Hey there, was wondering what are the longer term implications of holding yieldmax type ETFs? Understand at 100% dividends you have recovered your initial investment, but with NAV erosion does the dividend payment continue to decline overtime? Would you reinvest?
Hey Wes, good question! It really depends on the fund but yes - assuming the NAV declines over time, the payouts would likely also decline. Therefore you'd maybe reach a point where you'd need to reinvest some of the distribution to increase your share count and offset the NAV erosion. But this is only assuming the NAV does indeed deteriorate.
Thank you so much for sharing this amazing system!
I have a question…. As the 100k go down in value because of the decay you would be getting less and less income overtime? How do you go about that? Hope that makes sense! Thanks!!
So it really depends. Funds like GPIQ, GPIX, JEPQ, won't really experience decay since their structures are a lot more straightforward.. the decay only really comes in when we're talking about the massive yielders like YMAX.
In those cases, the decay doesn't matter once you've reached a 100% return. And if the payments start to decrease a bit because of decay, you can offset it by reinvesting portions of the dividend back into this positions to grow your shares.
I think it really depends on which funds you're talking about tho! Which ones did you have in mind?
It really depends.. the only find I see in threat of extreme NAV decline is TSLY and perhaps MSTY. That's why I tend to stick more with the diversified ones like YMAX
Thanks for the input! Really appreciate! I’m just discovering all this with your Substack and I need to understand it well. Thanks for all the great work🙏🏻 I’m very excited about building a dividend income portafolio!
I appreciate this article and the simple concept behind it; thus funding your future with your own money working for you. Thank you.
I appreciate you taking the time to read! Thanks!
Hey there, was wondering what are the longer term implications of holding yieldmax type ETFs? Understand at 100% dividends you have recovered your initial investment, but with NAV erosion does the dividend payment continue to decline overtime? Would you reinvest?
Interesting post otherwise cheers!
Hey Wes, good question! It really depends on the fund but yes - assuming the NAV declines over time, the payouts would likely also decline. Therefore you'd maybe reach a point where you'd need to reinvest some of the distribution to increase your share count and offset the NAV erosion. But this is only assuming the NAV does indeed deteriorate.
Awesome. For your own portfolio, has YMAX and MSTY needed much reinvestment? Would you consider other single stock ones like APLY, AMZY, NVDY, etc
Nope! I haven't reinvested any of the distributions from those so far.
I currently own:
YMAX (haven't reinvested but I did add more capital around the recent drop)
MSTY (best performer)
NVDY
AMZY
TSLY (worst performer)
CONY (nearly at house money status)
QDTY
SDTY
Thank you so much for sharing this amazing system!
I have a question…. As the 100k go down in value because of the decay you would be getting less and less income overtime? How do you go about that? Hope that makes sense! Thanks!!
Hey there! I appreciate you reaching!
So it really depends. Funds like GPIQ, GPIX, JEPQ, won't really experience decay since their structures are a lot more straightforward.. the decay only really comes in when we're talking about the massive yielders like YMAX.
In those cases, the decay doesn't matter once you've reached a 100% return. And if the payments start to decrease a bit because of decay, you can offset it by reinvesting portions of the dividend back into this positions to grow your shares.
I think it really depends on which funds you're talking about tho! Which ones did you have in mind?
Thanks for your reply. That makes sense. I was in fact thinking of those really high dividend ones, like YMAX, MSTY, NVDY, TSLY etc
It really depends.. the only find I see in threat of extreme NAV decline is TSLY and perhaps MSTY. That's why I tend to stick more with the diversified ones like YMAX
Thanks for the input! Really appreciate! I’m just discovering all this with your Substack and I need to understand it well. Thanks for all the great work🙏🏻 I’m very excited about building a dividend income portafolio!
And I appreciate you being a part of this! Please feel free to message me anytime. I'm excited to see your progress!
I love the principle of creating a system. Most importantly, you’re growing 2 stock positions.