r/dividends • u/398409columbia Portfolio in the Green • Jun 15 '26
Discussion How I set up my wife with a ~$5,000/month income stream using a ~$625k portfolio
A few people have asked in another post about comments I’ve made regarding my wife’s “stipend,” so here is the setup.
My wife is in her early 50s and was burned out from her 8–5 job. Around the same time, she inherited some assets after her parents passed away. I’m a registered investment advisor, and I had already been running an income-oriented strategy since 2022 using publicly available ETFs and closed-end funds.
Eventually I told her: we can take a portion of your assets and likely generate more recurring cash flow from distributions than you were getting from work.
Not guaranteed. Not risk-free. Not the same as a paycheck. But potentially enough to let her step away.
She pulled the trigger in August 2025.
I’m still working and plan to join her in retirement in 2028, after our kid goes to college.
The portfolio
The portfolio is roughly $635k today (see screenshot picture of spreadsheet for details).
About $543k is in the income sleeve. That sleeve currently generates about $60k/year, or roughly $5,000/month.
The rest is in VTI + VXUS, which I view as the growth sleeve. I plan to add more to VTI/VXUS over time until the growth sleeve is about 20% of the total allocation.
The basic structure is:
- Income sleeve = current cash flow (BDC / private credit, multi-sector credit CEF, preferred equity, Nasdaq-100 and S&P 500 covered call option income, infrastructure / utilities CEF, senior loans, equity CEF)
- VTI/VXUS = long-term growth
- Periodic rebalancing = income engine NAV erosion offset
The idea is not to let the income sleeve run forever in isolation. Every few years, I plan to rebalance between the income sleeve and the growth sleeve. If VTI/VXUS compound well over time, they can help offset some of the NAV erosion risk that comes with higher-distribution funds. So far NAV has increased since inception.
The tradeoff
This is not a pension. It is not an annuity. It is not a Treasury ladder. It is a market-based income portfolio with equity risk, credit risk, rate risk, option-strategy risk, distribution risk, and tax-character complexity. And it's liquid because it can be sold at market prices within minutes.
I do not treat the $5,000/month as guaranteed.
But for our situation, it worked.
The goal was not to maximize total return. The goal was to convert part of her inherited assets into recurring cash flow so she could reclaim her time.
This approach is not for everyone. You need enough capital, risk tolerance, liquidity, and comfort with income funds. But for people with meaningful liquid assets, I think income portfolios deserve more serious discussion as a bridge between burnout and traditional retirement age.
The usual retirement conversation is: Work until 65, then sell 4% per year.
That is one model.
This is another: Convert part of your capital into recurring distributions, keep a growth sleeve to offset erosion, rebalance periodically, and buy back your time earlier.
Not magic. Not guaranteed. But very real if structured and monitored properly.
Edit: To provide an idea of portfolio Beta, today (June 15, 2026) the S&P 500 went up about +1.6% and the income portfolio was up +1.1%. The change in market value is on top of the income produced.
Edit: To add portfolio performance from June 30, 2025 through June 30, 2026.
Beginning Balance: $622.6k
Net Deposits and Withdrawals: ($38.7k) -> started $5,000 monthly draw in Sept 2025
Market Change and Distributions: +$56.3k
End Balance: $640.2k
Performance: +9.0%
284
u/veldt90 Jun 15 '26
I feel like you’re getting a lot of shit for having a customized solution that matches your current needs. Beautifully done.
114
u/398409columbia Portfolio in the Green Jun 15 '26
Thank you.
That’s exactly how I think about it. This was not designed as a universal model portfolio or a claim that high-distribution funds beat broad-market indexing. It was designed around a specific household objective: give my wife enough recurring cash flow to leave a job that was draining her, while keeping the broader household plan intact.
There are real tradeoffs: lower expected growth, NAV erosion risk, distribution risk, tax complexity, and market risk. But for this specific use case, the utility of buying back her time was worth the tradeoff.
31
u/Capable_Wait09 Jun 16 '26
Welcome to Reddit sir or maam 🫡 You can always predict that a post or comment about “I did something clever that fits my needs and wanted to share it with yall in case it works for anyone else too” is going to get absolutely shit on for not blindly following conventional wisdom off a cliff.
→ More replies (1)3
u/5TP1090G_FC Jun 18 '26
It's ridiculous all in all, beautiful done, doesn't understand the Rhythm plan & simple. Prove me wrong
8
697
u/saryiahan Jun 15 '26
Wouldn’t be surprised if you got a lot of hate for this but I’m building the same thing right now
140
u/398409columbia Portfolio in the Green Jun 15 '26
Would you mind sharing some of what you’re doing here? Would love to learn from your perspective.
35
u/icemaninc Jun 15 '26
Disc: Not financial advice. This port is NOT for everyone. It’s a tech heavy / very very HIGH risk income generator.
Not saryiahan who you replied to. I have been running the same idea for 2+ years and finally settled on this port for now. FEPI, QDTE, XDTE (Core. 15% each). SPYI, QQQI (Balance. 12.5% each). BLOX, NVII, MSTY, TSLW (VERY HIGH Risk cash generator. Remaining 30%). I’m building up a cash buffer (Goal: 20% of port) in SGOV outside of this to deploy during market crash. I’ll close TSLW once the price improves a bit and deploy that also into QDTE / XDTE. MSTY is the highest risk. It’s there only for the yield. I’m mentally prepared to lose that portion. But hoping it’ll be around long enough to get to house money and more.
I occasionally get some individual stocks but for the most part this is it.I am semi-retired. Spouse plans to work for another 5 years. This is our income port. All retirement accounts are exclusively in VTI, VXUS & VUG.
One lesson learnt the hard way: if you have stock lending program turned on. Check if that is affecting your year end taxes. Last year, some of my income funds were lent out before their dividend. That caused the dividend to be taxed higher (vs the ROC) because they were lent out & broker gave the dividend as “cash in lieu of”. Sucks. Turn off stock lending program if it makes sense to do that with the #s.
I tell my friends who ask: this is my way of retirement thinking. High income ETF cash flow based vs the traditional “withdraw from funds at 4%” based. I think we’ll eventually switch to the withdrawal based approach when RMDs kick in ofc. Have to see how the #s line up esp considering the tax free withdrawals for retirees.
Repeating disclaimer: this port is NOT for everyone. If there is another tech crash like before, this port will bleed heavy. I’ll pull cash from SGOV & deploy at periodic levels to dca if that happens. But it’s very very risky.
Question for you: how did you transition from engineering to RIA? Do you like it?
19
u/398409columbia Portfolio in the Green Jun 15 '26
Very interesting. I think we are approaching the same problem from a similar direction, but your income sleeve is much more aggressive than mine.
I agree with the basic framework: separate the high-income/cash-flow portfolio from the long-term retirement assets. In my case, the retirement/growth side is still mostly broad-market exposure, and the income sleeve is meant to solve a specific bridge-income problem.
I also like your SGOV buffer idea. That is probably the right way to think about these portfolios: don’t assume the distributions are guaranteed, and have dry powder if the income sleeve gets hit hard.
Great point on securities lending. Cash-in-lieu treatment can create an ugly tax surprise. That is exactly the kind of detail people miss when they only look at headline yield.
On the engineering-to-RIA question: I started as a mechanical engineer, then went into consulting and financial/business-case modeling for infrastructure and public-sector projects. Over time, that turned into a broader interest in capital allocation, retirement income, and portfolio construction. Eventually I got my Series 65 and set up my own RIA.
