Ok, thatās fine. Then what is a sustainable distribution? Based on the underlying holdings, the allocation of funds, the real-time and projected performances of said holdings, options premiums generated, capital gains on exercised options. What is the number? If I make it a rule that forever and always 50% of the distributions go right back to reinvesting into the fund is it now a 14% yielding ETF? Maybe it needs to be 60% so now itās a 11% yielding ETF. If Iām forever and always reinvesting a portion of the distributions back into the fund so my share count is continuously growing does that mitigate potential risks? If I realize that time is still a factor and I invest a portion of the distributions into a growth or index fund with the purpose of realizing future gains to re-charge the CC ETF, does that mitigate further future risks? If I safely and selectively use margin to further fund my account and reinvest into the ETF does that again mitigate potential risks? I guess weāll find out but these are some of the things I am doing, will be doing and monitoring (among other things). $HHIS
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Canadian Investor@canadianinvestor Ā· 11dEdited
Total return tells you whether a fund is earning enough to support its distribution over time. If a fund distributes more than it earns, its capital base is being consumed. If it earns more than it distributes, its capital can grow. A high distribution rate does not mean a high return. It only tells you how much the fund is paying out. The amount you need to reinvest can change YieldMax Jay Pestrichelli was asked how much a person should reinvest of ULTY to maintain capital and he said all of it. @conroy119 and @karyungtom have tried to explain this concept. Covered Call funds do not allow a person to spend more than a comparable index fund something BMO Covered call portfolio manger just reiterated on stage at Blossom event. Fund companies tell investors total return tells you how much the fund earns. The distribution doesn't change the math it just changes the packaging. The claims that investing in covered call funds means you can retire with less, spend more do not come from the fund companies. Income investing also when taught doesn't make these claims either. The income factory is a great book. Not all income is the same. Earning from a company or debt are very different than option premiums sold on equity. in the end you need capital to earn more than you spend or you will deplete it.
Rob @hedge Ā· 11d
Thatās more or less my tiered plan. One by one build 4-5 CCs to $2000/month(starting with hhis lol) when a fund reaches $2000 Iāll reinvest $1000 and move the other $1000+ as it grows into the next fund (currently hdiv then hyld for a moreāstableā distribution). Once next fund reaches $2000 repeat but with $500 from the previous going into xeqt for growth and continuing the process until I have 5 funds that I can actually withdraw $1000 a month from each well building in the background with their respective distributions reinvestment.
James @brownerincome Ā· 10d
Up %37 on hhis and never selling š
Kar Yung Tom@karyungtom Ā· 11d
Iād be curious on what you think of things I have written on this specific topic.
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