086 - How We Use BulletShares To Earn Money Sitting On The Market Sidelines

When investments are overvalued, you need a place to park your cash while you wait. 

Letting cash sit uninvested means that inflation is slowly draining the purchasing power of your money. You need to be earning 4-5% to counter this hidden factor. 

But if you move your cash out into a high yield savings, it’s going to take you 3-5 business days before you can put it to use out or in. 

You never know when a stock is going to drop into a buy zone. So this waiting period might cause you to miss a great investment opportunity. 

Luckily we have a fantastic option inside the stock market that just so happens to pay you more than a high yield savings.

Invesco BulletShare ETFs Available --> Click Here

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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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Transcript

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. When investments are overvalued, you need a place to park your cash while you wait. Letting that cash sit uninvested means that inflation is slowly draining the purchasing power of your money.
You need to be earning at least 4-5% to counter this hidden factor. But if you move your cash out into a high yield savings, it's going to take you about 3-5 business days before you can even put it to use either in or out. You never know when a stock is going to drop into a buy zone, so this waiting period might cause you to miss a great investment opportunity.
Been there, done that. Luckily, we have a fantastic option inside the stock market that just so happens to pay you more than a high yield savings. What's up, y'all? So the reason we are doing the bullet share episode this late in the game is because we may have found an alternative and we never really did it justice in describing what the heck bullet shares are.
So that is what we're doing today. Okay, so for like the better part of like probably I want to say 15 months we've mentioned bullet shares and we actually never actually went to the website and showed you what they are. So I mean that's kind of like, so you guys are like, well, bullet shares, that sounds great.
What are they? They sound really cool. They are cool. But they're not like bullets to me is like pow, wham, boom.
And these things are just like. So like what they are, like basically they are ETFs that trade in bonds basically and they have like bond characteristics. So according to the website of the, it's Invesco, it's an Invesco investment thing.
So the Invesco site basically says the precision of bonds, the advantages of ETFs. I will give them that. That is 100% true.
Why are you saying it in that voice? I don't know. Because I'm being a derogatory D-bag. But that's, like these are actually good things.
Yeah, I know, I know, I know. So you shouldn't be derogatory. Well, that's not the part that I'm derogatory about.
We'll get to that here in a little bit. But basically what they do is they combine the benefits of bonds with distributions, final distribution at the maturity. Maturity.
Maturity. So if you've ever invested in bonds, you know, if you go into a bond, it's like a par value of a thousand and you hold them for a duration of period, like a year, two years, whatever the bond will tell you what it is. And you'll get coupons every six months.
So a bond has like a price, then a coupon rate, a coupon rate. And so if you hold the bond from when you buy it to when it matures, you'll get back your thousand at maturity. So that's why we always say you want to get bonds at like below a thousand.
Below a thousand dollars. Because the price of entry, you have to have a thousand dollars to buy a single bond. That's annoying.
And then the coupon thing is, like I said, every six months they give you an, it's an interest payment, basically. Also super annoying. It's like a yield.
So, but like what, what the bullet chairs do is they actually give you monthly distribution. So you're getting your coupon, your, your interest payment every month. And your entry rate is not a thousand.
It's like in between like 16 and 25 around there. Yeah. So it's like around the $20.
So it makes them much more accessible, which is really sweet. So they're lower price. And then the cool thing is with ETFs, they're a fund of collection of stuff.
But as an ETF, they actually have a higher flexibility to get into them. Because if you've ever actually researched bonds, they are a huge, Hey, PETA. PETA.
PETA. We definitely discussed that in the bond episode. Huge pain in the butt.
And then if you need to have the monthly payout, you have to find bonds that the six-month payouts stagger. They call that bond laddering. So you get paid out in January and July, then you get paid out in February and August.
You always forget August. Like the month doesn't exist for her. I don't think, I don't know.
It's really, it's really weird. It's like July and oranges, and then I should just call it oranges, but that's how you have to do it. So you have to technically have six different bonds to freaking get paid every month.
And then finding them, finding ones that actually do that as a pain, which is why like some of our months in the beginning we were doing until we started getting into these and more of the other ETFs. So that was really cool. Fine.
But I like the liquidity of them because I like bullet shares have always been where I hold like my excess cash. Like if the market's overpriced as it is currently, like there's sectors in an hour, it's ridiculously overpriced. I would store my money in bullet shares because bullet shares don't really have a lot of volatility.
They usually have a pretty, pretty easily to identify bandwidth that they trade in. And that's why, um, so there's like, like for a, it's like a dollar or maybe $1.50 for the year. It was all the difference between the 52 week high and the 52 week low is normally like between a dollar or $2 is all like the, the band is.
So they're pretty easy to get into at a decent price and then you don't lose a lot of appreciation in your cash because they don't really go anywhere because that's kind of how bonds trade for the most part. I mean, it's been kind of, um, different the last couple of years with like bonds will spike up like $1.50 one day and then they'll shoot down like 75 cents the next day. That's odd.
