The reality is: a CC ETF limits my upside, but pays me monthly. I'll have a lower total return, but is that so bad given my goals? https://finance.yahoo.com/markets/stocks/articles/qqqi-holders-gave-19-700-210529914.html If you're new to this: Covered call ETFs will LIMIT your upside, but it doesn't mean you don't get any. $19,700 is nothing to ignore, but this is besides the point. Income focused investors (from what I've seen) are always considering TIME. We know it's limited, it's fragile & we try not to take it for granted. If I bought the underlying, I would have made an additional 19.7k on a 300k investment, yes. The key? I'd have to wait a year. What happens/changes in a year? A lot of stuff. Hell, what can happen in a day even? For me, I always consider ''Yeah, in 10 years time my money could be worth more if I bought the underlying but, what if I don't make it?''. Sounds dull, but it's life. I plan to be around for as long as I can, but life is not guaranteed for any of us. People die in their sleep, in freak accidents, or get given a health diagnosis that cuts life in half. Ultimately, you have to ask yourself: Are you willing to risk & wait 10+ years in hopes to make more money & one day enjoy it? Or, are you ok with saying ''I'll take a lesser total return, but every month I'll get paid in a way that can change not only my life, but those around me'' Just food for thought.
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Kar Yung Tom@karyungtom · 6h
I think anything works as long as you understand the trade-offs. Don't worry too much about these articles. For me it's more about the distribution mechanic. I sold not that long ago to buy my first house and also sold shares to fund a month long vacation in China. You don't have to wait. If total returns are similar, spending via each strategy will be similar. I fully understand one being much more preferred - personal taste at that point.
Robert S@mookie88 · 4hEdited
You might want to mention that light leverage can make up for any CC capped upside. Sometimes CC+Lev outperform growth ETFs. Then the really high yield CC+Lev ETFs, they at first glance appear to have lower TR than others, but if you start to distribution re-invest they catch-up in a hurry. I can't call it increased TR, but compounded distributions from high yields is a powerful growth engine! So these ETFs can have five income streams: price growth, Dividends, CC, Lev, and Dist. Re-invest - these can out power pure growth ETFs.
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