Navigating Corrections as an Income Investor

[@armchairincomechannel]

➡Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"): armchairincome.link/snow

[@Nemo-yn1sp]

I signed up for a subscription, but as usual with Fidelity, there is an issue with Plaid and support required. Does the same with Seeking Alpha. Too many other irons in the fire to address it at this time so will have to stick with my basic spreadsheet. Thanks!

[@JosefTorkelsen]

@@armchairincomechannel I got this app after your recommendation and absolutely love it. It is so motivating to see the dividends grow. Also, it would show me I invested cash or money markets that I missed that, by investing, more than paid for the annual price. Great resource!

[@enricomonesi5856]

I ALWAYS enjoy listening to what you have to say...... thank you again 😊

[@armchairincomechannel]

You are always welcome!

[@williamfox1146]

Since finding your videos I have improved my investing approach. I am only buying income-dividend stocks. I have short term treasury bills which I plan to use to buy stocks when the correction comes. Meanwhile I quit buying index funds and buy income-dividend stocks instead. I search for income stocks which have a record of being less volatile while producing stable dividends. I don't fear what a market correction will do to my income stocks. When the correction comes I will resume buying index funds.

[@armchairincomechannel]

Thanks for sharing your approach, it makes a lot of sense! Having a plan is much better than just riding by the seat of your pants and the emotions that go with that.

[@momdittomomditto7705]

Good reminder to diversify and don’t time the market. Thanks for another well thought out video! I look forward to your Sunday videos.

[@armchairincomechannel]

Glad you enjoyed it! Thanks for taking the time to comment :)

[@OmaticFever]

I'm loving the content! Thanks for Mr. Archair Income!

[@armchairincomechannel]

My pleasure! Thanks for watching :)

[@rejeanorscott1555]

Thank you. I needed to hear this important lesson again.

[@armchairincomechannel]

Glad it was helpful!

[@johnmaria205]

Again, an excellent presentation. Thanks again my brother Armchair!!!

[@armchairincomechannel]

You're most welcome, glad you enjoyed it!

[@mikem511]

Thanks the latest market action has been unsettling as I have just started income investing. This was helpful

[@armchairincomechannel]

There's a lot of luck associated with timing when you start a new investing phase. Over the long term though, it generally evens out. Try to ignore the daily noise!

[@christopherdean9332]

Another good video thanks for your continued sharing of knowledge and experience

[@armchairincomechannel]

You are very welcome. I appreciate you taking the time to comment!

[@krcr2321]

Great video and great guidance with selection of stocks. Diversification and consistency of investing will compound growth. Downturns are opportunity. Staying in the market and not trying to “time” the market is key.

[@armchairincomechannel]

I couldn't agree more!

[@goose-F16]

one of your best vids AI.. well done.. and spot on.

[@armchairincomechannel]

Glad you enjoyed it! Thanks for being one of the first to watch it :)

[@brettcherry408]

Another amazing video with some very timely and fantastic advice. Thank you for all the great content. This is one of my absolute favorite channels.

[@armchairincomechannel]

Glad it was helpful! Your encouragement is motivation to make more videos :)

[@vitawater4259]

great video, sober thinking is needed in these times

[@armchairincomechannel]

Thanks! I appreciate your feedback.

[@chalupiak]

You channel has changed my entire perspective around income investing. Keep it up!

[@armchairincomechannel]

Wow! Thanks for the feedback. I think everybody should be exposed to every style of investing and find the mix that works for them. There are so many ways to approach investing/retirement and "buy low, sell high" is only one of them.

[@dominiquetheeasyminimalist]

Buy good funds, diversify, take advantage of dips, and enjoy the income 🙂 I do keep around 2% cash to add more when prices drop.

[@armchairincomechannel]

Thanks for sharing. I think you enjoy spending that 2% when the opportunity presents itself :)

[@alanvonweltin6820]

This question is not directed at this video but more general in nature. I'm new to income investing as i've been in growth mode forever. Retired recently and now i'm trying to dial back concentrated positions in individual stocks and have an allocation toward income. The issue I see with income investing in general (at least for someone in the USA), is that most of these funds pay their dividends as regular taxable income. Does Snowball (or any other tool) track the tax treatment for these funds? I'm also planning on doing a Roth conversion to a Roth IRA and then using that account for the income funds to remove taxes from the equation. Thanks again for your work and with making the portfolio available.

[@armchairincomechannel]

The US tax code is so complicated that I don't think any website can answer your question. Tax treatment for each fund is unknown until the end of year financial statements are issued. Even the 19-a notices sent to shareholders are often wrong. Perhaps AI will be able to more accurately estimate the tax treatment of these funds. You're correct, many funds pay ordinary income. The NEOS funds pay out a lot of return of capital, which is more tax efficient than ordinary income for most US tax payers.

[@danstevens64]

Hello again! Another great video as always. I wouldn't suppose you could do a deep dive video on the CEFS ETF? I know you touched on it briefly in a previous video (I think it was called "funds to save you time"?). I have been pouring through all of the documentation on the fund's website and unless I am missing something, it seems like it could be a great way to reduce the time I spend on my closed end fund portfolio. Currently I monitor CEF connect and manage the allocation of my deposits and man... I got two young kids and don't get enough sleep for this lol I know its a big ask, and your list of videos to make is probably quite long, but if it happens to align with your curiosity, I would love to hear your thoughts. Thanks for all you do on this channel.