Like that's not normally how bonds trade. But when we found these, this basically that whole, everything he just said is why this is kind of like a high yield savings account in your brokerage account is a fantastic place to stick your like liquid capital while you're waiting for other stuff to come into good price ranges. So if you look at a BSJU, that's a bullet share and that was in our Vanguard, our van life account.
You saw we were collecting, we collected $12 in October, $8 in November. So you're not collecting a lot in the form of dividends. But you didn't have a ton, ton of money in that either, right? But you're not actually losing any money, so you're actually getting paid to hold cash in your account while you're waiting for a better opportunity to, for an entry price in something that you're interested in that yields more than six to 7% because the bullet shares generally are between like, um, the ones that we invest in are generally between like five and 7%.
So like if you can find an investment that has dividend growth that actually yields say 8% or 9% and obviously you would take your money out of your cash account, your bullet shares and put it into that. So that literally is just where I held cash until I found better things to put it into. But you can see we were actually collecting dividends every month.
Not a lot. But it's way better than if you had your money just in cash and you were actually losing money technically because of inflation. So this basically helps you break even if not have a little bit of income from holding cash and then waiting for the better buys.
Yes. One of the huge things you have to remember when dealing with bullet shares is they actually do have a final distribution at maturity. When we actually look into the different alternatives they have for bullet shares, you'll understand why that's important.
But at the end of each fund's expected life, the net asset value, the NAV of the fund's assets is distributed to investors. So there's going to come a time when these stop being traded. What's in the target date retirement funds? Oh, that's what it was.
So bullet shares are kind of like the target date funds, the way they have them structured. So the 2004 one comes due in 2004, the 2005 one comes due in 2005, 2006, etc., etc., etc. And they go the whole way up to like, I don't know, 2040 or whatever, and then they'll add a new one once one- 2004? I know.
I went backwards. I used the wrong number. 2024.
My bad, guys. He's over here staring at me like I'm crazy. Absolutely factual.
So that's what happens with those. So what bullet shares like Invesco actually talks about is bond laddering, but not the way we were just talking about or I was talking about it. They're talking about bond laddering from buying into the ones that mature on certain dates so that you have cash coming available in a year laddering system.
I literally don't understand why anybody would want to do that. So I don't, I literally don't understand. When you do fixed income, they're trying to combine like the fixed income approach where you actually invest in bonds and CDs and like they say they mature in like April.
So then you'll have like $6,000 coming due in April that'll be a payment into your fixed income. It's stupid. Like we don't- Again, I think it's the dumbest thing ever.
We don't invest that way because I'd rather not have to worry about, oh, I have $6,000 because there's no guarantee that say when it comes due in October of 2024 that there's going to be anything worth dumping $6,000 into. I'd rather dump the money into stuff as it becomes available as opposed to hoping that 10 months or 12 months or 24 months down the road something's going to be available to invest in that actually has a good yield. So that's- I think when you read- That's why I don't do laddering.
I think when you read, well, they're laddering. I think when you read what the hell they're talking about it being an incentive for. So say you had like a wedding you were planning and you were saving money so you'd invest in the bond fund that it comes to fruition on the year I guess that you'd need that money available.
So you'd be accruing interest. But again, if you can get in and out of these things super liquidly, I literally don't understand why that's like even a thing. So if anybody can explain that to us from an actual thing that makes sense, I think it's just a weird way of touting something that- But regardless, their product is amazing just for the high yield savings account perspective.
Okay. Now you can share the screen and we're going to explain to them why I actually typed everything up. So I typed everything up because I'm a winner.
If you look at the- Go to the bullet shares page. If you look at this, this is what they give you. It is so hard to pull this data.
You literally get your year of maturity because this is what they're doing. They want you to do that laddering crap that they're talking about, which makes zero sense. And then they just have them broken up into investment grade, high yield investment grade, and then municipals.
But you have to click every single one of these. To do the individual- To do the individual- Individual research form. And it's so irritating and cumbersome.
So like I've- Yeah. Here's everything. It's super annoying.
So I basically, I have created a chart that with the pertinent- I'll put this into some spreadsheets. The pertinent information. So it's prettier.
So the first one is just the corporate bonds. This is the first column that was on that other page. First column.
Then it shows you the share price of what it's currently, well not currently, but like- Right about when Tim pulled this data. Four days ago, I think three or four days ago, that's what it was trading at. The yield at that point and the monthly distribution on average.
They are variable interest rates, so like some are variable interest payments. So sometimes it'll be six cents, sometimes it'll be nine cents. But if you do the calculations I came up with, so that's what it's around there.
It's seven cents or eight cents or six cents, whatever. Yeah. And I think the reason for some of that is going to be the ones that are coming sooner due.
