Supplementing Dividend Portfolio

[NilesMike]

(11-04-2021, 10:00 AM)ChadR Wrote:

(11-04-2021, 05:34 AM)NilesMike Wrote:

(11-03-2021, 09:57 AM)ChadR Wrote:

(11-02-2021, 07:32 PM)NilesMike Wrote:

(11-02-2021, 01:58 PM)ken-do-nim Wrote: Wow, I didn't know that!  Thanks for the advice!

You can regain your favorable tax position again if you wish. Have to live in it 3of the past 5 years or something like that, I might be a little foggy on that it's been awhile since I've looked into that.

This method will work a little bit.  Problem with this method is that you have to take the gain you have and allocate it between primary residence years and rental years.  So depending on how long it was a rental, you could make a big portion of the gain taxable.

Could you provide a citation for that because I have not found that to be the case.

https://www.irs.gov/taxtopics/tc701

Property (Basis, Sale of Home, etc.) 5 | Internal Revenue Service (irs.gov)

Understood, thanks.

[Navi]

(11-02-2021, 06:11 PM)ken-do-nim Wrote:

(11-02-2021, 03:07 PM)fenders53 Wrote:

(11-02-2021, 02:49 PM)ken-do-nim Wrote:

(11-02-2021, 02:08 PM)fenders53 Wrote: I can't even imagine #6.  The small piece of my world that is risk free is my paid off home.  If I want to gamble I will ask my broker for margin.  Sounds like a Reddit kid YOLA plan. This will fuel our next crash.  At the risk of being impolite it's an idiotic strategy that will have a high price eventually.

You are entitled to your opinion but it can be absolutely the right move depending upon a person's situation.  It was for me this past March.  I, however, wasn't even close to paid off.  I went from 27 years of mortgage remaining back to 30, and my rate lowered in the process.

Ric Edelman wrote about this in his book "The Truth About Money".  He advises people to always carry a mortgage.  I probably wouldn't recommend a cash-out refinance if the rate is higher.

When you talk to Ric next tell him I said he is a moron.  Keep borrowing money to finance 3X leveraged equity positions.  We'll chat about this in a few years.  My last comment stands.  Same foolishness that got people wrecked in all the crashes for the past 90 years.  Works until it doesn't.

(11-02-2021, 05:10 PM)Navi Wrote:

(11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns.  Pro's fall short but it's fun to try and with experience you have a chance.

Well I actually have shares in SPLG, which is a lower cost alternate to SPY. My goal isn't to beat the market per se. With trading, my goal is strictly to generate investment income to put in to my dividend investments. In other words, short term trading would feed long term investing.

I'm always fascinated by the various S&P 500 funds.

Year-to-date...

VFIAX: 24.83%  (what my 401k uses)
FXAIX: 24.89% (what my daughter's 529 uses)
SPY: 25.25%
SPLG: 25.25%
VOO: 25.27% (what I use in my taxable account)

VOO is still champs

I can live with a 0.02% difference . SPY has a bit more liquidity, but it's just so pricey. SPLG is easier to enter, and has a slightly better dividend yield at the moment. I'm actually surprised it hasn't been more popular in terms of index investing. When I found it in 2019, it was a large cap ETF that followed the S&P 500 closely, but it wasn't considered a "S&P 500 Index Fund" until 2020 I believe. I got in at around $35 per share, and now it's at $54...I'm quite pleased with its movement during that time. An S&P 500 index fund is a must to my portfolio, and even though I focus on a lot of individual dividend stocks with better yields, I can't let this etf go.

[ken-do-nim]

(11-04-2021, 05:50 PM)Navi Wrote:

(11-02-2021, 06:11 PM)ken-do-nim Wrote:

(11-02-2021, 03:07 PM)fenders53 Wrote:

(11-02-2021, 02:49 PM)ken-do-nim Wrote:

(11-02-2021, 02:08 PM)fenders53 Wrote: I can't even imagine #6.  The small piece of my world that is risk free is my paid off home.  If I want to gamble I will ask my broker for margin.  Sounds like a Reddit kid YOLA plan. This will fuel our next crash.  At the risk of being impolite it's an idiotic strategy that will have a high price eventually.