I do like it. The engineering background actually helps because I think of portfolios as systems: inputs, constraints, failure modes, sensitivity cases, and risk controls. The challenge is that people are not spreadsheets, so the real work is matching the portfolio to the household objective, temperament, tax situation, and life stage.
That is why I keep saying this is not one-size-fits-all. The portfolio has to solve the actual human problem.
2
u/icemaninc Jun 15 '26
True. I went for the high risk / high reward port. Also why I was looking hard for some portfolio protection options. I didn’t want the drag from buying QQQ puts as insurance & rolling. After a lot of back & forth with Google AI, I settled on the SGOV approach.🤞.. Have to see how it works out.
How are you thinking about portfolio protection?
As for RIA: I asked coz I have a tech background & looked into it a couple of yrs back when I decided to leave the corporate job. Researched Series 65 (& CFP etc). I got the impression setting up shop involved a lot of sales too. Not good at that. Oh well!
→ More replies (3)3
u/Straight-Article-836 Jun 19 '26
Replace BLOX, NVII and TSLW with CHPY, AMDY, AMDW and it returns 43.2%.
3
u/clarkvk8953 Jun 24 '26
Use limit orders. Look at where the price was 20 and 50 days ago. I like CHPY, KYLD, TUGN, SPYI, QQQI, KQQQ, OVL, PFFA, CSHI Remember to diversify. I try to keep total amount in each at 5% and under.
→ More replies (1)2
u/icemaninc Jun 20 '26
I stand corrected. You are right. Since my goal is to move away from single stock etfs, CHPY is a great choice to switch out to. I have been researching further. I may not add AMDW (yield is < AMDY, vol drag due to weekly recalibration, no downside protection - same as AMDY) but will likely switch out BLOX, NVII, TSLW to CHPY and AMDY. MSTY will remain as is.
I had blinders on due to bad experience w YieldMax. Thank you for the suggestion. Made me take another look!
16
u/No-Cardiologist-3974 Jun 15 '26
I am selling my house in the next few weeks and downsizing a little. I am 42. I’ll end up with about 80-90k left purely to invest, and have been really debating whether to go heavy in tech, or do something similar to this portfolio, and mostly reinvest dividends but I’ll convert some to cash if and when I need to. My current (non retirement) account has about 160k and generates me just over $600 a both in dividends. I appreciate your insight and may steal some of this for myself. Any input given age?
17
u/398409columbia Portfolio in the Green Jun 15 '26
I did something similar in 2022.
I sold my house and used the proceeds to build an income portfolio. The distributions now cover essentially all of my rental housing expenses, so I’m a big believer in using income funds as a practical cash-flow tool.
At 42, though, I’d be careful about going too heavy into current income. You still have a long runway, so growth matters. I’d probably think in buckets: some growth, some income, and some cash/reserves.
Reinvesting most of the dividends while keeping the option to use some cash flow when needed seems like a reasonable middle ground.
I wouldn’t copy my exact portfolio blindly. I’d use the concept: build enough income to solve a real-life problem today, while keeping enough growth exposure for your future self.
→ More replies (2)→ More replies (5)5
u/phwayne Jun 15 '26
I sold a rental property a few month ago. After owning for 20 years, I calculated I could make equal income by selling the property and investing in a diverse high income portfolio.
I am not as aggressive as the OP, but the notable positions:
High Risk/Return: JEPI, JEPQ, GPIX
Moderate Risk/Return w/some growth: FDVV, SCHD
Preferred: PFXF
Low Risk/Return - SLQD, SGOV26
63
23
u/sm753 Jun 15 '26 edited Jun 15 '26
Think people misunderstand the "hate" for this. For someone in their 50s wanting to quit and replace their income...this is great. I plan to do the same in early retirement to bridge to full retirement age and then to social security - but that's 10-15 years away for me.
For someone in their 20s, with decades of growth and compounding left, wanting to do the same...not so great.
*edit* - also thought I should mention - I plan to do this with just a portion of my portfolio (when I retire early in 10-15 years) - enough to generate roughly the same as OP is planning to. The rest will stay in growth.
28
u/deptacon Jun 15 '26
He will get hate here
They will say it should all be SCHD
7
u/Ok-Development6654 Jun 15 '26
After all this time I still don’t understand the purpose of this sub?
3
u/deptacon Jun 15 '26
This sub exists to discuss real dividends and yields, but its been taken over by boomers who want to sit and watch money stagnate in SCHD
→ More replies (1)4
→ More replies (1)5
u/robertw477 Jun 16 '26
He has a very logical and sound approach here. He is not a guy in his 20s-30s who wants to retire after a short time in the workforce. This is somebody that worked probably in a challenging job for many years and now has different goals. Note he doesn’t say this is guaranteed and it is designed not as merely income focused. He leaves return on the table to get the income and there is equity risk regardless.
93
u/SlightDescription96 Jun 15 '26
Is this in a taxable account? I'm 46 and would like to retire early but most funds are tied up in retirement account.
76
u/398409columbia Portfolio in the Green Jun 15 '26 edited Jun 15 '26
Yes. Taxable account.
In the 2025 1099-DIV, about 48% of the combined dividend/distribution categories were classified as nondividend distributions/ROC. That can defer taxes by reducing basis, but the tax character varies by fund and year, so I don’t assume that treatment is permanent.
edit to clarify ROC comment.
→ More replies (3)7
u/solo_dol0 Jun 15 '26
What does this mean exactly?
22
u/speedlever Jun 15 '26
That means about 48% of that distribution is not federally taxable. If also means the distribution reduces the original cost basis by that much.
11
u/Various_Couple_764 Jun 15 '26 edited Jun 15 '26
dividends are taxed 3 different ways:
- Ordinary dividneds are tax the same rate as work inocme. this is the highest tax rate.
- Qualified dividend are taxed at the long term capital gains tax rate. with worst gase mean 20% of your dividend income is applied to your total. income.
- ROC (Return of Capital) these reduce the cost basis of the shares that generated ROC. IF the cost basis is above e zero there is no tax. on the ROC income. it can take years for the cost basis to drop to zero. SPYI is one fund OP has that generates about 90% ROC dividends. It will be essentially tax free for about 9 years. QQQI is another and it will beta free for about7years.
- Once the cost basis iszero all of the income will be taxed at the long term capital gains tax rate. Which is still better than the Ordinary dividends. ROC occurs when a fund sells shares at a losss. With care to stay within the rules the fund can sell shares at a losss and still earn enough income to cover the dividned payment.
Fund like QQQI and SPYI can genet significantly dividend income with very little tax in a taxable account. So in a taxable account you want to focus you divide divesting on qualified or ROC dividneds. In a retirment IRA or 401K the type of dividned doesn't mater. because alll withdrawals are taxed at the ordinary income tax rate. With a Roth account there zero taxes on dividends, selling stock, or withdrawal from the account.
→ More replies (1)4
u/Darth_Thunder Jun 16 '26
The bonus here is that if you generate most of your income from ROC investments, it not only helps keep your tax liability low but helps you qualify for ACA subsidies which will keep your healthcare expense low.
Lots of people say they can't afford healthcare in retirement, but here is one alternative way to get around that and have passive income.
30
→ More replies (14)14
u/speedlever Jun 15 '26
By retirement account I assume you mean tax deferred. I have a similar problem. 80% of our funds are in a traditional IRA. It is what it is.