What happens is as the bonds mature that are part of the ETF, they liquidate themselves within the ETF and then they put them in treasuries. Isn't that what they said they do? They put them in treasuries? Treasuries and other- So the yield can actually go down over time as you get closer to that maturity date, which to me sounds stupid. If you're looking for the consistent cash asset.
That's why if you look at the 2025 one, for example, you see how the yield is different than the rest of them. It's under 4%. That's because they have things maturing in January and February, so then they're actually they're getting rid of those bonds that are maturity.
They're getting their money back and they're investing in the treasuries. And I forget what the other thing they invest in, but something along treasury lines. Yeah.
So they're putting it into something that's safer. So the treasury account that they're investing in, they invest in the, I want to say one, three, six month treasuries and those interest rates aren't as high as the bond rates. So you see that's why there's that discrepancy there.
Yeah. So that's that. And the other discrepancies is like if you've ever traded bonds, the further out you trade bonds the more unknown there is.
So the higher they're willing to pay you in interest, that's why it goes from 4% up to like 5% and beyond 5% because the further you get from what year it is, this 2025, the more willing there are to give you a higher interest rate because there's a lot of unknowns. But that is the corporate ones. So corporate means that they're lower risk, which means it's a lower- Investment rate.
So it's like a BBB minus or higher. And above. Yeah.
So the good rated stuff. Quote good stuff. Quote good stuff.
Yeah. Yeah. We never get in those, do we? Sometimes.
Sometimes. The second block here is their high-yield corporate bullet chairs. And there again, there's the year that they mature, then the different investment options you have, the yields, and then how much they pay a month.
See that that's vastly higher than the first column. So the first column was about 4% to the 5%. So these are like 6.75 is the soonest due and then they're all right under 7%.
But you're getting like, we'll just say for simplistic reasons, you're getting about double the payment per month in monthly interest payments. That last column, the 10, 12, 13, 15. Sounds for sure.
Right. And then the third block is- So the third block- So that's the first block is here. The first block is the investment grade.
That second block is the high yield, the middle column, and the third block is going to be that far right column. Yeah. The municipals, the munis.
We talk about munis from the tax perspective incentive thing. So if you are in a retirement account that has the tax advantage crap going on, the munis don't even make sense. Don't take that lower yield.
Like it just literally doesn't make sense. And you'll see like when we pull up the block here after the municipal ones, they pretty much suck. But that could be a good option.
So you're paying more for a lot like a half or a third of the yield. So like it doesn't make sense to me. And I'm not super familiar with how that tax incentive aspect goes because I thought with munis, you had to actually be in the state to get exemptions and all that crap.
Again, don't take my word for this. You should probably talk to your accountant, tax attorney, whatever the hell it is. But to me, that yield that they're spitting out the 2%, 2.53%, 3.9- Because when you compare the bullet shares, like the deviation from 52 week high to 52 week low, pretty much they all have a ban.
So like there's no outliers here where like one's going to have like a say a $6 ban and the rest of them have like a $1 to $2 to $2.50 ban between 52 week high and 52 week low. So basically it's like apples to apples almost because the yield and the band and the price is all listed. So you're literally trading apples to apples when you look at these, what is this, 20 some different, 32, I forget how many it is.
That's the third block. That third block we just disregard. That one's not even like, and you might be for it, but I don't like the tax incentives.
You'd like the only time- You can get in something better. The only time the tax incentives for municipals actually become something that you may want to consider is like if you have say $400,000, $500,000, $750,000 in your brokerage account. If you're like us and it's about $100,000 or below $100,000, then the tax incentives, they don't really amount to much.
So there's really no point in having them. Or if you want to get to a more passive income stream and you are okay with these like lower yields because you have a crap ton of money, like 3% on a million dollars is $3,000. That's generally the municipal ones apply to the higher portion of money that you have to invest.
Actually, I don't think that's $3,000 a month. Check my math on that. So that's kind of what they are.
Basically we discussed they are like, they go out and find a basket of bonds that they invest in. So you don't even have to do like the individual bond research. They literally will have like 20 or 30 different eggs in the basket so you can go through and if you want to look at them, that's up to you.
Like, oh, this one invests in Apple, this one invests in NVIDIA, but they kind of have like the same approach. All ETFs kind of act the same way. But like we said, we really noticed that there's a great opportunity for the high yield savings component within the brokerage account when you're waiting for the other stuff to hit metrics.
And that's what we use. So why I originally was intrigued by them and drawn to them is because you could basically choose your risk class, whether you want the corporate bonds, which is BBB minus or above the high yield corporate bonds, which is a mixture of BBB minus and above plus below BBB minus or the municipals, which is a completely different category. And then you can choose a target date, the target date, like the sooner the target date, the less risky they are.
Just like bonds, like if you get a bond that expires or matures in 2025, that's less risky than say one from 2040 because you have no idea what the company is going to do between 2025 and 2040. Or what better options are available? That's why I was drawn to them. And if you're looking at those charts, like at the end of this year, BCSP, BSJP, BSMP are all going to not, they're not going to exist anymore.