[@armchairincomechannel]

Thanks for your feedback. Last time I looked at CEFS, I liked the concept but the total return wasn't competitive. This past year it's performance has improved. Also...no dividend cuts! I'll take another look. Thanks for the suggestion and get some sleep!

[@marcosagosti6175]

One way to navigate correction is to “tail hedge” as described by Mark Spitznagel in The Dao of Capital. Buy every month 1/12 of 1% of your invested capital in SPX puts at strikes ~25-30% below market price. A sudden jump in volatility such a the Covid crisis will provide those puts with enough fuel to cover all the downside. Now one is at the bottom of a market correction with an even portfolio, due to the cash from puts, to do as much bargain shopping as desired. It’s not a panacea as tail hedge does not work well is slow downward crawling markets like 2022. But, with it I sleep like a baby.

[@armchairincomechannel]

That's an interesting risk mitigation strategy, thank you for sharing. Presumably the bargain basement deals scooped up during a crash would generate returns that exceed the 1%/year cost of the puts. A bit like an insurance policy.

[@canrightc]

Another excellent video thank you

[@armchairincomechannel]

Glad you enjoyed it! Thanks for watching :)

[@andymassey-pl1bg]

Great vid , many thanks ..

[@armchairincomechannel]

You're most welcome! Thanks for watching.

[@russellhaynes921]

Thank you for all your videos. Lots of work put into these. When you are considering a dip, are you looking at 10 days, 50, 100???

[@armchairincomechannel]

You're most welcome! I don't focus on trading or have a formula, so there isn't specific timeline or moving average I use. Each month, as dividend income flows in, I withdraw what I need and reinvest the rest in the best buying opportunities available at that time. When the market is correcting, there are more of those buying opportunities to choose from.

[@baranjan4172]

Great info here. Have you considered a hindsight market timing strategy? About twice a year, there is a larger correction, when the RSI of income investments drops to 30 and they become oversold. Collecting in between, putting it to work during those corrections. SA author High Yield Cash Flow has a similar strategy to yours BTW.

[@armchairincomechannel]

It's an interesting idea, and it may improve performance if the dips aren't too far apart (given the opportunity cost of holding cash). I've also considering buying when the Fear and Greed Indicator is in the Extreme Fear phase. However, I've decided to just buy every month instead of trying to time the market. I'll take a look at HYCF.

[@baranjan4172]

@@armchairincomechannel the opportunity cost isn't too big if we consider CLOZ to be "cash". Compared to PFFA for example. Similar yield but when PFFA drops 10%, CLOZ drops maybe 1%. Good time to rotate. And once PFFA is overbought again and back to its previous yield, we can rotate back to CLOZ, JBBB, JAAA or even BOXX. This works quite well. The trick is being patient in waiting for those corrections 🙂

[@RonnieM90]

EIC has performed well recently. It is currently up 5.47% year to date.

[@armchairincomechannel]

I'm happy with it so far but I accept its relatively risky so I expect more volatility than we've seen recently.

[@alvarobarreiro9069]

As always, a brilliant and educational video. By taking investment ideas from your analysis, I have considerably increased my annual dividend yield. Thank you very much for your work and come and discover Chile. We will be waiting for you with a good wine.

[@armchairincomechannel]

Thanks for sharing your experience, I'm glad its been helpful. I'm in Asia but your invitation is very appealing!

[@BenjaminHansen]

Thanks for the video

[@armchairincomechannel]

You're most welcome!

[@lindsaynewell6319]

Superb content - very well thought out, supported by solid evidence, clearly communicated with a bit of dry humour. All reasons why I’m here and learning from your strategy as I develop my own. Question for Q&A - do you spend much time doing correlation analysis on new investments and/or for rebalancing ? Thanks.

[@armchairincomechannel]

Thank you for your feedback, you're very kind. I'm always looking for new income investments that don't correlate with existing ones (especially the overall market) to smooth out the long term income stream. However, I don't have a mathematical model or system to do that, it's just seat of the pants. Most investments have some correlation to the equities market so they're difficult to find!

[@davidwysocki1004]

Excellent presentation on staying fully invested as an income investor during stock market corrections. Good stuff!

[@armchairincomechannel]

Thanks! I appreciate you viewing regularly :)

[@laurayopkins4049]

Awesome 😎👍🏻

[@armchairincomechannel]

Thanks!

[@HectorGarcia-nb2ld]

Great video sir

[@armchairincomechannel]

Thank you sir!

[@DeanPalma]

Been wondering about what would happen to your type of portfolio during a downturn. Like you said, there is always one on the horizon... Thanks for the overview, this is one more good reason for me to stay with the income style of investing as I approach retirement. Thanks for the info!

[@armchairincomechannel]

Thanks for your feedback. Glad the video was helpful :)

[@mikeb2777]

I like your opening comments. As a very long time investor I have heard this for decades. Eventually people like Dent are right and they tout their prowess for making great calls. Their misses (and for Dent they are annual) are forgotten by the media and they get interviews and can thus sell their services. I ignore all of the pundits though I think Ray Dalio and Rick Rule have something to offer. Thanks for sharing your thoughts for winning in a recession.