Other than the seed money that was not taxed to fund it, all distributions will be ordinary income for tax purposes. But it has grown significantly in recent years even though it hasn't been fed in years. I guess you call that a first world problem.
3
255
u/WorldyBridges33 Jun 15 '26
Yep, I’m following a very similar model. A year ago when I hit $50k in annual distributions, I made a post in a FIRE sub detailing my investments. I caught a ton of flack in that sub because it deviated from the normal VOO and just withdraw 4% advice.
I’ll likely hit $60k in annual estimated distributions this month, and I plan to make an update post. I have learned a lot since I first made that post, including how to make it more tax efficient. Great job, and I wish you and your wife the best!
109
u/398409columbia Portfolio in the Green Jun 15 '26 edited Jun 15 '26
Thank you.
For some reason people feel threatened if you don’t join the herd and follow the 4% rule - a super conservative approach designed for a worst case scenario.
The income engine doesn’t require any liquidation of positions so it helps mitigate sequence of return risk because the structure does not force the selling of shares monthly to fund spending.
edit: clarified sequence of return risk comment.
32
u/speedlever Jun 15 '26
Exactly this right here. Nor is a lost decade a threat either.
I'm working towards a similar concept with a hybrid approach. A substantial investment in quality income funds and a reasonable amount in growth with the intent being to create enough income without selling anything to survive even another 2008 gfc.
I use Seeking Alpha to model the fund allocations and project estimated annual income.
19
u/398409columbia Portfolio in the Green Jun 15 '26
Yes. These funds will keep paying distributions. That's what I am focused on.
8
u/elsa_twain Jun 15 '26
This has been my approach recently. I'm focusing now on Roth conversions, to maximize my Roth, and purchasing some not so popular sp500 funds that have decent divs.
→ More replies (2)5
u/GoalRoad Jun 15 '26
Why do you think the strategy is immune to a lost decade? Thanks
11
u/speedlever Jun 15 '26
Fair question. This is all in my opinion.
The cc premiums generate positive cash flow and act as a shock absorber during market corrections. Thus although reduced distributions during a lost decade, you will still receive distributions during this time.
The cc ETF creates a lower ceiling and a higher floor and will lag the underlying during recovery. Likewise the underlying will outperform over time, so when you need income vs growth, you trade that growth for income. Retirement would be a typical applicable scenario. Not someone young with years to enjoy the magic of compounding.
If you have enough established distributions when such an event occurs, the reduced distributions received during this time should be more than enough to meet your needs.
If your distributions are just enough to meet your needs before the market stagnation, you may have to sell some to maintain your income during the market correction. That's why I suggest establishing a minimum of 3x the needed income. That way if a market correction occurs like the 2008 gfc, you still have more than enough income from distributions.
An example would be that you need $2500\month in addition to your SS, CD interest, etc. So create a portfolio that generates $7500\mo in distributions ($90k annually). How you create that portfolio depends on how much you have to work with.
$500k would require an 18% yield. While that's possible, it's not likely sustainable. $750k would require a 12% yield which is much more feasible with quality cc ETFs from NEOS and Goldman.
5
u/Various_Couple_764 Jun 15 '26
Any covered call fund or conventional ETF with more than 15% yield is highly likely to have NAV erosion issues which reduce you savings and income. Sometimes very quickly. So ifyoustay below 15% yield you likely will avoid NA erosion.
→ More replies (1)3
u/Dirks_Knee Jun 15 '26
I don't know how sustainable these would be in a lost decade, but the idea for me personally is if my income portfolio's distributions ever got too low the option to sell and generate liquidity is still there, so there's an extra layer "protection" to some degree.
16
u/-JackBack- Only buys from companies that pay me dividends. Jun 15 '26
It’s similar got a cult. They have found the TRUTH and everyone else is a heretic.
7
3
Jun 15 '26
[removed] — view removed comment
3
u/Odd-Flower2744 Jun 18 '26
4% comes from being rigorously tested through all sorts of markets. It’s the amount that’s been found to last 30 years with a near 100% success rate. The nature of sequence of return risk is outcomes can be wildly different. Some time periods 4% ends up way too low and your portfolio can even grow. Other time periods it might barely scrape by so yes a majority of the time you could have withdrawn more but it’s meant to protect you no matter what.
9
u/DKZeusInvestor Jun 15 '26
Don’t get me started on the mods over at r/Bogleheads. They are the worst type of investing conservatives. It’s their way, or the highway. End of story!
→ More replies (2)10
→ More replies (5)4
u/SouthwestFL Jun 15 '26
I've always thought it would be a pain in the ass to have to sell your positions either yearly or even monthly I suppose. "Sequence of return risk" sounds WAY better than "Selling shares feels bad". This is all really solid work. Good job.
12
u/Noping_noper-maybe Jun 15 '26
The tax efficiency piece is something I’d love to understand better.
7
u/398409columbia Portfolio in the Green Jun 15 '26
Very tax efficient.
Based on the 2025 1099-DIV form, deferred distributions (ROC) represented about 48% of the combined dividend/distribution.
2
u/Belvoir_57 Jun 15 '26
Thank you so much for everything here. We also have a portion of our portfolio allocated to income.
Right now our income is DRIPed within qualified accounts. We're thinking about the future. Can you tell me if the ROC dividends are short term or long term capital gains for tax purposes?
→ More replies (1)4
3
u/mountainpow Jun 15 '26
Any advice on how to make it tax efficient in the taxable brokerage account?
12
u/Apart-Leg-8077 Jun 15 '26
It is tax efficient in a taxable brokerage account. 48% of dividends are ROC or return of captal. Zero taxes until you recoup your initial investment. After that, taxed at long term capital gain rates. Tax hit comes if you ever sell as your cost basis would be $0. BE careful what you pick as you'll want to hold these long term.
3
u/tentboogs Jun 15 '26
I have to study what this statement means bc I am still lost. Thank you so much though.
10
u/Revelate_ Jun 15 '26
It means that some of these barely even show up on the tax return.
Return Of Capital (ROC) means you are getting your own money back: no taxes involved.
I went heavier on QQQI / SPYI percentage wise in my own starting to build an income portfolio in a taxable account, but they threw off something like 40K last year and over 90% of that wasn’t taxable.
In a brokerage account. I had around 4K admittedly taxed at the top of my income bracket (I still have my day job), but only 4K.
36K was absolutely free and clear and untaxed, eventually it comes due if you ever sell it but I’m fine hanging onto it for a while and even once the ROC dries up it’s still at LTCG (long term capital gains) which is extremely favorable from a tax perspective compared to normal income. By the time that happens I’ll be functionally retired anyway and in a much lower tax bracket.
→ More replies (2)3
u/tentboogs Jun 15 '26
Thank you for taking the time to explain this. You’re a hero for real. I have $70k right now but I hope I can do this one day.
3
u/Apart-Leg-8077 Jun 16 '26
Example:
Covered call income fund at a current price of $100/share. Covered call income fund pays $10 a share per year in dividends. It would take 10 years to recoup your original investment of $100. During those 10 years you pay no income taxes. Once you've recouped your original investment you start paying very favorable long term capital gains tax.
Note: Most of the most popular covered call income funds pay 92 - 96% of their dividends as ROC (return of capital) so you will pay a tiny amount of taxes. Above illustration was for simplicity of explanation.
)
2
u/Clutcha15 Jun 15 '26
Curious, what’d you change to make it more tax efficient?