So they'll probably have a new bottom line if you pull up the other thing. They'll have a new bottom line down here, it'll be 2035 and they'll have new ones in Oh, they don't even have two here. Here, like for the first column and the third column, they'll have new ones and then they'll actually fill in that 2033 at the end of 2025 with a new one.
So that's cool, I guess, because it's always in flux and it's always changing. So it's like minimizes the amount of, they're doing the bond hunting for you because trust us, that takes a lot of effort if you can go and individually cherry picking bonds. And even the bit like investing in bonds differs from brokerage account to brokerage account.
Like I have such a hard time in Vanguard even trying to find bonds or in Schwab, it's pretty easy. It's easy to like, you can, they have like it's set up so it's user friendly where you can just click on, okay, I want a bond that pays more than 4% that matures in like 10 years and they'll just pull up, they'll pull up a list of everything that fits that criteria. And then you can search it based on a maturity date or a yield or yield to maturity.
That's like, yield to maturity for a bond is kind of like the CAGR for a stock. If you're not familiar, a CAGR is like whenever your yearly returns with your dividend income reinvested back in. So that's kind of what the yield to maturity column is.
And when you're investing bonds, but bonds are a huge, huge pain in the dick to invest in, especially if you don't have Schwab. Like it's, I mean, I can't speak for Fidelity, but I can for Vanguard and Robinhood and Wells Fargo and SoFi, they all suck compared to Schwab when it comes to investing in bonds. So they are a really, really, really good way to minimize your risk and store your cash.
Like I can't stress that enough. They're really easy to also identify an entry price because generally 25 to 28 is like the high and anything under 20 is usually a pretty good entry price. So question, if you had a whole bunch of money, like you liquidated something because it was a higher value.
So you had all this free cash that you wanted to put into bullet shares and they were at that high point, would you still get into them? No, I would choose a different one. And if they're all at a high point, then I would, I know, pardon me, I know like in, again, hate to beat a dead horse, but I know in Schwab, if we just hold cash in the brokerage account, we get like 5% on it. So really? Yeah.
I didn't even know that. That's really cool. So like if you, if next time you're in a heart Schwab, do you have my hair on your hat? I don't know.
Okay. So, and that's, so you, so they're really good because you can minimize your risk and you can store your cash and the good it's, and the fact that they're liquid is awesome because recently IIPR, which is one that I'm super, super awesomely happy that it's on sale now because of bad news went on set, literally went on ridiculous sale. Like it's normally between like a hundred and 130 for the most part, like some news came out where it dropped down to like 62.
So I was able to liquidate my bullet shares pretty much instantly and then pick up IIPR when it, when I saw that, Oh crap, it's down to 63, I need to get some shares. So I was able to liquidate bullet shares and buy. So that makes it super nice that they're that, that liquid.
How do we use them is the question that I'm assuming people want to know because our methods, the only one that matters anyway, bullet Invesco, Invesco bullet shares, firstly I stay away from the municipal, the muni, the muni section entirely while we both just butchered the crap out of that because I can get double or triple the yield for the same type of like literally the same type of risks. So, but that last column, the third column, I just disregard completely. Like I mentioned the normally trade within a tidy, a pretty tight band.
For example, I went in and I looked at BSJU, I just picked one and BSJU had a 52 week spread of a high of 26, 58 and a low of 52 week low of 25. So if it's, so you basically just take that 26, so it'd be a dollar 58 divided by two. So what is that? That's one.
I don't have my phone. What's one 58 divided by two, one 79, 79 cents. Yeah.
So a big, if you just take that and it's so 79, that comes out to 79 cents. So if you can get it for 25, 79 or lower, then that shows you that that's a good time to get into it. Oh, so he's trying to figure out the par value where the middle is.
So you want to go below that. So you find the median price just by taking the 52 week high versus the 52 week low and then dividing that by two, that'll give you the median. I told you we use math in everyday life.
So that comes out to 79 cents. So that tells me if I can get BSJU for 25, 79 or lower, that's a really good entry price. The reason you want that is because you want to minimize the capital loss as much as possible.
And the way to do that is just using the law of probability. Like if it trades in that band, then the lower price you get in that band, the higher probability that's going to go up. So if we got BSJU, for example, 25, 50, the probability is really high that that actually is going to go up in price while we hold it.
And then you, what is BSJU's monthly payment? 15 cents. So BSJU pays 15 cents a month. So while you're holding it, you're actually going to get capital appreciation probability probably as high.
You're going to get capital appreciation at the 25, 50 price. Plus you're going to be getting 15 cents a month for every share that you own. Sounds like a sweet deal to me versus stuffing under the mattress and not having liquid capital.
So to me, that actually to me is. Hashtag winning. It's like a two layer risk mitigation.
