Conservative Investor With $100K Cash Eyes 10% Yield With JEPI And QYLD, 'Am I Being Too Risky?' – Reddit Shares Safer Dividend Picks

Benzinga01-28

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

Investing is a way to grow your stack of money over time, but deciding how conservative or aggressive to be can be tough.

While some people like to play it safe, others prefer high-risk, high-return options for quicker, more massive wins. High-yields like JEPI (JPMorgan Equity Premium Income ETF) and QYLD (Global X Nasdaq 100 Covered Call ETF) have become prominent choices for those seeking a steady income.

JEPI offers investors returns from large-cap stocks, while QYLD employs covered call strategies to generate high monthly dividends. Both funds are especially charming for investors who want regular, stable payouts rather than waiting for periodical dividends.

Don't Miss:

  • Unlock the hidden potential of commercial real estate — This platform allows individuals to invest in commercial real estate offering a 12% target yield with a bonus 1% return boost today!
  • This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100.

This brings us to one investor’s journey that sparked a lively discussion in Reddit’s r/dividends community. With $100,000 to invest, this individual wants to earn monthly dividend income. He describes himself as “pretty financially conservative” and intends to put half of this sum in a HYSA at 4.25%.

“For the other $100K I want to start getting a higher yield. I'm thinking JEPI (40K), JEPQ (30K), QYLD (20K), SPYI (10K). I think this should yield ~10% in monthly income,” he wrote.

While he likes the idea of high returns, he’s also open to changing his strategy. As he puts it, “I don't mind trading some yield for less risk, but given my large cash position I think I should be somewhat aggressive.”

His post started a debate in the comment section, with Redditors offering various opinions and insights. So, let’s examine the advice he received on Reddit.

Trending: It’s no wonder Jeff Bezos holds over $70 million in art — this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here’s how everyday investors are getting started.

$100K Cash to Invest: Reddit Investors Give Their Advice

Invest in Tax-Efficient ETFs

Many commenters recommended SPYI and QQQI instead of JEPI or JEPQ for taxable accounts because they offer qualified dividends, resulting in lower tax rates.

“If it’s a taxable account, SPYI and QQQI would be better options for tax reasons. [ ...] With SPYI/QQQI some of the dividends will be qualified. With the other CC ETF options like JEPI/JEPQ, dividends are treated as income. This could have a significant tax difference. Typically 15% compared to 24%, but could also be 0% compared to 12% for married household incomes below around $100K,” a Redditor said.

A second Redditor mentioned that SPYI is a great pick because, besides coming with tax benefits, it also offers a terrific yield.

“I like SPYI. It provides a great yield along with lower tax benefits,” he said.

“I hold SPYI and QQQI myself equally split for my dividend ETFs and it works out fine for me,” reads another comment.

Trending: The Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).

SCHD, the Best Pick for the Long Run

Redditors mentioned SCHD as a great long-term pick because of its balance of capital appreciation and dividend growth.

“SCHD has basically an estimated breakeven with JEPI of around 10 years. Basically, SCHD is supposed to net more in the long run after 10 years once the dividend has grown over time,” a Redditor wrote.

Another r/dividends member highlighted taxes, but this time, concerning SCHD.

“SCHD will have you keep more money though as all those dividends are qualified so fewer taxes on the payouts,” the comment says.

One Redditor also shared his opinion on SCHD, saying that this fund is a “basic product” that doesn’t rely on options or leverage, making it safer and predictable.

“Over the long run basic products that are not dependent on options or leverage, tend to be less risky and more predictable. That's why SCHD is the darling of the dividend community,” he said.

See Also: Commercial real estate has historically outperformed the stock market, and this platform allows individuals to invest in commercial real estate with as little as $5,000 offering a 12% target yield with a bonus 1% return boost today!

Use SGOV Instead of HYSA

Several Redditors advised the investor to shift to SGOV (Short-Term Treasury ETF) from HYSA (High-Yield Savings Accounts). The explanation is simple: SGOV provides similar safety as HYSA but with more returns and tax benefits.

“I’d also move your HYSA into your brokerage and just buy SGOV with it. It’s basically the same as your HYSA but will pay a slightly higher rate (as SGOV invests in T-bills just like SMA HYSA) and you won’t pay state and local tax on the dividends as you do with an HYSA. Basically, you’ll make a bit more, save a bit on taxes and have your investing in one place,” a comment reads.

“You can buy T-bills directly from the government or to make it easier, you can just buy SGOV with any broker. SGOV paid 4.48% last month,” another Redditor wrote.

One comment also recommended moving the funds into SGOV because the money will be safer there in case of a market drawdown.

“If you’re worried about a market drawdown, the SGOV lowers your risk in half already,” the Reddit member said.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Looking For Higher-Yield Opportunities In A Shifting Market?

The changing interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks... Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. 

For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).

Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. 

This article Conservative Investor With $100K Cash Eyes 10% Yield With JEPI And QYLD, 'Am I Being Too Risky?' – Reddit Shares Safer Dividend Picks originally appeared on Benzinga.com

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment