Roaming Returns

026 - How To Use Ultra High Yield ETFs To Seed Your Retirement Portfolio

January 02, 2024 Tim & Carmela Episode 26
Roaming Returns
026 - How To Use Ultra High Yield ETFs To Seed Your Retirement Portfolio
Show Notes Transcript

YieldMax™ ETFs sound too good to be true and they actually are if you view them as a regular stock investment. But if you treat them as a vehicle you're purchasing to generate income, they become a useful tool.

You need to use a different investing strategy with these ETFs because of the higher risk for loss of value of the base asset. That's why we track our payouts until we get our initial investment back before we even consider turning on the DRIP. 

These ETFs still aren't as high risk as they seem. They have the majority of their funds in treasuries and only a small percent of their money is used to trade options. The options proceeds are how they generate their high monthly payouts. 

YieldMax™ ETFs are a great way to make money from popular stocks that don't pay dividends. We think everyone should hold some of these in their portfolio, but only up to 5% of your total investments. 

When you use these funds to generate extra income to funnel into other quality assets, you can really make it grow fast. 

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**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions.

In today's episode, we're going to talk about u max ETFs. These funds pay out between three or 4% a month using options trading. We all know about high yield high risk, which is true, but there's definitely a strategy you can use with these things to help really, really increase the amount of money that you can put into your portfolio and how fast you can grow it. So tune in and check this out.
Or I think we're good. We're gonna we're gonna get back feel like crap, so you have to do a lot of talk.
Hey, guys, so I was super super super sick when we posted the last one. That's why I didn't do the intro. I barely can move for two days. It was it was really bad. And Tim has kind of left me to go to the gym
which is the gym is my last right because it wasn't be sick for like two weeks once I caught the shit
I can give it a crap like you're gonna be just as bad as me you're gonna be just as bad as it was
going to be that's why I was going to the gym cuz I knew I wouldn't have any time for like two weeks. Fun. Good. Now he's dying. Absolutely. I was good at like it was I'm not saying good, but I was better. But then I woke up last night and that just came back like, twice as hard. Like the Black Crowes call song twice as hard. I have no idea what you're talking about. No, the black cross off a slap in the face. Nope.
I just made up soup if you can call it soup. It was paste was a gelatinous blob of noodles because he had to add extra and then he did finish it guessing or like
my noodles. Certain Way no bra no bras, so we're good. So I think we got COVID for New Year. So Mary New Years Do you guys have to be better than ours?
I have a Christmas no one cares about that. Alright, so we're going to try to do the yield Max thing like we promised. I'm not hopefully you can understand him. The
yield Max. The first thing I'd mentioned with you, Max is they are they're like inherently risky. Or riskier than normal RBTs normal investments because you are relying on one specific company. Like if you do that the Tesla yield Max is going to be putting calls on Tesla. So there's no other like they're not going to be able to balance it out with anything other than the Tesla stuff. So is riskier,
but they do book calls and puts correct
they do but like there's no guarantee like so again, I wouldn't put more than like 5% of my total portfolio into this. You could do whatever combination you want. There's 18 of them. You could put a little bit in all 18 I wouldn't do that but you can do that if you want. It's up to you. I would look through the list. They have a Tesla one they have a coin base one they haven't done video one. They haven't. Oh arc one I guess that's the I don't know what that is the Kathy would think oh Arkansas only one? No, no, it's not the only one that ends in y apple one. We have Amazon one they have a AMD which is you know the microchip one, Google one the square one, Microsoft, Netflix, Facebook, Exxon Mobil, the AI the ca c three AI one, which I just invest in. That was brand new. I
think it doesn't even have a yield. Disney
one. The Pay Pal ones the JP Morgan one and the Maderna one I wouldn't put up with touching the Derawan with a type of books and journals the devil but
we'd like to stay away from a lot of the health stocks anyway. Because they're so fickle with the way that they move price wise.