Yeah, it's pretty sweet. So you have the bonds as themselves as a risk mitigation, then you have what you know is going to be the trade bands. That is a second key or a second mitigation mitigator risk.
And then? So basically, OK, I don't do many communities. So basically that leaves the first column and the second column, which is corporate bonds and high yield corporate bonds. Usually then I would actually look at the yield.
I know most people's knee jerk reaction whenever they're investing is they want to look for the highest yield they can get. And I'm all for that most of the time because you would think we do that. But that's not what we do here.
But when it comes to bullet shares, I actually look at the time duration. So I don't I like to be at least three years in the future. So that means anything in 2025, 2020 to 26 and 2027, I would actually avoid.
So some of those first for the for the reason that we talked about earlier is because when that stuff gets closer to coming to fruition and this may not even be that the bond is hitting its max state, the company that has the bond might actually call it due earlier than scheduled. So it's more of a risk of that when. Because if I want to trade in treasuries, I would literally trade in treasuries or find a closing fund or an ETF that trades in treasuries.
So like I'm not interested in holding something that's supposed to be bonds that trades in treasuries. So that on those first two columns that knocks out the top three lines, 25, 26, 27 lines. And then I said in the corporate bonds and high yield bonds sections, a number of the investments have a higher yield than the short term treasury rate, which is 4.4 for one month and 4.34 for three months.
So that means there's potential for the yield of the bullet shares to actually decrease in those first those first three rows because those low those low treasury rates. So they'll drop the low treasury rates. So that basically I was like red flag.
So basically that crosses out the top three lines and it crosses out the third column, which leaves us with 12 possible selections from here. I would then look at share price and dividend payout per month. I don't like, you know, I don't even look at the yield.
I'm literally looking at the share price and the dividend payout per month. Now, the dividend payout per month kind of is incorporated, but I don't look at the yield. Now, like I said, they do change month to month.
If you do average math, you can figure out that what the monthly payment is going to be. So after looking at the share price and the dividend payout per month, you can scroll back up on the screen. Basically, you're getting rid of the top three here.
25, 26, 27 is gone. So you're looking at 28, 29, 30, 31 and 32 in this particular block. So you look at the share price, which is this here right after the bullet share ticker number.
So this, this and this, and you would pick the one with the lowest? I would pick the one with the lowest, not necessarily the lowest, but if it has a lower price, you see like 21.48 and 21.76 are different than the rest of these. 26 and 25. Then I go over here to the dividend per month.
So I'm actually willing to take a two or three cent less share per month because look at the price difference is like $4. So I don't normally, like I don't necessarily say, Hey, I should take the one that's paying the most. Because you look at that BSJS and BSJV have the exact same payout per month of 13 cents per month on average.
And one's 21.76 and one's 26.18. So this is what we were talking about before. If you get more money, you get more shares, so you actually get paid more even though the dividend payout per month is the exact same. Now that is incorporated into the yield, but I think it's easier when you're looking at these things at a snapshot in time to look at the current price and that dividend payout as opposed to that yield.
It's like calculating that constant fluctuation. If you scroll up to the regular ones, again, we're crossing off 25, 26, 27. They're gone.
Gone. So then we're looking at 28 down to 34. So then again, I would look at the share price as my first indication of what I should look I'd look at these 16s first.
So then here we have CU and CV. They have the same payout per month. So then obviously I'd go for the one that has less.
Has less share. 16.05. So VS, CV would be the one if you're in the corporate bond. And again, we could get more.
We could actually get 9 cents a month, but then we'd be paying 450 per share more again per month, and that to me is not worth 3 cents. But that's going to be a personal decision. Are you willing to pay more to get more? Yeah.
When you're actually getting less because you're actually going to get less share. So that's how that math formula works. Yep.
So if you had, say, $500 from a dividend payout, you could get 500 at 9 cents per share. You can get 500 at 6 cents per share. But 500 at 6 cents per share is going to get you a whole lot more shares.
But you also aren't in these things for a super, super long time. So don't analysis paralysis. Just pick one.
So if you look at that, we have BCCU, BCCV, BSJS, and BSJT are the four that I had left standing after all that filtering. And I know most people, again, knee-jerk reactions is the highest yield. I want the highest yield.
And BCCW and BSJW are fine, but you're going to be paying $4 more a share for those than if you went with the BCCU or BCCV or BSJS or BSJT. So it's $4 a share really worth more for 2 to 3 cents more a month in divvies. So that's kind of like how bullet shares work.
They're literally just like they go out and they get a basket of bonds. And then they collect the interest in the bonds. And they give you a monthly distribution, which is better than the actual twice a year, the bi-yearly distribution you get from holding actual bonds.
And they're more liquid than bonds. Bonds, if you ever tried to sell a bond, it's a huge pain in the ass because you go in there and say it's a bond that's trading at $96 that you got for $85. You go in there, oh, it's just trading for $96.