[@armchairincomechannel]

Thanks for your feedback. I enjoyed reading Dalio's "The Changing World Order".

[@MichaelIreland]

I'm overexposed to Canada as a Canadian investor (no fees on buying Canadian ETFs in CAD), but I've done an okay job with diversifying by way of ETFs with US & Global exposure. The CAD being so weak isn't helping, but it's not likely to be permanent. One strategy I use is portfolio weight - if a fund or sector is doing well, its weight will rise. I'll use the dividends from that to buy the ones that are depressed (within reason) to shift the weight. It's basically no-brainer "buy low" without any stress.

[@I_Died_2_Weeks_Ago]

Hang in there. Soon you'll be our 51st state! 😝

[@armchairincomechannel]

That makes a lot of sense, especially if the sector that's struggling is simply going through a temporary cycle.

[@MichaelIreland]

@armchairincomechannel real estate (I have common shares of a split corp) and bonds (I have a CC ETF) have been depressed longer than I originally expected, but I have do doubt they'll return eventually. In the meantime I've accumulated plenty of shares with very high yields. I won't be surprised by a cut, tho ... Just disappointed.

[@williamfox1146]

Excellent.

[@armchairincomechannel]

Thank you! Cheers!

[@AvDe-v6x]

Do you pay attention to NAV depreciation when you add stocks in your portfolio? Thank you for all you do. You’re amazing.

[@armchairincomechannel]

Thank you for your kind words of encouragement :) It's motivation to make more videos! Yes, I look at NAV over the long term. I'll accept some NAV erosion if it is specific to a situation, like fixed income investments while interest rates are climbing. But if a fund just generally erodes over the long term then its not for me.

[@txbgould]

This video is awesome! Before learning from you and Steve Bavaria (which I also learned about from you), I missed out on years of income by being scared to cash in on every headline. Thanks for your thoughtful and logical videos!

[@HelloMartians]

Same here. Where did you end up putting your money?

[@armchairincomechannel]

Glad it was helpful! Steven had a significant effect on my approach when I first read his articles before I retired. I don't buy exactly the same funds as his but I do share his general approach.

[@jeremysmith3142]

Harry Dent - Wrote an interesting book in the early 2000s - demographic trends Call in 02. Dow 36,000 just a couple decades early but interesting thesis Amazing video as always -

[@armchairincomechannel]

Yes, I read his book and thought the trends made sense. But his predictions have not been consistently accurate. The past doesn't necessarily indicate the future.

[@paulfiedler9128]

I thought you'd added JAAA to your portfolio, but then I realized it's far below your yield quest. But, I added JAAA to my dividend portfolio after using Fidelity's ratings and analysis tools to see JAAA received an A rating from FactSet, 90% Efficiency, 100% Tradeability, and a Five Star rating from Morning Star, AND a technical sentiment rating from Fidelity of STRONG for the next two years. Yes, JAAA isn't the hottest lady at the dance, but I'm pretty sure she'll behave herself and stay loyal to me. JAAA's 6.36 yield looks like fairly safe and steady income to me.

[@lindsaynewell6319]

You’re in good company - Brad at Income Architect is using JAAA as his temporary cash account (for Roth and IRA).

[@paulfiedler6820]

Thanks for relating that to me.

[@armchairincomechannel]

JAAA looks very attractive. Even though it's below my usual 8% threshold, the ultra low volatility brings its own value during uncertain periods. If I want to buy something that's at the upper end of the risk spectrum with an extra high yield, I might buy some JAAA to mitigate the risk to the portfolio.

[@bethhynes787]

Smart advice!! Thanks for your insights- Time horizon is a critical factor as well, if the market corrects & that correction impacts 1/3 of the dividends, does one have the time & other cash flow to buy into the dips & then see the benefits on the other side… if you’re 57, yes, if you’re 84, maybe not.

[@armchairincomechannel]

That's a good point. The older you get, the less important it is to maximize your net worth and the more important it is to sustain sufficient income.

[@AvDe-v6x]

You are the best. Thank you for always taking the time to share your research. Another big thank you is for sharing your portfolio. Because of your portfolio you’re helping so many people in the world. You are an amazing human being. Keep up the work and enjoy you vacations😊😊

[@armchairincomechannel]

Thanks! I appreciate your kind words. I plan to have some interesting vacations later this year that will make for some interesting backgrounds in the videos!

[@fialee8]

That's the problem with CC ETFs... it's when the market recovers more than 1%-2% per any given month, and worse, for several months in a row... you'll miss out on the recovery. It could be further compounded if the ETF options is automated such as iShares, which doesn't have any human intelligence & experience vs just initiating a position automatically.

[@AmeriGlobal]

One could dollar cost into leveraged funds after a big correction. SPYI/GPIX with some shares of SSO or SPXL for example.

[@ianLord77]

CC ETFs are created and should be used for income generation. Capital appreciation is a secondary, less important goal. If you want capital appreciation use the appropriate underlying.

[@armchairincomechannel]

The covered call funds I hold generally write calls further out than 1-2% per month, but yes, if the underlying index appreciates more than the strike price for a period that exceeds the duration of the call, then you'll miss out on some appreciation. The the price of getting paid those distributions every month regardless of what the underlying index is doing.