So you have like there's two trains of thoughts on this like because they're inherently risky. We're you're not going to be putting a lot of money to them. You could pile most of your money into the ones that yield the most. I mean, that's an option I have right now. I think Coinbase and Tesla and PayPal are the ones that yield the most or you could put like half your money into the risky Tesla one because it yields like 60% and then put like the other half kind of more like more common sense conservative ones like the AI yy which is a C three AI one which is going to be worth a lot in 2024 Because AI and then probably the PayPal or the JP Morgan or the square one I don't know some some one of them that uses technology
but I don't think I think we've talked about this. These are not like ones you're investing in from a normal perspective or you're looking for price appreciation, though. It seems like some of them are gonna go up like Kony has definitely gone up. Well, I think these all started out at 20 $20 a share. This one's up to 30 now, and that seems pretty high considering a lot of the other ones will go up and then they'll redirect back to around that $20 range.
So what I did with the Coinbase one is I got my $1,000 out and then I just left everything else in there. So now we decide all profits so I can like I can zoom in and dividend reinvested reinvested all back in because I don't care and because
these are brand new, like we don't really know what's gonna happen from a price valuation standpoint from a dividend consistency standpoint and from longevity in general standpoint. So
those are why my recommendation would be to do kinda like what I'm doing like I'm not the most gifted trader but like I am pretty good at risk analysis like so if you put $5,000 into whatever you're doing with this will make sure you don't turn the dividend reinvest on unless it's severely undervalued until you recoup your $5,000 initial investment via when you buy severely undervalued is the Tesla ones that like $12 It should be a 20 to our show is severely undervalued. Now you have the option that you can turn the dividend reinvestment back on or on for the Tesla one or you can leave it off because it does yield the most it gives you the most money that's entirely up to you. But what I do is I every month I'll go through and I'll look at like the week we hold the Tesla one the Coinbase one, the Amazon one, the Microsoft one, the Exxon Mobil one the AI why why one the Pay Pal one and the JP Morgan one and like one of three, one of three different counts. So I have an idea like where they should be like right now we have the video one two, I'm sorry that the video is overpriced right now it's at $23 around there and it normally goes between 20 and 21. So it's overpriced. I would turn the drip off now but in the videos on the when it comes out on the seventh, they'll pay you on the 12th of January I let that go into cash and I reinvested other stuff whereas the Exxon Mobil one's overpriced right now it's nowhere it's normally between it's undervalued because it should be at $20 That's what it wasn't it came out but it's it's overvalued because it's been trading between like 15 and 16 the entire time so I would probably turn the drip off on the Exxon Mobil one and you collect cash on that because it until it settles back down to where it's been. Once you trade them for a few months you understand like where their sweet spots and then you can actually change the drip on and off accordingly. My objective is to get the initial investment out of each of them before I before they go kaput. Yeah,
we don't know how long these things are going to last or if they're going to stay indefinitely. Normally what happens I think we've said this before, is that do things and things of high dividend type stuff don't last indefinitely. There's usually like the incentive of high yield or a good price going into it for a short term.
Stay with these ones because Tesla's been around for 14 months now and it's been high the entire time. So there's a possibility that dividends because too
high. Well see, that's what we were saying we're not sure but normal like normal things will fall away. They hype things up to get a lot of people in and then once they become saturated, they kind of decrease in payout some
of these within like the ninja video one started in, I think, October, August of last year, and it started out paying a lot. And then it went down a little bit each month and like settled, it was settled at like 45 to 50 cents per share.
Well, that's what we're saying. These don't have a really long track record. So it's kind of like the wild west right now with them. But if you understand the concept of how they're trading and making the money to then pay out, I could see how these could potentially have long term consistency. Because the calls and the puts like there are people that actually just trade options as a daily like routine to make money in general. So and if you know anything about like really good annuities that's actually how they take your money and guarantee you that fixed income going forward. They do some kind of like call options trading thing to keep you consistently so these are similar thing. It's interesting that they only focus on each one of them focuses on one specific stock, which to be honest, I think would be really good because if you're doing calls and puts on a specific stock, you're becoming extremely expert at the movements, the maneuverability, the volume, all that other stuff. I would think that would give the manager of the fund a lot of insight on having good returns. One prime example
like we got the Tesla one in August of 2023 for $14.28 and it's currently it's at its highest it's been since we got in at $12.12 So we're down what $2.30 But because of the yield is so much and I turned the drip off, we're actually up over on the because we've got $2.35 per share that we bought. So we're actually up almost 2% on an account that we've lost $2 on so the dividends and the yield make it possible if you just collected cash you can recoup the loss because most I think the video went up a little bit. Amazon went up a little bit county went up and bought like I can't believe how much the county the Coinbase one went up. It was like trade at 3008 on Friday.