$96 isn't necessarily the price you're going to get for the bond. You have to find someone that's willing to buy your bond. And generally, it's going to be a lot less than $96.
Well, and I think there's like fees, too, that are hidden when you do the bond trades because every time Tim trades them, we think we're getting one thing and then we end up getting less than that. So I don't know exactly where the hidden fees are in that, but they're somewhere. What I found with bonds, if you're actually interested in bonds, we can do a bond episode at some point.
But what I found in them is it's better to get like a one that's undervalued, say, like vastly undervalued, like 30% undervalued, and then just hold it. Get your twice a year interest payment. And at some point, once it comes more into line with what it's valued for, the company just buys it back.
That's happened three or four times where they just bought it back. So we'll end up getting like a 30% increase plus the bond coupon. So it's like freaking juicy.
That's how I do the bonds. I don't even like when I first started, I tried to like, OK, I got a bond for $86. No, it's trading at $96 now.
So I try to sell it. And when I do it, probably $94 is what I'm selling it for. So I am getting a total return of $8 per bond I bought, which is nice, I guess.
Then the fees. But I found it's easier to just let them call it back and then try to like, because when they call it back, they're going to call it back at a price to tell you, hey, we're going to call that bond back at $95. And then generally when that happens.
So it's not usually par? No. Well, sometimes it is, sometimes not. It depends because like there's sometimes like when the bonds trading at like $60, you get in at $60. And it shoots up to like 85, they'll call it back. But if their stuff goes over par, they're more than likely going to call it back. But generally speaking, it would be 100.
Yeah, it would be par. But there's times where I've actually like one or two times where they've actually bought it back under par. Like they said, we'll give you 90, 90 cents on the dollar for it.
So recently, that's what like for 12 to 15 months, maybe 18 months, we were putting everything in bullet chairs. But then I came across THTA. I remember how I said if I wanted to trade in treasuries, I would just trade in treasuries.
Yeah, well, we found this gem a couple weeks ago. Well, THTA actually trades in treasuries. They hold the collateral of all their funds in treasuries.
So they're getting like the 4% in treasuries. And then they write options on the S&P 500. And it has the same band as the bullet chairs do.
For the most part, like there was like a two week period where it doesn't. But for like the last year, it trades in a band. What do you say? 1816 and 1961 is like the band that's been in for the last five months has been trading between 1816 and 1961.
And it actually has a 12% yield with a monthly dividend payment of around 19 cents. So then I would look and I'd say, OK, well, I can get shares of this for the same price I could get for a couple of the bullet chairs. And I'm getting twice, twice, maybe two or three times the amount in monthly dividend payment of 19 versus seven.
So that's a no-brainer to me because it literally I don't I'm holding this as cash until something better comes along. But the reason that I thought that going over the bullet chairs and then mentioned the THTA is important is because we are actually in a trading environment where a lot of shit is overvalued. Yes.
So you shouldn't be buying too much stuff in 2025. I mean, there's a couple sectors like real estate REITs, maybe a couple utilities and maybe some financial stuff. But just based on the first four years of the Trump president's when he was president, like you can kind of get a blueprint of what's going to happen.
And a lot of shit is overvalued. So I would recommend putting a lot of your dividends in cash if they're that like a fair value priced. Like if you have closing the funds or EFTs, and it seems like they're whatever EFTs and they're at like a fair value price, then I would just put that I would turn the drip off and put that in cash.
And I take the cash and put it into bullet chairs or THTA for a few weeks or months, depending on you can gauge where things are going, because I think it's going to be really volatile. We saw that already, like the volatility has been crazy. The first the first first couple of weeks of the market, like it was down one one or two percent and it was up like one percent and then it was down like half a percent.
So it's been very volatile and that's going to continue for months. That's not going to be a one off thing like, oh, it's just because of the Biden Biden presidency is over and the Trump presidency is about to begin. That's no, it's going to be pretty volatile because what I'm reading is a lot of investors are actually taking profits and moving money from the sectors that aren't going to do well and put it into the sectors that they forecast to do well.
So there's going to be a lot of volatility going on. And like because we mentioned before, 70 over 70 percent of trades is computer like they're just algorithm trades. Computers are trading.
So once a few customers, few people actually trade individually trade, that's going to trigger something in the algorithms and algorithms are going to have to react because they have like they have their limit prices. Oh yeah. I wish to talk about that at some point.
Like there's a lot of bot trading that goes down. And I think that a lot of the volatility is just automatic purchases. Well these are these are bullets BTW.
Bullets. Pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew, pew. Pew, pew, bang, bang.
Yeah, those are bullets, BTW. But, so this year's gonna be volatile trading. Like I said, I'm one of the conservative people.
I don't think the S&P is gonna, like there's people calling it's gonna do 20, 25% again. I don't see that happening. It's gonna be between five and 10% is my guess.