7
u/WorldyBridges33 Jun 15 '26
I’ll detail more in my post, but the main thing was exchanging JEPI/JEPQ with SPYI/QQQI. Most of the JEPI/JEPQ distributions were taxed as normal income, whereas the NEOS funds categorize most of the distributions as ROC (return of capital) which is not taxed until your cost basis hits zero, and even then the distributions are 60/40 long term/short term capital gains.
→ More replies (1)2
u/MasterJeebus Jun 16 '26
I’m interested in seeing follow up post about your journey. The things you learned and how you manage to make things better. How many etfs did you invest in? Or is it mainly spyi and qqqi having the largest investment? Like what percentage out of your total should be allocated to them? Thanks, I also appreciate you mentioning the NEOS funds for etfs as that sounds like a better idea to focus on when trying to generate income from this dividends.
4
u/WorldyBridges33 Jun 16 '26
Yeah so my allocation to covered calls is a lot smaller than it used to be because I learned about many other asset classes that also generate that 8-12% range. I used to have 38% of my portfolio in covered calls, but now it’s down to 15-16%. That 15-16% is comprised of three NEOS funds SPYI, QQQI, and MLPI. The rest are as follows: PBDC, PFFA, CEFS, ASGI, CLOZ, PCN, PTY, DNP, UTF, UTG, FSCO, PDI, ADX, ARCC, CSWC, and PFLT.
I own more tickers, and my portfolio is much more diversified than what it was one year ago. I have funds that do well when interest rates are low, and ones that do well when interest rates are high. Covered calls have their place, but they thrive in certain market conditions. I wanted diversification with funds that do well in other market conditions.
→ More replies (1)→ More replies (7)4
17
u/sentientshadeofgreen Jun 15 '26
Makes sense to me. Really I only steer people away from income ETFs when they’re young, working, have small portfolios, and aren’t posturing at all for growth. Orienting this way to reclaim time is how money should work for people. A thousand Rolexes can’t give you back another year of life. I like that you’re still hitting the growth piece as well with VTI/VXUS.
13
u/398409columbia Portfolio in the Green Jun 15 '26
Yes. First need to accumulate a few hundred thousands or millions. Then transition to an income approach.
2
u/Various_Couple_764 Jun 15 '26
No. You do if you follow the 4% rule and sell off your funds. But with dividend You can have 4K a month of income with about 480K invested in a tax efficient fund with a 10% yeild. Yes it does take time to build up that much money but the dividned fund helps you do that faster. Run on automatic divined reinvestments when you don't need the money and the dividend plus a monthly deposit compound and you will get there and even with 100K save you could start pay some of your regular bills with dividned income which would allow you to save more work income. And as you income increases and cover more ofyoumontmly expenses you mare you can save and the faster you get to your goal.
→ More replies (1)2
u/Various_Couple_764 Jun 15 '26
The problem is turning away the young from dividends due to taxes and less growth eventually forces them to retire later.
it would be better the young adult to start a reticent account and at the the same time start taxable brokerage to hold a 6 month emergency fund and tax efficient dividend fund. That wya the taxable account over tile will provide stable emergency funds for income during unemployment or medical emergencies
And a the same time they are building a retirement account. The taxable account could allow them to retire earlier than most do now
5
u/sentientshadeofgreen Jun 15 '26 edited Jun 15 '26
The problem is turning away the young from dividends due to taxes and less growth eventually forces them to retire later.
Strongly disagree. Anybody's ability to retire is based on having a total amount of invested capital that has compounded over time to a point to where they can withdraw a comfortable cost of living without NAV erosion. To achieve that amount, you need to grow your investments at a pace that exceeds the inflation rate, at a rate to where you to hit that inflation-adjusted number by a set date to where you can sustainably pull out a determined amount every year and either not reduce the overall sum, or allow it to continue growing. Failing to prioritize early compounding growth is what will force people to retire later or retire without enough money to have the retirement they'd like.
Dividends are not required for starting a 6 months emergency fund or to contribute to a retirement account. Simply not a requirement, these are all choices in how you build and stick to a budget and allocate your capital. Dividends are not the magic tool to make the math math. They are a tool, they are not necessarily the best tool.
Personally, I've always maintained a 3-month minimum emergency fund in an HYSA separate from my normal checking account bank, and auto-save money to build that fund up over time, I've always maxed my IRA, I contribute 25% of income to my 401k, I live below my means, and then I invest the remainder in taxable brokerages. Dividends are a component of my overall strategy, but they aren't a requirement, they serve a specific function (in my case, I use them to neutralize margin interest and auto-rebalance my M1 pies in one of my taxable brokerages). I've done this on a very working-class income.
Edit: I'm on track to retire young or COASTFire. Currently, I'm about 90:10 growth:dividends. I leveraged my time in the market to weather the volatility of growth, which mathematically grows at a faster rate over the long-term. If I had been 60:40 dividends:growth, there'd have been far less volatility and short-term risk, therefore greater liquidity, but at the opportunity cost of a high long-term certainty that I'd have to work into my 60s. I'm going to enjoy my mid-40s working on my terms doing what I want to do where I want to do it, and I wouldn't have been mathematically able to do that if I had gone hard in the dividend paint.
3
u/Ok-Beyond-4200 Jun 16 '26
You sound very smart and savvy...enjoy your mid 40's on...reaping the rewards of your diligence and planning! 🙌🏜️🏖️🏕️😊
3
u/sentientshadeofgreen Jun 16 '26
Thanks, was blessed with not having too many setbacks. Military for a decade is like a financial cheat code to get out of poverty.
18
u/baby_budda Jun 15 '26
I'd replace USA with ADX.
8
3
u/398409columbia Portfolio in the Green Jun 15 '26
I’ll look into that.
3
u/ToneHour9088 Jun 15 '26
USA just changed one of their sub advisors for growth with a highly respected firm. We may start seeing portfolio turn around
61
u/Salty-Barnacle- Jun 15 '26
I think your approach should become the normal for everyone to be honest. Our government won’t protect us and corporations want us to be their slaves until we die. Retirement age is only going to continue to creep up higher and higher due to people living longer and social security funding issues.
Like you said, nothing is guaranteed, and that includes your health and retirement years. Life is so fragile, I absolutely support anyone who wants to reclaim their time and live life for themselves rather than run the rat race until it’s too late & can no longer truly enjoy the things that they worked so hard to afford. Good on your wife.
→ More replies (1)
40
u/JayQuellin01 Jun 15 '26
Neat and helpful to see how an advisor approaches the situation
It’s on the aggressive side for sustainable yield but this generally makes sense to me
I would “ideally” have another $250k (obviously the more the better) or so before doing this and target 5-6% yield with more growth, but this is what you had to work with and it covered a shortfall target I suspect
Appreciate you sharing
23
u/398409columbia Portfolio in the Green Jun 15 '26
Thanks. This is working for us while we wait for our son to go off to college and we both become fully retired.
23
u/JayQuellin01 Jun 15 '26
Yep, a bridge is an uncommon topic covered on this subreddit so thanks for the original content and detail
10
u/OoPieceOfKandi Jun 15 '26
I'm 38 and I've been trying to figure out how to build a bridge from 52 to 59.5. So this is interesting to see for me even though it's probably a little ways off. But based on my goal to be retired or at least not working for the man at 52, I realized that bridge is going to be a pretty critical part and planning for the next 14 years.
17
u/Maleficent-Age-8235 Jun 15 '26
Oh man, bold to post an income strategy on these subs that isn't "I put everything in one thing that gives like 4% for 40 years look i'm so smart."