[@fialee8]

@@armchairincomechannel That would be a good video and metric to include in all future CC videos... how much of the underlying assets have covered calls sold against. I actually thought most CC ETFs sell at 2% or less, otherwise, they won't be able to generate enough options income for the dividends (unless it's mostly ROC).

[@peterxie1]

I am your fellow Australian, just wondering what is your tax situation living in overseas? I am approaching 60, and just realised Australia is the only country where there is no income tax and capital gain tax if you derive your income from your pension super account, also there is no asset value cap on your pension super account. No need tax yearly tax return as well. Would you consider returning Australia when you reach 60? Love your show and much appreciated. Regards, Peter Sydney

[@armchairincomechannel]

Hi Peter, the tax situation for Australians living/residing overseas is great! Australia doesn't tax its citizens if they don't reside in Australia. I love living in Asia and have no plans to base myself anywhere else in the future, but I will travel outside Asia to Australia and Europe extensively. You may want to join our private community. Here's a link: facebook.com/share/g/18cQAFyrxL/

[@peterxie1]

Thank you inviting me to join your group, I just sent a request under the name James Farmer.

[@rickgrimsley4059]

Great Video! Long term holding seems best. Income over value fluctuation and ability to grow income even faster during corrections matters in retirement. I'm learning alot from your channel. Thank you. On a side note, I'm an Armchair insider member and the download link to your portfolio does not work today. I tried it in several browsers. I get this message--> This XML file does not appear to have any style information associated with it. The document tree is shown below. Any ideas?

[@rickgrimsley4059]

P.S. I was able to make the link work with Gmail. Thank you!

[@armchairincomechannel]

Thanks for your feedback, glad you like the info. Not sure what happened with the download. I just checked it and it worked. Another option is to click "view on the web" in the email.

[@J_International]

The media, particularly the financial media always dramatizes market movements. They love to use anxiety producing words like getting nervous, worried, uncomfortable, flashing warning signs... Any seasoned investor doesn't approach the market with fear. It's always opportunity, and preparation.

[@Wasteoftime10]

Do you consider the drop of The Nasdaq by 80% two decades ago, and 16 years just to break even again a "market movement"?

[@armchairincomechannel]

I agree! Investing in the market is an act of optimism, and over the long term, it has paid off. Slow and steady doesn't get views or ratings.

[@J_International]

@@Wasteoftime10 Of course not that was a catastrophic crash. I have sell logic built into my methodology but it has nothing to do with headlines or trading ranges the media goes bonkers over. I am not a buy and hold investor but I am also not a panic and sell everyday investor.

[@BTinSF]

Why do you use 3 different brokerages? I used to use 2 (just in case one went down in a severe market disruption) but as I age, it seemed like the simplification of moving everything to the one brokerage I prefer had a number of advantages: (1) Making life simpler for my heirs, taxes and so on, (2) putting my single account into a size that gets several extra perks smaller accounts don't get.

[@I_Died_2_Weeks_Ago]

I just opened a second brokerage to separate my income funds from my savings (SGOV) & hedge fund (BLV). My Schwab account makes it too easy to grab the money so-to-speak, so I put my long cash & bond funds in Robinhood.

[@armchairincomechannel]

Those are good arguments, much like focusing your travel on one hotel brand to obtain loyalty benefits. I have a significant portion of my net worth entrusted to these brokers and I don't trust any one (or even two) entity with that much power. They can make mistakes, get hacked, have an outage, etc. I expect that they can eventually resolve any issues, but for the days or weeks I'm waiting for that resolution, I'd rather have 2/3's of my assets elsewhere. I looked at one brokerage statement about 2 months ago, and the balance was down by 50%...my heart was racing! After about 15 minutes they fixed the "error". That wasn't fun.

[@BTinSF]

@@armchairincomechannel When you say you looked at one brokerage statement and it was way down, do you mean a monthly printed statement or an online balance? I have found that the value of my online balance varies by many thousands of dollars during the day regardless of the price of individual shares. It has to do mainly with how they value options. During the trading day, they value options at the bid price (or, for short puts, at the offer price). Late at night, when they balance the books, they value options at the last trade. This typically boosts the value of my account by double digit thousands. But I've now been with my single brokerage (after being with 2 others for a few years each) for 40+ years and have yet to have a major glitch that wasn't quickly resolved (and I traded through the 1987 crash, the collapse of the Dot-Com bubble, the recent "Great Recession", Covid etc etc.). For about a decade I had the same worries you have which is why I used 2 brokers. But I just haven't had any problems that justified the additional complexity to my financial affairs.

[@khanbus]

As always, another excellent video! I have a couple of quick questions: 1) Are you still bullish on the PIMCO Dynamic Income Fund (PDI)? 2) What are your thoughts on the Virtus InfraCap U.S. Preferred Stock ETF (PFFA), given the recent NAV erosion?

[@armchairincomechannel]

PDI is a black box and I'm a little concerned about PDI given their recent cuts to a couple of other Pimco funds. I keep a small allocation (about 2%) to PDI but may trim it soon out of caution. As for PFFA, the price went down recently with long duration bonds, exaggerated by the leverage on the fund, that doesn't make me like it any less. If I didn't already have my 5% max allocation filled, I'd by more. Interview with the fund manager coming soon...