Well I don't know if that's going to continue the pattern because 2020 fours with this whole Bitcoin having we don't really know exactly what's going to happen with so Kony kind of is like a Rogue One. And potentially the AI one could do something similar. I don't know. Because that's another What do you say macro macro trend?
I don't remember did I say that? That sounds like something I would say genius. Genius. Genius. Well, I your objective with these is to use them as paychecks. We mentioned that I don't know if it was last episode. I like
the goal of these isn't really asset acquisition.
I guess it is asset but it can be like oh, I have this hybrid approach. Like everything else I do with investing or the hybrid approach. Like I said, I turned the drip on and off according to the share price. So some months I've actually accruing more shares because the price is good for me to get good with the trade winds for me to get more shares other months. It's overpriced and I actually get cash. So it's obvious as a paycheck that month. The only one that I have turned off completely is the Tesla one because it yields the most and I'm getting like 200 to $300 a month in that one on $5,000 invested. Even
though turning it on the trip one would require me like accumulate a lot faster. We only want so much percent in these things. Right?
Yeah, we've we've invested $8,905 Total on that. And we've so far crude 1363 1300 Yeah. And since September, all we've had in the video on Tesla since August, and we've got seven shares in the video throughout the month when the video is good. Like I said between 2021 and 22. Like if it's more than 22 I turned the drip off and I take cash if it's under 22 I'll turn the drip on and take shares we've got almost seven shares in the bay that way. Now, the Microsoft and Amazon ones I've left the drip on the entire time because they only yield like not very much like five I think five or 8% per month or something like that. That's not a lot compared to the other ones. But we are getting more shares we're getting we've got three shares of Microsoft and five almost five shares Amazon. Now I do feel kind of foolish selling off the Coinbase one when I did but whatever actually
I have warned him about that as a potential like recur because it's one of those things we always struggle with knowing when to take profits off the top because there's always like the momentum investors think you should stay in or invest actually start running and follow those momentum swings. But the contrarian so
I saw that 2830 or something like that. And it's about 30 Okay, so I mean, I didn't lose a lot but I lost enough to be annoying, but they're all like
but hadn't gone down. It would have been a win for sure
that flicks one would be one I pick up and fly because it's under 20 and that's pretty good, but has a pretty good yield on that one. Exxon Mobil one I would wait to pick up but I pick it up at some point. The AI why why when I would definitely pick up because it's under 20. And I expect that would it be around 30 By the end of 2024 or one I don't follow Cathy wood stuff. So I don't know. My guests trading the 1450 So I guess that would be one to pick up. The Tesla ones at $12. I would probably wait for Kathy what she's like Warren Buffett but for females like they get weird about it. Okay. He's like one of them. She invest in like tech tech stuff and everyone loves her. They suck at the Tesla one I would wait till the end of January to see what the hell's going on with that one before I got the word for a sock a lot of money into it. I mean, you could start a career in a position now but I wouldn't put all my money into it right like what I what I would make a idea of what I want to put into it but I will hold off on that one. Like I said it normally trades between 11 and 1160. And it now is at 1212 It could be breaking out and going back up to like 16 or it could be just over like over over what is that over overbought and that's about to be sold. I don't know. So I will hold off on that one for a couple of weeks. The Apple ones under 20. So I would definitely pick up the Apple shares because that was it's normally like 2075 So that was like a full dollar underpriced and the JP Morgan when I probably picked up two because the paper one they're both trading at about 20 And I think the financial markets are going to be pretty good 2024 Even with interest rates going down I think because all hell is gonna break loose in the financial market because it cryptocurrency and crypto ETFs and whatever. So that's my peg. That's why we bought the device. We actually were in both of those. I put it in her dad her dad's retirement account. So we actually have a full like her dad's retirement account is all just your bank's ATM but
that gave us like $6,500 Way back in the day to manage for his like retirement account and then forgot about it like tech should the bed this is before we even had any idea of what the heck was going on with that like half the value
forget about I like set it I put it in this like dividend paying stocks.