You are entitled to your opinion but it can be absolutely the right move depending upon a person's situation.  It was for me this past March.  I, however, wasn't even close to paid off.  I went from 27 years of mortgage remaining back to 30, and my rate lowered in the process.

Ric Edelman wrote about this in his book "The Truth About Money".  He advises people to always carry a mortgage.  I probably wouldn't recommend a cash-out refinance if the rate is higher.

When you talk to Ric next tell him I said he is a moron.  Keep borrowing money to finance 3X leveraged equity positions.  We'll chat about this in a few years.  My last comment stands.  Same foolishness that got people wrecked in all the crashes for the past 90 years.  Works until it doesn't.

(11-02-2021, 05:10 PM)Navi Wrote:

(11-02-2021, 12:30 PM)fenders53 Wrote: Trading will put you in a battle with SPY returns.  Pro's fall short but it's fun to try and with experience you have a chance.

Well I actually have shares in SPLG, which is a lower cost alternate to SPY. My goal isn't to beat the market per se. With trading, my goal is strictly to generate investment income to put in to my dividend investments. In other words, short term trading would feed long term investing.

I'm always fascinated by the various S&P 500 funds.

Year-to-date...

VFIAX: 24.83%  (what my 401k uses)
FXAIX: 24.89% (what my daughter's 529 uses)
SPY: 25.25%
SPLG: 25.25%
VOO: 25.27% (what I use in my taxable account)

VOO is still champs

I can live with a 0.02% difference . SPY has a bit more liquidity, but it's just so pricey. SPLG is easier to enter, and has a slightly better dividend yield at the moment. I'm actually surprised it hasn't been more popular in terms of index investing. When I found it in 2019, it was a large cap ETF that followed the S&P 500 closely, but it wasn't considered a "S&P 500 Index Fund" until 2020 I believe. I got in at around $35 per share, and now it's at $54...I'm quite pleased with its movement during that time. An S&P 500 index fund is a must to my portfolio, and even though I focus on a lot of individual dividend stocks with better yields, I can't let this etf go.

Check out SCHD.  It achieves close to the SPY price (currently 24% to SPY's 26% year-to-date) with double the dividend, though it varies monthly.

[Navi]

(11-04-2021, 09:00 PM)ken-do-nim Wrote: Check out SCHD.  It achieves close to the SPY price (currently 24% to SPY's 26% year-to-date) with double the dividend, though it varies monthly.

SCHD eh? That sounds interesting. I need to look into it and see if it fits my portfolio. Thanks for the suggestion 

Took a quick look at it. It's around $80 a share with over 2% yield. Looks like it follows the DOW US 100 Dividend index, and only has a 0.06% Net Expense Ratio. I may have to add it to the portfolio. Quite a recommendation; thanks again!

[Navi]

For those who have answered so far, I have the following questions:
1) For those who use short term trading to provide income to their dividend portfolio, what style of trading do you use?
2) For the options traders, does that provide enough income for you in terms of supplementation? What is your preferred style of options trading?

[fenders53]

(11-07-2021, 04:25 PM)Navi Wrote: For those who have answered so far, I have the following questions:
1) For those who use short term trading to provide income to their dividend portfolio, what style of trading do you use?
2) For the options traders, does that provide enough income for you in terms of supplementation? What is your preferred style of options trading?

I do some short term trading but I don't depend on it for additional income or return.  

In a sideways or up market I sell options successfully.  It's tougher in a down market as I am generally bullish. Over the course of a year I can usually triple my monthly dividend income or more selling options.  Sometimes much more and almost never less than my dividend total.  I am late in my accumulation phase and have the advantage of a lot of capital to commit as collateral.  I never trade anything naked.  It ties up a lot of cash but it would be sitting there collecting nothing otherwise as I am near retirement and maintain a decent sized liquid position just in case.  My methods are simple sales of cash covered puts or calls.  It can be done with credit spreads with far less capital.  I do that occasionally.  There is a learning curve but some simply trades are possible.  