And between five and 10% means there's probably gonna be at least two, possibly three or four pretty big pullbacks, like five to 15% pullbacks. And then it'll shoot up five to 18, five to 15, five to 20%, and then it'll pull back again. So that's how I foresee the market going this year is we're gonna do a pullback down, and then a shoot up, and then a pullback.
So that's how the market to me is gonna be choppy like that. It's not like if you looked at the last two years, the market's been kinda doing this on the way up. Which would be nice, because if you're in bullet shares while stuff's up here, and then when it does a pullback, you can possibly throw some shares into stuff that drops down and gets into a good buy range.
But I'm in the minority. Do your own research and talk. If you have other subscriptions, read what they have to say.
But a lot of people are forecasting for it to be, again, another year of this just straight up crap. And I don't think that's gonna happen. Yeah, I don't think so either.
We're already seeing that. We saw the employment numbers. What happened this week is the employment numbers are coming in very hot.
The jobs are, they were forecasting 150,000 jobs, and they came in at 265. So that spooked the hell out of everyone, because now they're, prior to January 1st, they were forecasting two to four interest rate cuts in 2025, and now they're zero to one is what they have. Isn't that what we've been saying for the last six months or more? My biggest concern is, I mentioned this in the email, my biggest concern why I'm big on bullet shares and THTA is because I actually can't foresee a path where they have to raise interest rates this year, which will cause a total market meltdown from a multitude of reasons.
Obviously, the most clear one being because if they raise interest rates, it's gonna cost more money for people to borrow money, and the consumer's already strapped. Consumer has so much debt, like the debts went up 20 or 30% from 2024 to 2025 for the personal debt. So if they have to raise the interest rates, those credit cards, and those homes, like they're gonna buy new homes, and probably the rent, and probably the cost of groceries, all that shit's gonna go up again.
It's gonna cause inflation to spike again, probably up to 4%, maybe 4.5%. And once that happens, people are gonna panic, and they're gonna start raising the rates from whatever it is now, 5.5%, probably up to 5.75% or 6%. So there's a path where I foresee interest rates actually going up in 2025 or early 2026. So it's good to have a place where you can store your cash, that way you're gaining at least some interest so that you're not being left behind because of inflation.
And that's why we thought bullet shares was so pertinent for- Why is it so pertinent? And the THTA, I don't even understand how they're paying 12%. Because I foresee treasuries, like when the interest rate goes up, the treasury rate's gonna go up, and then I think THTA will actually revisit that 1961 that it's been, maybe even hit $20 a share. So if you can get in it, I think it's like 1865 or 1885, I forget what it was when I last looked, but if you can get it in where it's under $19, you're gonna get a whole dollar in probably appreciation at some point in 2025, plus getting 12 or 19 cents per share per month.
So I actually really like THTA for 2025 and probably 2026. Over the bullet shares, which is interesting, because that has been literally our freaking cash baby for a while now. And we've done quite well.
Like I said, we showed you, we were getting a little bit of dividends here and there every month, like our chart doesn't go back the whole way, because I just started doing it. We just started tracking. But we were getting bullet shares of dividends every month.
And I leave the drip on in those because it doesn't really matter. So like if that one I actually want to accumulate because I'm holding cash for say four or five months, the more shares I have is the more cash I'm getting. Well, if they paid out in cash, we'd just stick them back in bullet shares anyway.
So you might as well just leave the drip on. So that is the bullet shares. They are fundamental.
Like they are like- Yeah, foundation piece of formula. It's like having access to Worthy, but it's in your brokerage account where you can just buy and sell whenever you feel the need to buy and sell. And if we haven't talked about Worthy in a while, Worthy is paying 7% on what you put in there as an investment.
It pays out daily. And most high yield savings accounts right now are only paying like 4.6%. And you can hunt for a better one, but I think Worthy's the best thing outside of the stock market. So yeah, Worthy is where we keep our emergency funds.
Like we have a few thousand tucked away in that in case shit hits the fan and we need to cash it out. Yes, sir. So that's like, I've recommended that before.
I'll recommend it again. Like if you have something set aside for your emergency payments, put it into Worthy. That way you're getting 7%.
You can pull it out any time. You're gonna make more in Worthy than you are in your checking account or your savings account. Hands down.
And I mean, your savings account probably pays less than 1% and Worthy's paying 7%. I mean, I figure that's basic math. Most people- My checking account's paying like 0.01 if not zero.
Most people understand basic math, so that's what. So our first thing that we've always said is that one of the first things you should do is establish an emergency fund and you should put your emergency fund into something like Worthy. And there's a lot of other people that say to put it in a safe place and don't worry about it making money.
We do not agree. Your money should always be making money. And there are definitely options that are safe enough.