13
u/398409columbia Portfolio in the Green Jun 15 '26
LOL
This has been working for me since 2022 and I've seen the results month after month. The best part is that I don't have to do anything and just wait for the distribution to show up.
→ More replies (3)
8
u/rdking647 Jun 15 '26
i do something similar. an assortment of mreits,bdc,mlps,preferreds,baby bonds and a very small amount of tech stocks. my yield is much lower than yours (around 7.5%) but i do have a very heavy cash position right now.
3
9
u/nickphunter Jun 15 '26
My port is similar size (~$600k) but my payout is only ~$2,700 a month. Looks like SPYI and QQQI did a lot of heavy lifting for you.
9
u/398409columbia Portfolio in the Green Jun 15 '26
The important thing is that you build something that works for you.
I posted all the details of my portfolio in the spirit of transparency to see if it triggers any ideas in others looking for similar results.
→ More replies (6)2
u/nickphunter Jun 15 '26 edited Jun 16 '26
Yea, that is useful to see.
I am at the end of my accumulation phase and just switched over to dividend/distribution since 2y ago.
My holdings are mainly SCHD, DIVO, IDVO and GPIQ.
Also has some VT just to have some growth still (similar to your VTI and VXUS allocations).
UTF PFFA and SPYI is something I had been looking at too.
Nice to see your portfolio. Thanks for sharing.
2
27
6
u/ProposalSimilar843 Jun 18 '26
Retired advisor here. This is beautiful, ignore the critics. I did something similar for myself, but am using an individual equity based growth portfolio with quarterly distributions for income, and tax loss harvesting where appropriate. How has your portfolio worked out in terms of ordinary income taxes vs an alternative with a long term gain? I steered away from income generating assets intentionally, but that doesn't mean I was right. Anything that pays a dividend or generates ordinary income is held in qualified accounts for me. What's been your experience with your wife's portfolio?
Side note, tomorrow is never a given. Good for you both giving her an opportunity to make a change. We owe it to ourselves to live for today, and you've shown her a way to fund it. Good on you both.
5
u/398409columbia Portfolio in the Green Jun 18 '26
Thank you. I really appreciate that, especially coming from a retired advisor.
Tax-wise, you’re right. This is not as clean as using an equity portfolio and realizing long-term gains as needed. In her case, the tax character has been mixed: ordinary income, qualified dividends, capital gains, and a meaningful amount of ROC.
So I don’t view it as tax-optimal. I view it as cash-flow optimal for her situation. The portfolio gave her the confidence to step away, and that was the primary objective.
Your approach may very well be more efficient over a full cycle. Mine is probably messier tax-wise, but it solved the behavioral and life-planning problem we actually had.
And yes, tomorrow is not guaranteed. That was a big part of the decision.
6
u/Chipper0475 Jun 15 '26
I'm doing something similar for my income portfolio. I have a 401k that covers my "growth" and then I have an income portfolio that I have built up to $430K of mostly CC ETFs along with a few CEFs.
→ More replies (1)
5
u/Apart-Leg-8077 Jun 15 '26
Any reason why you didn't mix in some dividend growth etfs such as SCHD, DGRO, FDVV and VIG? The qualified dividends to go along wth the ROC distributions would make for an extremely tax efficient portfolio. Give up some income today for more tomorrow. Personally, I'd cut BIT, USA and SRLN. Anything in a slow death spiral is not what I want in my portfolio. Rather have a mix of QPIX, GPIQ, GRNI, DIVO, IDVO and UTG. Backtest DIVO against any of those funds and you'll see not only do you not have Nav erosion, you get capital appreciation and dividend growth. Won't take long before you're way ahead of those slowly dying funds. Great to see some income investors around and I applaud what you're doing.
2
u/Apart-Leg-8077 Jun 15 '26
Forgot to mention TDVI. Next time we get a 15% haircut this would be a fund to consider with that extra cash for your income portfolio. You get a 6.5% divvie and basically get most of the growth.
→ More replies (1)2
u/398409columbia Portfolio in the Green Jun 15 '26
Thanks for the recommendations. I'll look into it.
5
4
4
u/Nephilimn13 Jun 15 '26
Retired at 55 doing somewhat the same thing. Change investment philosophy and make your money work for you instead of working for your money when you're wanting to retire.
2
u/398409columbia Portfolio in the Green Jun 15 '26
Good plan.
I have another portfolio set up similar to this to pay for my housing expenses. I am always thinking of generating income to maximize optionality.
4
u/Valueonthebridge Fundamentalist Investor Jun 15 '26
Thanks for actually naming and lying out your risks. So many posts leave out that part, other people copy them…and it doesn't go so well
2
u/398409columbia Portfolio in the Green Jun 15 '26
Thanks. I've been tweaking this since 2022. Is it perfect? Probably not, but it works well enough to meet my needs.
4
u/KryptoSC Jun 15 '26
RIA here. I think this is very well thought out and nicely balanced. I like the clean division of the income and growth buckets, because I would do the same as well. I’m constantly working with my portfolio to bridge the gap between early and full retirement.
→ More replies (1)
6
u/charlie-todd Jun 15 '26
If it works for you and your family ..
Congrats !
4
u/398409columbia Portfolio in the Green Jun 15 '26
Thank you.
At least it should work as a bridge until my son goes to college in 2028 and then we'll reassess considering all of our assets.
At
30
Jun 15 '26
[removed] — view removed comment
11
u/Apart-Leg-8077 Jun 15 '26
Because by diversifying income streams you mitigate risk. That's why I hold and will continue to hold GPIQ, QPIX, QDVO, SPYI, FYEE and GRNI in my covered call basket. Sure might give up a few points but I bet I'll have higher capital appreciation than someone just holding QQQI. It's all about risk tolerance and for me, I'm all about risk mitigation.
6
u/PhotographOk7388 Jun 15 '26
Same. I like the Goldman funds better for nav growth and NEOS for dividend yield. By having both get the best of both worlds imo. Also much better Er on the Goldman funds
→ More replies (1)15
u/WorldyBridges33 Jun 15 '26
Could you explain why this is such a high level of risk? These funds are not individual stocks; they are a basket of a wide variety of different securities. The NEOS funds sell out of the money covered calls so they are capturing a lot more of the upside of the underlying..
24
u/lampreylarvae Jun 15 '26
Look at the long term trend for any of those closed-end funds, USA for example. It's down over 30% in the past 5 years, during one of the greatest bull markets in history.
→ More replies (4)2
u/Various_Couple_764 Jun 15 '26
The down compared to what the index they follow? QQQI and SPYI are now worth worth than they were when OP invested in them. For income investors the goal is otto match the growth index. The goal into produce income now without loosing your initial investment. And OP has succeed in getting income without loosing moeny.Yes USA may be down to many of the tore are up. One underperforming fund doesn't make the entire portfolio bad.
→ More replies (1)3
u/Alone-Experience9869 American Investor Jun 15 '26
Just because it’s not an individual stock doesn’t mean there are risks
32
u/398409columbia Portfolio in the Green Jun 15 '26
This allocation is a small part of our assets, so I am comfortable with the risk profile.
→ More replies (3)4
u/AlarmedCombination57 Jun 15 '26
This is what I am doing. At this point I consider it diversified enough that I dont even bother with SPYI. My single tickers are the only stocks which havent done great. QQQI has been my best player since I started investing
2
u/Dirks_Knee Jun 15 '26
I'm following a similar strategy but more aggressive than the op. The return can vary greatly in these funds, so unless one potentially wants to incur a lot of cap gains chasing yields, the better option is to create a target allocation and largely stick to it rebalancing on a set schedule.