What I don't do is buy calls or puts for a few hundred dollars or less.  I am on the other side of those trades.  You can make money buying options but most people don't. About 70% of them expire worthless and that is why I sell them.  Way too much to explain in a paragraph.

[NilesMike]

Lots of good reading here if anyone wants to trade S&P spreads.

https://www.elitetrader.com/et/threads/s...der.49586/

[fenders53]

(11-07-2021, 10:07 PM)NilesMike Wrote: Lots of good reading here if anyone wants to trade S&P spreads.

https://www.elitetrader.com/et/threads/s...der.49586/

I read quite a few pages of that thread.  I need to paper trade one so I can follow along.

[Navi]

(11-07-2021, 05:03 PM)fenders53 Wrote:

(11-07-2021, 04:25 PM)Navi Wrote: For those who have answered so far, I have the following questions:
1) For those who use short term trading to provide income to their dividend portfolio, what style of trading do you use?
2) For the options traders, does that provide enough income for you in terms of supplementation? What is your preferred style of options trading?

I do some short term trading but I don't depend on it for additional income or return.  

In a sideways or up market I sell options successfully.  It's tougher in a down market as I am generally bullish.  Over the course of a year I can usually triple my monthly dividend income or more selling options.  Sometimes much more and almost never less than my dividend total.  I am late in my accumulation phase and have the advantage of a lot of capital to commit as collateral.  I never trade anything naked.  It ties up a lot of cash but it would be sitting there collecting nothing otherwise as I am near retirement and maintain a decent sized liquid position just in case.  My methods are simple sales of cash covered puts or calls.  It can be done with credit spreads with far less capital.  I do that occasionally.  There is a learning curve but some simply trades are possible.  

What I don't do is buy calls or puts for a few hundred dollars or less.  I am on the other side of those trades.  You can make money buying options but most people don't. About 70% of them expire worthless and that is why I sell them.  Way too much to explain in a paragraph.

I understand; options are a whole different animal. I tried to learn about it, and still don't get the gist of it, hence why I stay away from it. Thanks for your feedback. I tend to prefer being bullish as well, but I do eventually plan on adding short trading to my skillset (assuming I get comfortable with bullish first). I'll certainly keep this in mind.

[fenders53]

It's certainly nothing you have to do.  Mike and I make far more income than dividends.  We put a lot of time into learning proper risk-reward.  The reality is a majority of new option traders are only in because you can leverage up and gamble if desired.  Go for the big score.  It doesn't take long to lose your money if you don't thoroughly understand the basics.

[NilesMike]

(11-09-2021, 06:12 PM)Navi Wrote: [quote='fenders53' pid='29702' dateline='1636322596']
.  


I understand; options are a whole different animal. I tried to learn about it, and still don't get the gist of it, hence why I stay away from it. Thanks for your feedback. I tend to prefer being bullish as well, but I do eventually plan on adding short trading to my skillset (assuming I get comfortable with bullish first). I'll certainly keep this in mind.

I am no expert on options, trust me, but do know enough to make $$ and stay out of trouble.
Options, for the retail traders like us, are not that complicated. A couple of thoughts to try and keep in the back of your mind. When you sell an option, you MAY BE OBLIGATED to do something down the road. When you buy an option you MAY HAVE THE OPPORTUNITY to do something down the road.

Try some index spreads on paper, aiming to collect 1/3 width of the strikes, this will already give you a 66% chance of success. Pick good spots on chart and higher volatility environment and you'll do even better. Move on managing early and your win rate will ramp up.

Your option position is your expression of future underlying price or it's volatility. Fenders and I disagree whether there is an edge in selling or buying options (there isn't) it's just a different way of expressing your view of the market and how you wish to (hopefully) make $$.

Just don't read Natenburg or Cottle option books, my head nearly exploded.

[fenders53]

We don't disagree that the inverse payout is the same.  It just my strong opinion that rookies trip over themselves trying to time the next moonshot with longshot call buys.  Not all of them but head on over to Reddit if you want to meet 100 clueless fools that did it today.  I am especially impressed by the guys that give themselves 3 days until expiration for it to work out.  It's painful to read but they never run out of fools.