Because otherwise you're losing money to inflation. We're lucky though, because if we just say Worthy would collapse, which I'm not saying it will, but hypothetically it would collapse, we could replace the $6,000 with like three months worth of dividends. But at the same time, if something did happen with Worthy, the way that their stuff is backed is that they only allow people, because they do lending out to small businesses, but they only allow the people to actually take loans out for 75% of what their actual assets are worth.
So if they had to liquidate, you're still gonna get a chunk of your money back anyway. I think that's actually better than the FDIC insurance because the way that works, it's gonna take you forever to freaking get that crap back when it's government- Yeah, I really like Worthy. Worthy's one of my favorite things I ever found.
We in and out of there several times. Like I took 10 grand out, I just moved another 2,300 out of it. Tim's got a good chunk of change in it, and then once we get the proceeds from the condo, we're gonna probably re-boost our thing in there.
Because it's always good to have money outside the stock market too, like diversification. And it's just super easy, it does it all for you. That's one of those set it, forget it things.
It is. Now the only problem with Worthy is from what I gather, it has like a three-year rolling thing. So if you get in say in February of 2025, the bonds that you buy in February of 2025 will actually mature in February of 2028.
I don't know if they automatically just take your money and put it into bonds for February of 2028 to do the three-month process. I think they do if it's available. Okay.
Unless it's in that stupid thing where they have to go to the FDIC to get an, FDIC? FDA? FDA? I think it's- What's the trade, commission and trade thing? SEC. So when they have to go to the SEC to get re-approval for like the system that they have set up, they have this waiting period, and sometimes it can be months, which is where my mom's situation was in. We had to wait a while to be able to actually buy anything because they ran out of bonds, which is annoying, but it is what it is.
So everything will just keep, you know. Because they do that, they are like, so Worthy is a lot like Bullet Shares in that regard, that they have a rolling period, and then when it matures, you're just liquidated, and you're giving everything back. But that makes more sense why they're actually called Worthy Bonds as opposed to something else, because I didn't realize there were maturity things.
So it's like, if you didn't want to do Worthy, you literally could just set it in like one of those 7% yielding, or 6.9% yielding Bullet Shares, and get the same result. Only difference would be that you would be in your brokerage account as opposed to a Worthy account. But if you're going to be using it for investments, and then again, even with Worthy, you have a four to five day business thing to get it back into your account.
Same thing with your brokerage. You sell your stock, and then you have like a four to five day waiting period before you move it into your account anyway. So it's like the same thing.
I found Worthy before I found Bullet Shares. Yeah. That's why.
But we needed something in the stock market. I actually like what Worthy does more than Bullet Shares. Worthy actually- Oh, hands down.
Invests in small businesses, and- Yeah, I love what they do. And their real estate one is they're investing in single family homes to make single family homes affordable to people so they can rent or buy them. So I like what they do.
That's why I don't mind having, like it seems kind of redundant having Bullet Shares and Worthy because they're kind of the same thing. Oh no, I like what they do a lot, and I like having it in a different place. Whereas I don't give a shit what Bullet Share does.
I just want them to make me money so that I can- Just make me money. I can reinvest at some point. We don't agree with your stupid bond laddering.
Just, it's a great option. That's that. Okay, that's Bullet Shares.
Any questions, write me questions, I'll answer them. I'm pretty fluent in Bullet Shares now because I had to research this for an email, and so I have a- We probably won't do the bond episode until bonds start coming back into like goodbye ranges. I don't really see a point of just looking at everything that's overvalued.
Next week, we are going to cover a psychological thing that may or may not appeal to you, but it should. Are we talking about the goal setting thing? Yeah. Okay, so next week's gonna be the goal setting thing because I imagine at this point, according to the statistics, like a crap ton, huge percent of people have given up on their New Year's resolutions and even more will by the end of January, so.
So there's a lot of very interesting information that you don't necessarily think about when you think of a goal setting. But it will be a really good- It's actually like an art that you can develop or a skill that you can strengthen or a muscle that you can strengthen. Well, it's a process actually too that you can strengthen and it's gonna help you readjust those goals if you did set them for New Year's so that you can actually get back on the horse and actually get some shit done.
And I promise you it relates to investing. Absolutely. Like it's all about the money crap.
So this is gonna be awesome because I imagine most of you have New Year's resolutions around saving, paying off debt, whatever, whatever. To me, it's important because like one of the, like if we go back to the very beginning, we had the components of identify who you are as an investor, have a budget, have an emergency fund set to the side. Well, that's all like for the most part goal setting.
Like if you're starting from scratch, your first goal would be I'm going to create a budget. I'm going to look into my budget. My second goal would be I'm gonna have an emergency fund.
So those are all goals, goal setting techniques. But we're gonna do it in a way so that you can actually tailor it to yourself because we always talk about knowing yourself first so that you actually get the traction you need and have the willpower for the discipline, which is the whole reason people's stuff fails. So it's the foundation pieces.
It's gonna be a really great episode. Hopefully you guys tune in for it and we'll see you next week.