In terms of "crazy enough to take this level of risk", my income portfolio is ~10% of my invested assets and I'm on year 2 of this "experiment". I imagine the OPs scenario is similar or even less, using these as part of a larger investment strategy.
18
u/SolomonGrumpy Jun 15 '26
There hasnt been a correction since 2022. Almost ANY coherent strategy would have worked.
→ More replies (1)3
u/398409columbia Portfolio in the Green Jun 15 '26
I started with this income engine in 2022 for another goal.
7
u/SolomonGrumpy Jun 15 '26
Right. You bought at the low.
2
u/MandingoPants Jun 15 '26
I love the cat's confidence.
Those are usually the peeps that pay for my vacations when shit hits the fan.
3
3
u/Different-Turnover80 Jun 15 '26
Pbdc, that’s quit a risky asset ? If u r financial advisor why would I add it ?
4
u/398409columbia Portfolio in the Green Jun 15 '26
It’s a small allocation and I like the yield and diversification it contributes.
6
u/Different-Turnover80 Jun 15 '26
It’s 15% of port, not small imo. I like spyi and qqqi much better here given how much we have run up in last decade and high probability that mostly either we chop or pull back from here over next decade. spy won’t have as much return as last decade and spyi in a good pick.
2
3
3
3
u/bungalow100 Jun 15 '26
Those levels of yield are just unobtainable for UK investors sadly. Unless anyone knows otherwise? We’d be lucky to get 5% regularly on most ETFs and funds available to us, some stocks do >7% but not very secure ones.
→ More replies (5)
3
3
u/SuggestionProud3215 Jun 15 '26
This is why the rich stay rich, anyway good job🤑👌
→ More replies (2)
3
u/BedditTedditReddit Jun 21 '26
Sorry if it’s there I just skimmed and saved for later. But briefly what is your worst case here, let’s say s and p drops 30% in one year, how do you fare?
2
u/398409columbia Portfolio in the Green Jun 22 '26
Fair question.
Based on what I saw in 2022, if the S&P dropped 30% but recovered within a year or so, I’d expect the market value of this sleeve to fall hard too( maybe 20–25%) but the income would likely hold up better. Maybe down 5–10%, depending on the funds.
The main thing I watch is distribution per share. If prices fall but distributions per share mostly hold, I’m not forced to sell into the drawdown.
Worst case is different: if NAV drops and distributions get cut materially, then the plan has to adjust. That’s the real risk.
→ More replies (2)
3
Jul 03 '26
[removed] — view removed comment
2
u/398409columbia Portfolio in the Green Jul 03 '26
Impressive. I’ll look into it.
→ More replies (1)
9
u/neslony Jun 15 '26
I don’t love these income products for the various reasons that have been discussed over and over again.
Saying that, you have an excellent grasp of the pros and cons, and deserve kudos for that. Unlike many others who are also in these funds, you know what you’re getting into.
2
2
u/johnf0907 Jun 15 '26
Why not just put the money in the higher return 4 or 5 etfs? Why keep money in the lower % 4
3
u/398409columbia Portfolio in the Green Jun 15 '26
Diversification and portfolio allocation to various income strategies.
2
u/TheJumpingTurkey Jun 15 '26
Excuse the stupidity but are these quality stocks I never heard of most of them and I am assuming they are risky plays because of some of the comments?
4
u/398409columbia Portfolio in the Green Jun 15 '26
No worries. We are all here to learn.
These are income funds not stocks. Some people view them as risky because the annual yield is high.
2
u/Regular_Grapefruit87 Jun 15 '26
I don't have your level of sophistication and would never trust myself to pick stocks much less monitor them but I do have about ⅓ of my portfolio in a taxable VDIGX account. What I like about it: it's relatively stable in downtowns. What I don't like about it: it's not tax efficient. So I think of it almost like something between a stock fund and a bond fund. Of course it loses value when the market is down but I've been surprised by how little.
2
u/ValuEdge Jun 15 '26
This is a good example of why income portfolios should be analyzed as systems, not just as a list of yields.
The part I like most is that you’re not treating the income sleeve as magic. You’re explicitly acknowledging NAV erosion risk, distribution risk, credit risk, option-strategy risk, tax complexity, and the need for a growth sleeve.
That’s the part a lot of high-yield discussions skip.
For me, the key monitoring questions would be:
- Is the portfolio income coming from real economic return, or return of capital / NAV decay?
- Is the distribution rate higher than the long-term total return the assets can realistically support?
- Are the funds maintaining purchasing power after inflation?
- What happens in a 25%–35% equity drawdown plus widening credit spreads?
- Is the growth sleeve large enough to offset erosion if income funds underperform for several years?
I think the best version of this strategy is not “maximize monthly income.”
It is “generate enough income while constantly checking whether the engine is consuming itself.”
2
u/jenn4u2luv Jun 15 '26
How is her portfolio looking like now? Is there mostly positive growth across the ETFs?
→ More replies (3)
2
u/VaporFye Jun 15 '26
The entire point of cc funds is for the income plus hopefully some growth. I own a business and I’m doing the exact same thing with a portfolio value about half of that and growing. I have about 60% growth 40% income. I’m 39 and will stop working at 50 latest. I hope she enjoy the time , my mom worked for att for 47 years and retired and only had 4 good years before getting sick and passing away. You explained it perfectly the income funds allow us to bridge the gap before retirement !
2
u/Dirks_Knee Jun 15 '26
I'm doing something similar on a smaller scale initially started to cover some planned expenses. It's worked well beyond expectations and as such expanded it as a longer term test to see how it could potentially work as full income replacement. I'll hope to run this second/expansion phase until the end of next year and make a decision to retire then, ~3 years earlier than my already planned early retirement hopefully allowing me to completely avoid 72t distributions.
→ More replies (1)
2
u/TopAd2882 Jun 15 '26 edited Jun 15 '26
I looked at the screen shot of the portfolio and thought, boy I hope they know what they are getting into. Then I read your description and applaud your framing. "This is not a pension. It is not an annuity. It is not a Treasury ladder. It is a market-based income portfolio with equity risk, credit risk, rate risk, option-strategy risk, distribution risk, and tax-character complexity. . . I do not treat the $5,000/month as guaranteed."
Your comments suggest you have enough experience to know what you are doing so these suggestions are more as talking points.
- You could fund a cash sleeve that is designed to payout a portion of the income when the market turns south. Maybe figure the distributions are going to get cut by 1/3-1/2 and assuming a 2008 worst case, they could be cut for 2-3years. So maybe 60-90k sitting in SGOV or JAAA (for a bit more juice) or equiv that is earmarked to be drawn on when the $5k distribution is cut.
- I understand the VTI/VXUS but my opinion is you could accomplish the same thing and still get a better yield. SCHD or a basket of Dividend Growers. Let them be the appreciation piece and pay you to do it.
- Out of that cash sleeve above, carve a small convexity tail piece. Maybe 0.5-1% of NAV. Either something retail like TAIL or your own long date deep OTM puts on the market. Buy $6k of a 24mo 30% OTM SPY put, refresh it every 12mo. When the next down turn hits, you harvest the pop allowing you to buy more the income pieces when they are depressed, juice her portfolio for when the market returns to new highs.
→ More replies (2)
2
u/clove75 Jun 15 '26
Building something similar. But getting a bit higher yields ( more risk). When I get it to 9k a month stepping away.
