxXg/видео.htmlsi=zeaAqMqWdenhGVoU
@@FundamentalsofFinance Thank you!
beta and return still more favourable than QQQE and SPY - with a high cash return via the divs - so the right comparison is not QQQ - its lower beta with a higher cash component, as an example - I use JEPq in my portfolio to lower my volatility and extract lower taxed cash.
Well beta is highly dependent on which benchmark you're using. I think standard deviation is a better gage of volatility that puts things on an even playing field but even that has flaws in this case. It is most useful for a normal distribution and the returns of JEPQ will be far from that. It'll have many small positive months and a few big negative months. We haven't really seen it in a major tech downturn yet so I don't think its past returns are a good indication of the potential volatility in the future. Also, it is less tax efficient than almost any other equity ETF that you'd plan to hold for at least one year. I would be careful assuming that its past returns are a good predictor of its future returns. There's a good chance that they won't be.
What do you recommend instead?
For what objective and time horizon?
@@FundamentalsofFinance in my middle 50ts, growth, income, perseverance wealth. Now!
I'm making a video now about how to build a personalized asset allocation. It's going to go pretty in-depth including how to invest for multiple objectives at once. I think it'll be exactly what you're looking for!
Did this video come out yet?
What do you think of FEPI?
I wouldn't touch it with a 10ft poll. If I wanted to bet on the fangs or whatever other backward looking acronym you wanted to use, I'd just do it without the covered calls to get the upside if they went up. From its October inception it's already behind the index by 15% through 3/31. It's never been tested in a down market but as I'm writing this it's down 1.65% vs. Qqq at -1.73% and SPY at -1.56%
Same basic flaws as JEPQ but arguably more extreme because it's more concentrated in tech and just a few companies.
Why don't they just buy the index? Do they not buy the index QQQ to save the .20 fee?
You can't buy an index. An index is just a list of companies. So, you can either pay for the licensing agreement to access to companies as they change and then pay for the people and systems to track it, or you can pay for an index fund. Neither option is expensive but neither is free.
@@FundamentalsofFinance I meant why don't they do the cover calls in the QQQ ETF instead to keep it simple, instead of buying most of the individual stocks that make up the Nasdaq 100?
This is what you do is this your job before you are in Medellin Colombia or after you exit it out of Medellin I saw one video you were like you tried that passport channel too
I worked in the investment industry then left to travel the world, and I also started this channel
But, Sr Jepq is heavily managed, thus minimizing the risk. Not to mention it’s from a well-established company JP Morgan.
It's managed but it's not managed with the objective of minimizing risk the same way as JEPI is. That's a key differentiator. They're trying to keep the portfolio pretty close to the Nasdaq 100.
I’m thinking about buying jepi jepq to play against each other
i sold all my jepi and put into jepq, the jepi's dividend and growth just cant compare to jepq
How do you think they'd play against each other?
@@FundamentalsofFinance I was looking at some charts they almost parallel I would move between them but the plan is QQQ Jepi JepQ Vanguard split 1 million between just for monthly income
Well that's because jepi is based on the s&p 500 and Jepq is based on the nasdaq 100, which has been more volatile (leads to higher income from selling call options) and has been going up more lately. It probably will usually be more volatile but the growth part can just as easily go the other way if tech falls out of favor.
@@FundamentalsofFinance oh, for sure
Im 54 & not retired yet...i have 21,000 dollars laying around & i thought about dumping it in jepq but after watching this video i don't know 🤔
It's definitely a risk. You could always put some of it there and some of it elsewhere. Sounds simple but it's what even the best investors do. No matter how "sure" I am about something I know I'm not actually sure and invest accordingly. There have been a few times that I've been very thankful I did that!
YES!
Awesome video
Thank you! Good one coming this week on international complements to VOO
JEPQ is perfect for retirees. I bought on the dip. If you just want to see unrealized gains on a graft, and you are young, absolutely do not invest in JEPQ.
I think retirees should be very careful with JEPQ because it has significant downside potential and that's very hard to recover from in retirement.
JEPQ all day guy
Haha best of luck.
Thank you for sharing..too risky for me.
No problem. It would be for me, too, if I were retired!
great
Thank you!
Buying low is critical for the derivative funds because there is not a lot of room or circumstances to reap anything on top of the dividends and compound advantage.
Yes, after a bout of high volatility would be best. Income will be temporarily higher and there's theoretically less downside potential once it's already down a lot (though it won't feel that way in the moment lol)
Every CPA said samething about Jepq. Lol. But you do you
Haha soo.. doesn't that tell you there might be something to it?
@@FundamentalsofFinance as a trader, I can make money on selling call why can’t JEPQ do the same?
You said limit upside potential. Yes! If you let it run over your strike. You already said who you are so you know that better than anyone. Base on what you said, I assume option sellers don’t make money. LOL (Sorry! If I misunderstand anything)
Risk to downside???? Of course! you forgot to mention that growth portfolio will do the same as everyone else unless you sell covered calls to capture some premiums when IV crush.
It’s just your thoughts and opinions, I respect that. There are many ways to invest. You do you. You like growth go with it. Whoever likes dividends go with dividends. Good or bad only time will tell.
Personally, I see JEPI and JEPQ is good for diversifying beside SCHD.
My favorite part is when you expose these youtubers for being frauds
Thanks! That's my favorite part, too lol.
Dude it’s for income. For retirees. Beats CD’s. I don’t like your channel.
It is absolutely not comparable to CDs. It has exponentially more risk. Retirees should be very careful with JEPQ. I'm sorry if I'm telling you what you don't want to hear, but I hope you take this to heart. I'm not trying to rain on your parade, I'm trying to save you from disaster.
Taking financial advise from a youtuber who trashes other youtubers is the worst decision ever. Do your own research!
1. Nothing on this channel is advice. 2. I'm not just a RUclipsr, I'm a CFA charterholder and very experienced investment professional who does this channel in my spare time to help people become better investors. 3. If other RUclipsrs weren't misleading people into making terrible investment decisions I wouldn't have to point that out in my videos.
@FundamentalsofFinance why are you trashing other youtubers? You think you will gain more viewers / credibility by doing that?
Actually I try to avoid that as much as possible. Usually I say things like "some People will tell you that..." but if I feel like someone is actively harming people by giving misinformation then I consider it a public service. I actually think it hurts me to do it rather than helping me. But I don't make videos about physical therapy or how to do your makeup or anything other than investing because I'm not an expert in those things. Sadly lots of people who make investment content have no idea what they are talking about. This is people's livelihoods at stake. I take that seriously.