Did you actually have them in dividend paying stocks I put those back before we were actually in
the reason why I hate TD Ameritrade like when we ever do when we ever do the podcast about which which brokerage account brokers I had to reinvest the stuff and when I went in there after like a 10 months of not even going in there cuz I lost the password went in there and it was accruing to cash because I turned off my drip because I didn't like
check something off. Yeah, strike strike for TD Ameritrade
garbage, like the basketball and Schwab like if you can try to convince me like Schwab the best one.
And I think we've had I think we've actually had every single purpose. I've never had fidelity haven't had fidelity but we've had pretty much every other one that goes garbage.
TD Ameritrade garbage there Thinkorswim platform is pretty good but a trade a trade is garbage. What
was the other one we had? Crap
with Schwab like when you type in trade zero, something like that. When you type in a ticker is Schwab and literally the first thing you'll see is what sector it's and so you click on that sector and it'll tell you the price like the P E ratio of what you're looking at compared to its do its peers. So you've knocked out that part of the research like within five seconds of opening up this ticker. How long does it take to do otherwise it takes anywhere between one minute and like seven minutes to pay and we're like you have to like locate it.
That's a lot of time savings.
And then like what do you do then it tells you where they're like it has a year like either you can select between one week and like five years like any other chart so that's not anything different but then on the right it has like a listing of all their different experts like how they view and it has the short sale like the short interest in the stock and like it's I actually really liked it. Schwab not from a trade. E trade was the other one trade out of the accessibility type thing because the trading sometimes is but like from a research point of view Schwab is the best one that I use to research like I will like when I look up stocks for FNA van life or her dad or her mom or us or anyone else that like writes me questions I always research it as well because it's swab is the easiest one to research with. It's actually even easier than like tip Mark Tip Tip ranks Yahoo Finance, Seeking Alpha Seeking Alpha, it's way better now Seeking Alpha they always try to sign up for shit. So like to me sure Charles Schwab is the best one to research with that when we do our bond episode when I feel better, like that's where I'm going to be doing like the bond thing and like this, the agency and the municipalities bond and stuff like that because it all there's like literally that has it broke down perfectly for you. We're hoping to do that one and
find preferred shares in there too, right?
Yes, because like if you type in some and you scroll down to the bottom, there's a preferred share for to the list of preferred shares like other ones don't do that. Hoping to do the bond episode at some point this week, so it'll be out at some point this week. Yeah,
we want to make sure you guys don't fall prey to the whole buy bonds bond pump thing that's happening right now.
If you look at bonds, if you go in and look at any bond that has a b, b, b minus or above rating, they're all pretty evenly balanced and evenly priced. Which means you will not You're not gonna get any price appreciation. You're just buying them for the yield and then the yield is not that great. So what you need to look at is not that you need to look at the agencies and the municipalities and treasuries and all that garbage, but we'll we'll get into that in the next episode. This is about yo Maxim. Yo Max actually is quite a while I when I was typing this in, because I did my end of the end of the year analysis I was pleasantly surprised to see that we're up in all of them well as my pull up in this wall but it says Tesla we're down like $100
Oh talking about it yes to Schwab does that thing where they do that rolling cost basis which is an accurate
for crap. But I haven't like reinvested in exact search.
I have no idea what well that's what I mean, like, I don't know where they're getting their numbers.
But see, like, like here it looks it looks bad because it says we we invested 4898 And we only have 40 ones 57. But if you take the 1428 minus the 235 that gives you 1211 songs, so we're actually up on a cost basis analysis for up 2% Even though down at money because of the dividends that we've got.
Again, I don't know how the heck they do their math.