[@krakhour2]

You can look at your position all you want but at the end of the day you can only just hope that they work out .Noticed jepi has been really struggling lately and svol. While Iclo and cloz and main and fsco have continued to do great. I look at which ones are struggling and I dont add to them.

[@krakhour2]

Dont try to time the market I add to position as the lot I buy is lower than the lots I have bought in the past .Otherwise your doller cost averaging up which is a big mistake IMO

[@armchairincomechannel]

I agree that SVOL's performance has been disappointing recently. It doesn't like the recent increase in volatility. JEPI generally underperforms during a bull market, so no surprise there.

[@ArnieT-s2m]

What do you make of some of these managed ETFs that are paying massive yields? For example YMAX 40% to 50%. Somehow that doesn't seem sustainable. I see that you have a bit of FEPI in your portfolio, another high flyer for dividends.

[@armchairincomechannel]

I don't hold any Yieldmax ETF's because I don't like NAV erosion or concentration risk. I interviewed Jay who manages the YM funds a couple of years ago. Nice guy, but I prefer something that maintains or grows NAV. I have some FEPI but consider it quite risky as it relies on 15 tech growth stocks continuing to appreciate to deliver excellent returns. So far, so good but during a tech correction it will get hit hard.

[@AlbertoCambiaggi-zx6yk]

Buongiorno,complimenti per il canale,la seguo da in Europa(italia) finalmente stanno arrivando ache qui fantastici etf da reddito come jepq e jgpi.

[@armchairincomechannel]

Grazie mille! I love love love Italy! Can't wait to return :)

[@leoz6338]

Thoughts on interval funds for diversification? Some are open to retail investors. Thanks in advance.

[@armchairincomechannel]

I prefer the liquidity and transparency of publicly traded funds so I've never taken a serious look at interval funds.

[@chadbelcher6208]

Probably answered 100 times but what kind of overall growth are you getting overall in say past 10 years? Paced with inflation? Thanks

[@armchairincomechannel]

Only about 5 times ;) Last time was Dec 27th, 2024, so I'll paste it below. Generally it keeps just ahead of inflation. I took a big hit in 2020 because I went to cash and then bought back in too late. Won't make that mistake again! "Tracking results is challenging with a constantly evolving portfolio. I started using Snowball to track my portfolio (and share it) in May 2024. Before then I just followed the numbers on 3 separate brokerage accounts. Since then I have made about 4 trades a week and reinvested a portion of my dividends every month. Not counting the reinvestment of dividends, the portfolio is up 6.7% since May, and the yield is currently 11.54%. Total return would require annualizing the 6.7% and adding the income. I don't have software that can do that for my portfolio. So no NAV erosion, but the market has been kind to us. I would like to track everything but I haven't found a way to account for my trades (realized vs unrealized profit) and I want to show the returns without reinvestment so that its a constant as I reinvest a different amount each month and that complicates the return. As the data from Snowball grows, I'll share whatever useful data I can. I think I'd need at least a year of data but ideally it would be best to see how the portfolio reacts to bull and bear markets. Anecdotally, I recall that my portfolio dropped like everybody else's in 2022, but the income hardly changed at all...very few cuts. Since then I've added covered call funds and they are likely to trend down during a prolonged bear market so that will affect future numbers."

[@MoniqueWyatt-y3r]

With a correction, are you concerned about your CEFs possibly deleveraging? What are your thoughts?

[@armchairincomechannel]

Yes, that's a valid concern. May CEF's are leveraged. If there's a serious meltdown then deleveraging hurts the NAV. I don't over allocate to CEF's for a few reasons, but that's a big one!

[@TJ-Stackin]

I like pull backs get my favorite assets on discount

[@armchairincomechannel]

I agree! If the income generation machine remains constant and the price is lower, then I want more!

[@Nemo-yn1sp]

Love corrections unless I don't have free cash to go on a spree. Cash doesn't hang around long, perhaps through a single dividend payment.

[@armchairincomechannel]

It's expensive to sit on cash for more than a short period. That's why I like income investing...always more cash coming!

[@BTinSF]

I like selling puts on high income payers very far below current prices--commonly I use charts to find 5-year lows or other strong support levels. That provides me income from put premiums and in the case of a genuine market correction can get me into some securities at very advantageous prices.

[@armchairincomechannel]

That's a great strategy, especially if you enjoy the process and you're happy to own the stocks if they fall. Thanks for sharing.

[@fredrickthegreat3895]

Looking to add FSCO due to its low correlation to stocks, and good track record. Do you think it is to expensive now? This fund has been on a tear.

[@armchairincomechannel]

FSCO is one of my best performers in recent history. If I didn't already have my max allocation (5%), I'd buy more. It's still trading at less than NAV....and it just raised its dividend!

[@peterxie1]

I am in the process to construct a high income and tax free retirement account using high yield credit in USA and combined with Australia tax free Heaven for a great retirement. Most people in Australia including me mistake $2m as the max asset value you are allowed to hold in your super account, I just found out that cap only applies to super account in accumulation phase but does not apply to super pension account when you reach 60. Of course, you can not contribute to your account and must withdraw 4% min every year but an account of $2m, if you are able to manage it well and using income deriving from the high yield credit you shall be able to to grow the value to $5m easily, also there is nil capital gain from selling your assets to buy new assets so the return on your investment is much higher than your non tax free account. Just like to hear your perspective about this matter, much appreciated. Cheers 😅

[@armchairincomechannel]

Thanks for sharing that information. I'm not an Australian tax resident so I don't have experience in that area. Per my earlier comment, join our community so that you can exchange information like this with other Australians.