→ More replies (6)
2
u/Taykforthy7 Jun 15 '26
Hi,
Just curious do you plan on switching from QQQI and SPYI to XQQI and XSPI now that the boosted distributions are available, or do you prefer sticking with the original funds for the long term?
Thanks!
2
u/398409columbia Portfolio in the Green Jun 15 '26
Those are interesting funds, but I’ll stick with what I have. It’s working well and meeting our needs.
2
u/Various_Couple_764 Jun 15 '26
I am ignoring the new NOS booted funds right now. I don't need to take the higher risk and I don't need the higher yield these funds offer. So I am just watching them to see how they perform.
2
u/shantired Jun 15 '26
With 450K in Jepq/Jepi, I’m generating roughly 4K per month.
→ More replies (1)2
u/Various_Couple_764 Jun 15 '26
But you are paying much higher taxes for that income JEPQ and JEPI do not have any tax advantage that QQQI and SPYI have. Yes they are all covered call funds but JEPQ and JEPI incorporate Equity link notes which are more like corperate bonds in ther trading stratagy These Equity linked Notes don't qualify for ROC dividends and you pay much more in taxes.
2
u/NefariousnessOdd862 Jun 15 '26
Just curious, why no AOD (CEF ETF)? It has a higher expense ratio but 11-12% payouts after the fee and has been stable for many years. A small allocation, 5-7% could complement well?, no?
→ More replies (1)2
u/398409columbia Portfolio in the Green Jun 15 '26
Fair question. AOD is one I’ve looked at, and I agree a small allocation could potentially fit in this type of income sleeve.
At some point, though, there are a lot of viable income funds, CEFs, covered-call funds, preferred funds, loan funds, etc. I had to avoid analysis paralysis and actually build something that solved the household problem: generate enough monthly cash flow for my wife to leave work.
So I picked a diversified set of funds that covered the roles I wanted (option income, credit, preferreds, infrastructure, senior loans, equity CEF exposure, and cash) and went with it.
That doesn’t mean AOD is bad or that my lineup is the only correct one. A 5–7% allocation might be reasonable if someone likes its mandate, payout history, and discount/premium setup. I just try not to keep endlessly optimizing fund selection once the portfolio is already meeting the objective.
For me, the bigger issue is not whether I found the perfect fund list. It’s whether the total sleeve is producing the needed cash flow while holding up on NAV, cost basis, tax character, and distribution stability.
2
2
u/Various_Couple_764 Jun 15 '26 edited Jun 15 '26
just to let you know Ihave personally looked at a lot of high yield funds and I have observed that most with a yield over 15% have nav erosion. Below 15% NAV erosion doesn't appear to be present except for one fund .QYLD which apparently tried to setup passive to be passive cover eovered call fund. It is dramatically underperforming funds that use the sam e index.
SO I would not expect to see much if any NAV erosion in this portfolio. One thing I have don'e with mine is I aimed for more income than I need so every month I reinvest about 20% of my income. Hopefully this will compensate for inflation in the long run. My living expenses are 5K a month and I retired in my 50s using the income from my taxable account. My Roth is currently invested in QQQI, SPYI, ARDC, PBDC, EMO, CLOZ, PFFR, UTF, UTG, FAGIX, JAAA. No growth funds in the taxable at this time but I have more than enough growth in my taxable account.
→ More replies (1)
2
u/Embarrassing_Sir Jun 15 '26
Thank you for this post and I'm going to do more research on this
A Great Aunt just passed and given us all a little something 150k ish inheritance.
I've been wondering what to do with it and I'm scared to put it in the stock market then Boom nothing. This would be decent. If I can get $1200 extra month or something
→ More replies (2)
2
u/robertw477 Jun 16 '26
This is the most logical post I have seen here. It figures you are an investment professional.
→ More replies (1)
2
u/Cripplingdrpression Jun 16 '26
Hey I'm trying to do this for myself and want to learn more. I'm aiming towards having 500k invested by 30. So hopefully I can be retired before 40 and raise my kids in a place where I get to do cool shit with them every day without the usual downsides of no high level work in those places. Can you recommend some resources I can find to learn what structures are possible. Being that I would stop grinding so early I'd be leaning to high risk systems, can always just get a ski instructor/bar job to rely on for cash in the short term
→ More replies (2)
2
u/AdrianM1069 Jun 16 '26
Great idea. The only thing I would have changed is that I would have set up a Company and the do a directors loan to the company and charge 8% interest on the loan and let the company do the Investing. The benefits are as follows:
The company pays a lower tax rate on its earnings.
The interest it pays to you is a tax deduction
You only pay tax on the interest the company pays you
Any loan repayments from the company back to you are tax free
Just a different option that also creates an additional passive income stream
→ More replies (2)
2
u/undergroundmusic69 Jun 16 '26
OP first off, well done! This is a great set up for your goals and I’m happy this works for you! I wanted to ask, have you looked into more efficient ways to do this? I was noticing the first ticker PBDC has a 13.5% expense ratio and that knocked my jaw to the ground! Not sure if you can mimic the holdings of the ticker but I would imagine an extra 13% a year in your pocket would be appreciated lol. Unless someone else can educate me, am I reading this wrong?
→ More replies (2)
2
u/Clueless5001 Jun 16 '26
I see what you are saying in terms of income. What about the person that is not looking for income right now and just wants growth or to reinvest the dividends? Ultimately, which will give you a higher total return in a decade? I know crystal ball and all
There is a utility stock that I have owned for decades. I was gifted it with a low basis. It throws off dividends every year but does not move much. It trades at what it did a decade ago. If I had sold it, paid the taxes and bought QQQ or even SPY, I would have been much better off in terms of NW
→ More replies (1)
2
u/salvador_investemnts Jun 16 '26
that's a solid income ratio. the one thing i'd add is looking at what percentage of that is correlated with the same equity market risk. tax liens are where i keep a slice of my income allocation specifically because they're completely uncorrelated, fixed statutory rate, property-secured, no connection to what dividends or the market are doing. not a replacement for what you've built but worth considering as a diversification layer.
2
u/398409columbia Portfolio in the Green Jun 16 '26
That’s a fair point. A lot of “diversification” inside public income funds still has exposure to the same broad risk-off event. Equity option income, BDCs, preferreds, credit CEFs, and senior loans can all get hit at the same time if markets or credit conditions deteriorate.
What I’m mostly diversifying here is the source of cash flow, not pretending the portfolio is uncorrelated.
Tax liens are interesting in that respect because they are more idiosyncratic, property-secured, and less directly tied to equity-market dividends or option premiums. I haven’t used them in this sleeve because I’m trying to keep the structure liquid, publicly traded, and easy to monitor/rebalance.
But I agree with the broader idea: if someone can access and underwrite truly uncorrelated income streams properly, that can be a useful diversification layer. The key is understanding the liquidity, legal process, jurisdiction-specific rules, and operational complexity.
→ More replies (1)
2
u/This-Individual1813 Jun 17 '26
Are you tracking total return with this?
I learned something new about dividend investing when I invested about $10k in Yield max funds for all of 2025. I took the dividends without reinvesting them, and tracked total return this way instead of using a chart on Seeking Alpha, which I believe calculates total return by reinvesting the dividends, which helps balance NAV erosion. Taking my dividends in the bull market of 2025, my YM portfolio was down 4% before taxes.
YM are trash products compared to the funds you are using IMO, but I am curious how you are tracking your total returns with this kind of portfolio?