Solid 800 $806 and do it and what four months September October November yeah four months we have 800 So we're gonna 200 plus dollars a month. They're lucrative if you know like if you don't do what a majority of people do. How do I phrases that sound like an asshole
I love what you have to say that all the time. One
of the human conditions is when things are going good. They get stupid, foolish and arrogant. So I could say you invest in a Tesla. I've seen it on Tik Tok. I've seen it on Instagram. They're putting like $20,000 into the Tesla yo Max. That's stupid. Don't do that. That's becoming arrogant. That's when like that's the type of shit that people do. In cryptocurrency that bites him in the ass. Like you still want to have a risk of risk assessment and some some sort of plan in place. Granted that Tesla does yield like 60%
I mean, it's one thing if those people put in a fraction of the portfolio to test the waters and then they get more confidence and then they invest that amount of money and that's only 1% of their total portfolio. That's a different story. But if it's all your money, that's
literally all back their whole portfolio is Tesla human.
Oh, you know that for a fact? Well, that's yeah, that's even more sketchy that they're telling people to do that. That's insane. That's like Enron.
And when I'm saying like that, like Don't be a fool like that. But that happens a lot and I mentioned that in emails and when times are good people get foolish they become more lacs with their money they become more of the riskier and that's the time when you should actually be doing the opposite. You should be buttoning it up trying to conserve your money, like this year, like so what I'm trying to figure out this year is how to actually turn my drip off on some of our investments because they're up too much. And then what the hell am I going to do with them because I don't want them to reinvest at such a high price. Yeah. So I don't know how to put them into the bullet shares or put them in some I don't know yet. I have to figure that out. Because I don't want to reinvest whenever it's at the top of two year, like a two year period where it's went up like 60% Yeah. PQ for example. JD PQ is up like 47% this year. It could go up in 2024. That's possible, but like at the same time, I don't want to be paying 2024 At the peak, to reinvest. So I'm going to turn it off and see what happens.
So we're going to be doing some experimenting with that whole thing, because we're trying to incorporate our contrarian and value say
with Trinity capital, like Trinity capital went up like 50% Last year, like as a possibility that could go up more there is but probability wise, like it's going to pull back so I'm going to turn the drip off, and then I'm going to sell profits and then whenever that drops back down, I'll probably put the same amount of money back into trading capital.
And the reason why I think that's so important is I think I've read something in a book on investing that was talking about if you invested if you weren't invested your money during the 2028 pullback, like if you put your money right before she doesn't eat right before that. It took about 25 years. I think they said for you to actually get back to break even had you been invested. Two years. Maybe that was his depression.
How about basic math? It's 24 and in 2008, that was 16 years.
How many years did it take to get back? I
think it was 2012 I think it took three years. I think the great depression that took like if you put your money in like 1929 It took us on the 1950s to get back to the same price it was prior to the Great Depression. Maybe that
was the one that we're talking about. This price crash that entire thing.
It's funnier when you're the you don't know how to do basic math.
No, I have no time for section well no it's
that's why that's why people do that cost bow that dollar cost analysis crap which I don't believe in that. I think it's stupid. I think if you see like, if you're an icon, for example, it's going down and going down and going down. That's different to me. I mean, it's the same concept of dollar cost analysis like you put it a little bit when it's 18. And you put it a little bit with 17. That way your
cost but the cost basis hollered US dollar cost averaging, but when it's going up, I think it's stupid to do that.
I agree. Well, they even say and dollar cost averaging, you lose if it's going up, and you win if it's going down. But you stay consistent with it. It averages out over time. I don't want to average out over time. I know but that's what they say that averages out over time. The problem with that observation
you be like oh, it's gonna it's up this month. I'm not going to have my drip on.
Hello. Well, they're not talking about drip, they're talking about investing. I understand that.
It's the same concept. If you're bulking up like what I said, if you pay attention to what you own, and you know what it's worth, then you shouldn't be able to say okay, I'm not putting any money into that because it's not a good investment right
now. Yeah. And that's that's exactly why we have a an estimated value of something because we know when it's overpriced, so we don't put money into something we put it in, say bullet shares.