[@littlebeardedjedi]

Any comments on situations where you get a windfall and it's more than an American can put into tax advantage accounts (e.g., Roth, IRA, etc).? Clearly, there are tax efficient income funds, but they aren't usually offering the best returns... And what is your preferred strategy to rebalance? Do the pros of selling all or part of a position outweigh the option to redirect future dividends into newly favored funds? And if you do sell a fund (referencing non tax-advantaged status above) what protection do you seek, if there is any?

[@armchairincomechannel]

I not as systematized as your questions imply, and I'm a non US tax resident so my tax strategy wouldn't be helpful. Regarding rebalancing, I have a cap of 5%, so if a fund hits 6% allocation I'll trim it. Generally I hold more of the lower risk funds, and smaller allocation of higher risk.

[@littlebeardedjedi]

@armchairincomechannel The other end of that thought experiment for me is if I have less money but want to start the dividend snowball with a few higher yield funds with less diversification as my first step (taking some risk there) and then hedging risks as I go by adding diversification (more funds, more kinds of funds, more conservative funds) as I go by reinvesting the dividends from the relatively fewer high yielding funds in the beginning.

[@littlebeardedjedi]

Hopefully, with such diversification, I could avoid ever selling funds and taking a tax hit. Especially if outside of tax-advantaged accounts. I will have to look into US code for "in-kind" rules if these transactions are outside an IRA or Roth. That said, I don't think I'd need 20+ funds, but I might get there anyway. I would be interested in building a matrix of the kinds of risk out there and see the minimum number of funds it would take to hedge (or evenly distribute) those risks.

[@FragileNM]

When you show a chart such as ARCC, are you taking into account holding back some of the income to cover taxes?

[@armchairincomechannel]

The total return charts show price movement, along with 100% of the dividends reinvested. That's the only fair way to compare a stock with income to a stock without income. Everybody's tax situation is different so its difficult to display charts that adjust for taxation.

[@FragileNM]

@@armchairincomechannel understood, thank you

[@michaelt2974]

Question- say I bought into the “crash is imminent “ mantra and went to 50 percent cash. Now market is higher and so i don’t known whether to wait for correction or get back in now and dump it all back in. Terrible position to be in. Avoid it at all costs.

[@ventcurtisburkett532]

JAAA is almost as safe as cash and pays decent. I'm using it as a cash equivalent. Who knows where interest rates are going, but unless the FED makes big cuts, JAAA is not a bad place to park money if you wait.

[@michaelt2974]

Thanks I was also looking at BUCK to park some money. Still pondering

[@AmeriGlobal]

JAAA and JBBB together.

[@armchairincomechannel]

You've described one of the pitfalls of timing the market. I'm a believer of being in the market all the time and riding out the rough parts. Picking a day to buy back in at scale is stressful. You could try dollar cost averaging back in. If you're nervous then the low volatility funds might help you sleep better.

[@dubsdolby9437]

Do you hold any uk 🇬🇧 stocks? as we have some good companies with high yields at present. I am a retired dividend investor living in the uk 🇬🇧 😊

[@armchairincomechannel]

Greetings to the UK; love the Lake District! I don't hold any UK stocks but I'd be open to it. It's easier to access a lot of research on US stocks/funds but diversification would be nice.

[@johnspelman8976]

I made alot of extra income in August and December when a bunch of funds dipped. I held my nose and bought. How are you feeling about SVOl these days

[@armchairincomechannel]

Nice move! I recently reduced my exposure to SVOL and am considering exiting it.

[@angelvazquez8169]

Great advice to keep divided investors focused when there is a market correction.

[@armchairincomechannel]

Thanks for your feedback, I'm glad it was helpful :)

[@jeancarloferreira9770]

Just curious...do you have your investments in taxable brokerage or retirement accounts? Or a mix of both? I'm currently 60%taxable 40%IRA. And my taxable account is my income account. IRA is mostly growth etfs plus a few dividend growth etfs. Not the most tax efficient but since I need the income now that's what I went with.

[@armchairincomechannel]

I'm a non-US tax resident so my tax situation is quite different. If I was still a US tax resident I'd try to max income investments in an IRA, unless they were tax efficient, such as SPYI.

[@hulenbryant5637]

Thanks for another great video. These help keep me focused on my goal and avoid the "shiny new objects" that are constantly being put out there.

[@armchairincomechannel]

I can't ignore the shiny new objects either...requires some discipline!

[@YamahaC7SRG]

New subscriber here... I'm curious if you have a video or thoughts on investing for QUALIFIED dividends? If Trump makes SSI untaxed, someone with qualified dividends could earn a great deal of income w/o paying federal taxes, right?

[@armchairincomechannel]

Welcome to the Armchair Income community. Qualified dividends are mostly paid by individual companies. Unless they're somewhat distressed, eg. MO because the outlook for tobacco is unknown. I prefer to focus on healthy sources of income and they typically pay ordinary income, which is less tax efficient. The exception is funds like SPYI that pay a substantial amount of return of capital, which is quite tax efficient.