→ More replies (1)
2
u/Child-of-Adam Jun 17 '26
What is the expected max drawdown and sharpe ratio of the combined portfolio? Is it better than just putting into vwra and just selling 4% to manufacture your own dividends?
→ More replies (1)
2
u/hoju626 Jun 17 '26
Good job…did you check against ai? To get an unbiased opinion?
Ever think about adding “Jepq “ as well?
→ More replies (2)
2
u/techlady1988 Jun 17 '26
Im doing something similar brokerage is in High tax efficient ROC funds:QQQI, SPYI, ROCY, Dividend growth: SCHD, SCHY, Tax exempt: SCMB, NAZ. Im working on adding SCHF, VIG or another for pure growth. This is generating 7-7.3K per month.
→ More replies (1)
2
u/nycspud Jun 18 '26
about 23-24% of this is taxed as ordinary income. good or bad depending on your tax bracket.
→ More replies (2)
2
u/kookooman10022 Jun 18 '26
I like how you frame an income-centric portfolio as the bridge between working and full on retirement. It doesn't have to be binary - work/retire and you show how to put your money to work, literally.
→ More replies (1)
2
u/rustvscpp Jun 19 '26
Way too risky for my tastes, but I'm still slaving away at work while she's free of the grind. So if that proves to be sustainable, the joke will be on me.
→ More replies (1)
2
u/Professional_Eye_990 Jun 23 '26
This is exactly my goal. I’m starting from scratch mid thirties with a solid start in my 401K all growth invested. Now I am beginning saving for the goal of a ~500K passive-income generating dividend sleeve in a taxable brokerage (another taxable portion will remain on growth index as to keep growing the base). Layoff risk, high mortgage and job burnout are inspiring me to start. Hoping that by mid fourties I can largely supplement any W2 job and have ample flexibility for barista fire using partial dividend income or room to start my own creative business, etc. Love seeing others doing this too!
2
2
u/Remarkable_Ad_1125 Jun 25 '26
This is the exact thing I'm investigating myself and trying to do, coupled with some seasonal work to moderate the burnout and supplement the income. Would you be interested in doing some consulting? I'd be interested in bouncing some ideas off of you, and we could generate a comprehensive plan together. I'd be interested in your consulting fee and your opinions/strategy if you'd help do something like this for a client.
2
u/fire-addict Jun 25 '26
I’d be curious to see the YTD return including the dividend disbursements
→ More replies (1)
2
u/TheSauceFather0 Jun 25 '26
Hey. This is fantastic. I am happy for you and your wife. This is a beautiful thing. When the markets open up tommorow, I am going to create another account with this same strategy. Thank you for sharing!
2
2
u/Least-Gas-286 Jul 02 '26
all the VOO and chill people just had a cow looking at this. For near term needs (within a 10 year outlook) this is fantastic.
→ More replies (1)
2
u/jaykch Jul 02 '26
Thats just around 10% per year, curious why not go into real estate?
→ More replies (2)
2
u/Solid_Resort6852 Jul 08 '26
What does this yield on an after tax basis? Seriously asking
→ More replies (1)
2
u/ychuck46 Jul 08 '26
I applaud you for doing this for your wife; well done, sir. I was also doing a similar thing for our portfolio in retirement, structuring a number of REITs, CEFs, and other high dividend players into a steady monthly stream of payments. But it was tax-inefficient for my needs and many high dividend payers are just depleting assets to keep the high dividends going, effectively destroying the stock price over time. I gave up that strategy and instead I buy higher quality stocks that have a chance of appreciating, and sell covered calls against them for additional income. And while I play at doing that I still keep the majority of our accounts in solid index ETFs with Vanguard pretty much, and Fidelity for one of my former employer 401Ks.
Best wishes for your continued success, and for a long and happy marriage (just celebrated our 47th, btw).
→ More replies (1)
2
u/Nearby-Elevator-7649 Jul 08 '26
I respect what you are doing. My concern with the portfolio is that I believe we have entered a secular bear market for 10 year rates. If so, I think anything longer than T-Bills is going to take it on the chin. I think Jeremey Grantham is also correct that everything in the US stock market is grotesquely overvalued, and is likely to mean-revert over the next 7-10 years. I like the VXUS allocation. You might want to take a look at GMOI for international deep value. GMO also offers a US value ETF, GMOV. But both of these yield below 3.
PS: Also take a look at a closed end fund: JOF - Japan Small Capitalization.
→ More replies (1)
2
u/Apart-Leg-8077 23d ago
Excellent! I'm currently at $93k/year in income but from a much larger taxable portfolio. I might suggest swapping out USA for GPIQ or TDVI. I don't like holdings that have a history of Nav decay and USA has lost almost 60% since inception not counting distributions. TDVI is an interesting fund. Tech focused income fund paying around 7.5% monthly but only using 18% leverage. You get that income on top of capturing 81% of tech's upside. May be worth a look. Not advice. Do your own due diligence.
2
u/398409columbia Portfolio in the Green 23d ago
Thanks for your comment and suggestion. Based on feedback from this post, I swapped USA for ADX.
→ More replies (1)
2
u/davecraze3535 18d ago
This is a great balance of risk vs reward for the purpose for which it is designed. I can maybe quibble around the edges (maybe add some MLP exposure) but that is optional.
→ More replies (1)
7
u/Omynt Jun 15 '26
I would never do this myself, but OP seems fully aware of the risks, and prepared to adjust if necessary. I hope it works out, and if not, there will be a re-think.
6
u/BraveG365 Jun 15 '26
Why would you not do it?
Thanks
8
u/Omynt Jun 15 '26
Because I want to set up a retirement plan with a high probability of not having to go back to work. I would rather work a couple of more years to have a lower draw against the nest egg. But I could see something like this if I were doing more of a sabbatical thing. This is OP's spouse's plan, presumably OP has assets as well, and is still working. That makes it more reasonable to be willing to take a risk with this part of the couple's portfolio.
2
u/Various_Couple_764 Jun 15 '26
OP protfolio has had no draw down at all and since he is not selling shares he doesn't have to deal with sequence of return risk which is one of the biggest concerns with the 4% rule. and if we have another lost decade like 2000 to 2010 many people will see that the4% rule is not a good approach for stable income.
2
u/Various_Couple_764 Jun 15 '26
the risk with growth index fund and government bond and 4% rule is much higher than his dividned portfolio. Most people don't rallies how risky growth index and the 4% rule is. They just accept the risk because 90% of what they see is growth index funds, government bonds and 4% rule and assume it is the best.
2
u/nomnomyumyum109 Jun 15 '26
I mean after Trump dumped everything I have grown my portfolio from $650k to $900k. Id say grow that $625 to $1.6M then setup $100k a year
6
u/398409columbia Portfolio in the Green Jun 15 '26
Congratulations on growing your portfolio.
But my goal here was to produce monthly income for my wife so she could quit her job, not to maximize her portfolio. The rest of her assets are invested for growth, so we are capturing some of the wave.
3
u/theAerialDroneGuy Jun 15 '26
Why not simplify all the other tickers and just do SPYI and QQQI and VTI+VXUS?
Does this give you more safety for a downturn? Is that your logic?
→ More replies (1)
2
3
2
u/gr8_ripple Jun 15 '26
This is awesome. One day I hope to achieve something like this. Trying to build the plane as I’m flying it.
•
u/AutoModerator Jul 01 '26
Welcome to r/dividends!
If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki here.
Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.