That's foolish to me. It's just a waste of your time and money. You're not making as much as you could be making. Like a good one that's like with you that you need somewhere to put your money in. 2024 put into utilities. There you go. I solved all the world's problems in 2024. And where are they? Now you make more on utilities? Well, no, you make more worthy, simple somewhat. Some utilities are worth more than 7%. Like we'd like for example, her mom's account I just started up. A position in ne ne it only pays like 4% but it's raised its dividend for like 30 Some years and it's like it got just destroyed in 2023 and went down by like 60%. Same reason that we bought any P which is the renewable portion of any, we got that in our portfolio, and we were up like 40% in it with only one dividend paid. Out. So like, like if you need to
reduce they were up 40% With one dividend payout. Jesus,
if you needed one place to put your money, put it in utilities utilities got just absolutely asked for it for the last two years. There we go. We solve all the problems. Are there any other questions about this?
Yeah, I wanted to talk about what yield Max really is. So if you're looking for a way to help you invest money without actually taking money out of your paycheck. If you take money and you invest in an asset an asset is something that is generating additional money for you. These aren't like normal stocks where they're increasing in value. They're like cash generators. And they're exponential cash generators that help you increase your dividend payouts. They're
very like three between 3.12 and four point 4.76 per month. Like normally whenever you have a yield, it's per year, these are actually per month. So between three and four and a half percent they fluctuate
per month, but they definitely pay per month, which is nice. And we were talking about the strategy. So
what they do is they actually will hold like treasuries as the bulk of their thing and then only have like 10 to 10 to 20% of what they have will be a put and a call on that flex if you look at the Tesla one for example, they're gonna have a put on the Tesla and they're gonna have a call on the Tesla out of the money.
Now I don't know how exactly that breaks down. I'm not a an options expert. I think they have open positions open both ways.
It's like it doesn't make sense. That's what
I mean. I don't exactly know how they profit but maybe they put more on the one they think it's gonna go the direction it pans out in the end. Right
now so we can look at is exactly what they're holding. So then we could tell them this exact what they're holding
distribution rate, 60% 60 cents
per share. 58 per share. 58 per share if that the a per share at three per share dollar 780. So they pay a shutdown. Some of them they'll pay as much as the test one, but I like the decimal because I do believe it's undervalued, but it's not undervalued compared to where it's been historically, it's been like I said,
I mean Tesla is a leading tech stock. And it makes sense why this one's probably their bread and butter.
Alright, so their holdings Here we go. They have a 614 24 Treasury for 45%. And they have an 11 of 2024 Treasury for 53. So like that right there is 98% 98% of their holdings and Tesla is the United States treasuries. So they make their money off of the call option on 124. And the put on 124. They have one they have a 250 for the put and they have it at 262 50 for the call that's what that's how they make their money. That's it. They literally have a point and a call outside of the money.
Absolutely crazy that it's only like 1%
If you look at all of them, they have that like it sometimes will deviate like not all of them have the 98% in treasuries looks like the lowest I've seen like 91 but the majority of the majority of their money is tied up in Treasury, they just use the code they put in the call to make income.
And that's why income considering tussles like the biggest payout that's that is well that's
why I'm saying I'm not too concerned about this ever going to zero. But what I am concerned about is the dividend staying at like 3% per month. I don't think that's
why that's why I would be really curious to see what the heck happened through a bull market.
Well, I think they actually lost money to coin the coin base.
And we're up which is exciting.
Because they'd like to say that money should be out of the money out of the money in the Coinbase and Coinbase. Shut up like whenever like something without easier came out. Like the coin based ones ridiculous. A big 121 1082 46 That's for sure.
Holy crap. The elevens only been out for three months.
You can make a lot of money in this then I think what happened that's why I say don't get rich, stupid, don't get retarded like people do whatever they're making a lot of money with. They seem to be eating money. Because when he do that, that's how like that's why the house always went. He started getting fooled.
So my question is those are really really big payouts for Coinbase. Because this has only been out for three months, you would expect that to come down a little bit in their payouts. Right to like level out.
I guess what I got out of it. Yeah. Okay. I see the Coinbase when they had to change it up because like they were getting raped. They had to put in 165, a Call of 200 and they did a Call of 205 and they do a put a call up to 10 Call 200 They have a bunch of calls so they get like they only have one put and they got just destroyed the put so and only like a always only 87% of theirs in treasury bills like I would get out of Coinbase actually I wouldn't get into it.