[@locdogg39]

Anybody know why JBBB fell this week while JAAA and CLOZ remained strong?

[@I_Died_2_Weeks_Ago]

The bond market. A rise in yields makes it harder to pay off riskier loans (JBBB).

[@armchairincomechannel]

JBBB's price movement looks normal to me. It moves up and down with the timing of distributions but otherwise, I don't see anything strange.

[@ClintonSiegel]

Thank you, Armchair Income, for providing insights, data and perspective that truly enlightens.

[@armchairincomechannel]

My pleasure! Thanks for being a regular viewer...and commenter :)

[@JoaoLuissonhar]

Good contend . where do you cash ....

[@armchairincomechannel]

Thanks for watching!

[@ventcurtisburkett532]

Great video. All your videos have been great. I agree with you almost 100%, but I disagree that the market is "always overvalued". I know the statement was hyperbole, and it feels like valuations have always been sky-high. The Shiller P/E Ratio is a terrible correction predictor, but it is unusually high now, and it makes me uncomfortable. Old guys like me remember the 2000 bubble and crash, so I have moved more into JAAA and JBBB and cut my exposure to Tech. Perhaps I am trying to time the market, but I can make about 7.5% without exposure to expensive assets and sleep well at night.

[@normansimonsen1203]

I'm an "old guy" as well. And, I've always had an odd thought whenever I here "don't try to time the market". Does anyone really want to buy at the wrong time, or sell at the wrong time. When I think of it this way, isn't everyone timing the market ?

[@dominikfrohlich6253]

Good companies will always be overvalued, not the market. The correction is due when lots of bad companies are overvalued, just like in 2000. The SP500 without the MAG7 is isn’t overvalued at all.

[@armchairincomechannel]

I'm old enough to remember the considerable sum I lost in the 2000 crash. It was a hard but valuable lesson. Back then I didn't buy funds, just hot growth stocks, but I had a job so it wasn't the end of the world. I like JAAA and JBBB too but I'm also a fan of diversification so I don't allocate more than 5% to any one fund.

[@coltong694]

Question for you, since I know you’re in Vietnam- do you think $1000 per month in dividends is enough for a single guy (turning 30 this year) who’s willing to be a bit frugal if necessary (but still be pretty comfortable with things like a gym membership)? Just looking for an insiders take from someone I look up to. I’m prepared to cross the $1k mark in dividends this year with about a 250,000 portfolio. I remain ambitious about boosting this income over time but I’m so ready for something different than the west!

[@TrackingArete]

$1000 is cutting it close for a single person, depending on how frugal you are may make it possible. Planning for extra $200-$400 per month for emergencies, extra monthly savings, medical/dental expenses, travel, taxes will lessen financial stress and more prudent.

[@armchairincomechannel]

I spent 2 months in Vietnam in 2024 but I'm not there now. Congratulations on building a passive income stream at such a young age...keep it up! I think $1,000/month is living a very basic life and doesn't allow for the unforeseen so I'd want at least $1,500/month if I was 30, but its a matter of taste. Check out Joose the Nomad on KZbin. His channel addresses your question quite well. Look into Nha Trang and Danang. Hanoi has too much pollution. As for asia....yes! At a minimum you should visit Asia and see if its for you...I love it!

[@wp00n1974]

To be able to more successfully 'capitalize' on market corrections, I first build up a 3-month 'buffer' of 80% of accrued dividends (i.e. don't automatically DRIP). Of the dividends I receive, I siphon off 20% to immediately reinvest in the most-fallen two tickers in my portfolio, to compensate for NAV-erosion. Once the 3-month buffer is filled, which I hold in SHV (short-term gov't bonds), then only do I start reinvesting the ''overflow' dividends immediately on receipt. That way, when the 'crash' comes, which I define as a 15% fall from the peak, I'll have a little more capital to buy more assets at a discount.

[@RobertBrown-yn9tx]

I'll need to ponder this strategy... It has a good "ring" to it...

[@armchairincomechannel]

I follow your logic. Having a system is a lot better than flying by the seat of your pants, and the emotion of the moment.

[@bills.1390]

Excellent analysis, you are very good at illustrating your reasoning, this will help a lot of us folks here. I have a lot of preferred stocks for the very thing you mentioned, the dividends still roll in and cannot be lowered regardless of current market price unless the company is in dire straits and has already eliminated any common stock dividend altogether, a very rare thing. I try to mostly buy "term" preferred stocks that have a stated maturity date, even in down markets they don't stray much from the $25.00 a share maturity price, yet it is not hard to get an 8% dividend average.

[@armchairincomechannel]

Thank you for sharing that information. To achieve 8% with preferred stocks generally requires leverage, for example PFFA. There are exceptions, but the credit rating will be lower.

[@bethhynes787]

What is your favorite investment that balances capital appreciation with yield?

[@AmeriGlobal]

Armchair income has done some videos with Wealth Adventures, and DIVO is one of the favorites.

[@bethhynes787]

Interesting because VIG tracks that at a lower expense ratio (3 year, 5 year total return)

[@AmeriGlobal]

@@bethhynes787 VIG dividend yield is currently 1.75% compared to DIVO at 4.73%. VIG isn't much of a dividend.