It’s up 31% In the month we need to reassess our position. That's all changed.
It's all cash. Don't care what it does, just keep it.
Alright. Well, that's the thing these are if you can do some side money or like stop drinking, don't know your daily coffee for a week or two and take the extra money, water, takes the extra money, put it into these things and just consider them an asset. That's going to generate cash for you to help you then invest in the other stocks that we always talk about that are really really good long term.
Next month.
I know but this is the yo Max episode, we should at least reiterate that so if people are coming to look with them specifically for this thing here,
what I do is I literally take the proceeds from the Tesla and the other ones I turned the drip off for the month and I put it back into the my dividend stocks, whether that be like any P whether that be a GE Qi whether that be whichever ones are undervalued, we just put a star to create a creative position in Main Street capital, like whatever one it might be. It doesn't like that's what I use the Tesla money for. So like that's why I say it's a paycheck. It's live instead of me taking money from my paycheck, putting it into Schwab, I'm actually taking an investment in Schwab, that's kind of treading water because I knew like where it should be trading the Tesla like the Tesla ones and what's the one that generates most of the income? I know it should be trading between like 1115 $12 I know where it's going to trade because that's what it's been doing for like six months. So I'm actually taking that as a paycheck and I put it into stocks. So I'm actually putting 200 to $300 into stocks every month that I don't actually have to take out of my pocket. That's what I mean when I say I use it as a paycheck.
And then if you continue to put your paychecks and you're like doubling if not, you know,
for your paycheck and or you can just buy more gearboxes,
but it's icing on the cake to that was
pretty pretty good. I think it's only been one month so I'd like to give it a couple months.
So we were discussing the whole idea of coming up with a strategy for people who don't have a ton of money to invest in general and we were thinking that like taking the little bit of money they have or a portion of the little bit of money they have and putting it into yield backs to then help buff up bump up the amount of money that they're able to contribute kind of like a snowball effect.
What's gonna happen with them, it's ultimately gonna get impatient. I don't think it worked. Because if you say you put $1,000 into Tesla and it's generating, I don't know, we'll say $140 a month, you're probably going to turn the drip on. You're gonna keep reinvesting that. So it's gonna take probably two years at the price to get up to the amount that you feel comfortable with. So I don't know if they have the patience for that. Instead of taking the $100 from Tesla and starting to put it into other stuff and just letting Tesla would do it. It does.
I said that we've been tinkered around with the idea of recommending that as a thing, but yes, that you're right. You're gonna have the people that get impatient and I know I probably fall prey to that, too. So you could do that. But if you do it responsibly, you can then have that help you raise more money to put into the other investments.
I think everybody should have a yo Max in their portfolio for their retirement for that reason for an income generator that they use as a paycheck. Like I feel comfortable saying that like if you have $100,000 portfolio, I think you should have like 2500 to 5000 in a couple of deals Max is generating you income every month to put back into your other dividend stocks. Like if you get into say for example, you get into the Tesla one at $12 It's like the highest it's been like six months you get $12 and it goes down to zero probability wise as you're going to pay back what you invest in the $12 a share of Tesla before it goes to zero. So you're going to make out you're going to actually have 1000 extra dollars in other investments.
If you get one of the high high earner ones. I think it takes about three years to get your initial investment back to three.
I don't know I can't really do math that well right now.
Okay, you're up to par with my normal math skills. I got lazy when I got my engineering degree. I did calculators,
take four times three. So we're making 2400 So it's going to take two years to repair the the Tesla one,
but that's what I'm saying. So if you're getting your initial back, that's two years return on investment. 100% return on investment. That's insane. Most businesses aren't even in the green until three years.
Three would be six months that'd be 700. So that would be like little less than three years. The Microsoft was gonna take a long time.
But if you own the ones that you pay a lot, that'll pick up the slack for the ones that are paying less right
we'll take like four years and that will take like five years. Yeah, but like I'm not worried about the Microsoft one or the Amazon one ever going. Yeah.
We had talked about getting your initial investments back so that you're not really worried
or the opposite. I think you should always act I think every investment should the goal should be to get your initial investment back. Yeah.
So if you can come up with the extra cash or allocate part of what you have in these are thinking and knowing they're just going to become an income generator, or an asset or a vehicle, not really looking for the valuation increases.
I do the same thing with the ETS. Yeah, I use them as cash. And then
you take the cash out of them. And what we're doing is we're keeping a spreadsheet and keeping track of that cash that we're getting paid out. So we know exactly when we're paid back and everything so that it's just house money at that point, or it's just this pure income at that point. It's kind of like getting a retirement pension, you're setting up a retirement pension or royalty check.
We're up 6% of your soI or up 2% Even though we'd like the price is way under where we bought it for you. So I've got so much back in dividends. So like I do, like I'm very meticulous when it comes to risk assessment whenever it comes to the risky stuff. And I think
now even though it sounds like we're completely like, risk psykers psykers psykers reciters like risks like, like, I
think every portfolio needs something that's a bit risky, but as long as you do it responsibly, what's the word? mitigate risk? Like I call it's risky. To be honest, it is risky, but we've made $21 in dividends over the last three years. We're still down a shit ton of money but I'm not really worried but like dude, like that's what I've said like if you look at my column that's that's a shit show. We went over that one but that's a shit show. I'm not sure if we'll ever get better. Look at that.
paid off tip stop looking at other crap in the
stock or while these almost paid off.
All right, so your back says we definitely recommend them.
Absolutely. I think everybody should have at least one. But I would make sure it's
not anywhere near your whole portfolio.
I would take one of the harpin ones one of the lower paying ones. I'd like I would pick up at least two that makes sense. So
why higher pay wanna wire a little bit we know a high obviously but why lower paying one
lower paying when like the lowest paying one is the square one 3.12 A month so you literally could just turn the drip on. If you bought say you put 60% into your high paying one which was will say take it out just because it right here. You're getting 60% and this one he put 40% in this one you could take this money and put it into this one had to have this drip turned on and this will actually be growing faster because
you have to 10 likes to call it the reverse credit card strategy. And
then once you get these up to a position that you're comfortable with and I pick up another one like I liked a nd y ones pretty low but that's like 3.64 And then you have this one to have the drip on that have these go into cash and then just pay like you couldn't dare you get 18 of these with the money that you spent on just getting to them. If you have patience and so
you're saying you could start out with with one that pays a lot and then funnel that
I'm gonna put $1,000 Live puts 600 to 750 into one and then I put the other 250 or 400 250 to 400 and the other one and I would turn the drip on the lower one. And I'd use the cash from this one to get this one. So this one's growing with its own drip and this one's taking the cash from that and put it into that. And once this once this gets up to a position that I like then obviously you turn the drip off on this one then you can raise this one up to whatever position you want to be in by putting the drip on and then put into it the same thing once you get them both to the position that you like. Then you turn the drip off of both of them and you start up a new one and use the cash from these two to fund the next one. Like it's you literally don't even have to put any extra money and if you just have patience and that is the biggest fault of almost every investor is they don't have patience. If you took $1,000 I'm sure within like five years you could have $1,000 in like 10 of these.
Actually, I really liked that strategy. That's something I think we should test out.
Well, we're gonna test out the dad.
I know I'm really excited about that. So we have a test account. What was that up to 6500 We started with the drop down half that it was came up through six. So we have like 3600 and that one are we mainly going to focus on the yo Max's it's awesome. Oh, sweet deal. We got to test portfolio. My Dad Oh my dad's retirement dime
goes to zero doesn't matter.
He was literally going to cash that money out take penalty, just to like put it into
To Max like my dad doesn't understand retirement account what I would do with you. That's what I would do. I really liked that last strategy we just talked about so mull that over guys. I feel like I'm gonna go lay down. I'll be back for the bond episode in a couple of days. Yeah, once he's feeling better, we're going to actually record the bond episode and tell you guys specifically why we would not invest in bonds and what to do instead if you're looking for something that is like bonds because there are certain funds that are okay right now and then that we talked about the Munis and some of the other stuff in the other episode, but we'll go into detail on specific ones. Once Tim is less bla. Basically, you want to invest in bonds, you basically have to invest in closed ended funds that deal with bonds, because bonds are all okay, we'll see you in the next episode.