[@armchairincomechannel]

Wealth Adventures likes DIVO a lot. I don't hold it because I'm more of an income investor.

[@armchairincomechannel]

I'm focused on income and appreciation is a distant second. However, to address your question...MAIN and ARCC come to mind. Those are individual companies though.

[@JosefTorkelsen]

Excellent video and thanks for answering my question that I commented last week! Btw, my family starts our international journey next week starting with 3 months in Japan.

[@armchairincomechannel]

If it was your comment that sparked the video then....thank you!! Your international journey sounds absolutely incredible!!! I love Japan and can't wait to go back. It's also my favorite food.

[@PeterFadullon]

Hello

[@armchairincomechannel]

Hi, and thanks for watching :)

[@GinJ1337]

Not looking at what the markets do all the time really helps. Have a buffer when you retire. You should be having more income than your expenses, because it could drop in a bear market.

[@armchairincomechannel]

That's true! You need a margin of error to avoid unforeseen disaster. Always better to have too much cash flow than just enough.

[@chubstyk8545]

The two greatest tools for an income investor are dollar cost averaging and compound interest (DRIP). Long term, unbeatable

[@armchairincomechannel]

You're right. Focus on those 2 things, ignore the noise, and the money piles up...slowly at first, then steadily, then unstoppable (unless you spend too much of course).

[@tpo6142]

From what I see, the correction started when dow peaked at 45k. It needs to go to about 40k.

[@armchairincomechannel]

All I know about the Dow is that in the short term it can move in either direction at any time, and in the long term it goes up. I have no clue when to buy it or sell it...hence why I'm comfortable being an income investor.

[@peoriaos6627]

Another excellent video. I will add why I like VICI although it is only 6%. Several years it has grown the dividend 8% or better. At that rate it would take 4 years to increase the dividend to 8% of that original cost. Since they are steady increases, it is helping out with inflation. That means less money I have to put towards stocks that other dividend stocks don't supply. Meanwhile, my current yield on cost before I just purchased more, is a little more than 7%. Also I feel this REIT is the safest of all REITs and it currently has the highest rating on SA. Its difficult to put money into such a low yielding position, but long term, it feels good for me.

[@armchairincomechannel]

Thanks for sharing that. I reviewed VICI a while back and am impressed by the duration and quality of their leases.

[@peoriaos6627]

@@armchairincomechannel it seems to have been hovering between 29 and 33 so right now it appears to be a great buy, with me expecting it to easily do 10% in equity return in two years. However, I have no plans of selling it. But it would be a great way to earn some capital.

[@krakhour2]

svol kicking my butt...I think gonna have to reduce that position cause it is extreme drop during heavy down days.

[@armchairincomechannel]

In the last edition of Armchair Insider, I reduced my SVOL position. I'm liking it less as time goes on.

[@chalupiak]

​@@armchairincomechannel I set VIX alerts and anytime VIX is over 25 I add some and keep adding if the vix keeps climbing. When the vix drops down I sell it. It has worked well so far.

[@jeancarloferreira9770]

No one likes it when it's going down but remember that svol has the ability to recover better than most CC etfs. Once the market turns bullish again just watch svol get back to ATH

[@hansschotterradler3772]

I started a small experimental SVOL position consisting of 50 shares in August. Since that, the distribution has dropped from $0.30 to $0.26, and I'm down almost 10% in the share price. I will get out of it in the coming weeks.

[@andrewd9633]

I just bought more when the vix spiked, and I doubled down and bought SVIX for a short term volatility trade

[@peoriaos6627]

Wow! I got the first like!

[@armchairincomechannel]

Now sure how, but you accessed a sneak preview!

[@brucef1299]

In the moment..... Never has a truer statement been made. October 2022 was my test, and I failed miserably. I didn't sell anything, but failed to ramp up acquisitions. For me DCA is the way.

[@armchairincomechannel]

I pretty much learned every useful lesson the painful/expensive way. If I could live to 200 I'd be so rich with all the knowledge and experience one gains!

[@TheMally85]

Thank you Mr. Armchair!

[@armchairincomechannel]

You're most welcome!

[@RC-xm4lj]

For your next Q&A: Do you have wife and kids? If you were to have kids, would you give them your income portfolio if you die?

[@armchairincomechannel]

Thanks for the suggestion. I don't really get into personal life topics on the channel. However, I will say that if I was a 21 year old and inherited my portfolio...it might negatively affect my motivation to pursue a career and all the delayed gratification that goes with achieving my goals. I would want kids to be secure in their health and safety, but not give them enough to lose interest in pursuing their own path. I didn't stay in fancy hotels or fly business class when I was a kid...not sure it would have been a good thing.

[@JGerman68]

How many of the funds in your porfolio pay qualified dividends and what is the easiest way to determine if a fund is qualified?

[@armchairincomechannel]

I don't know of a quick and easy way to determine which of the 36 funds pay qualified dividends, so I don't know the answer to your question. Some fund websites have that information displayed, but not many. Generally you have to analyze their tax documents or end of year financial reports, which is laborious. Generally though, I'd say its very few. Qualified dividends mostly come from individual stocks; something I'm not focused on because regular stocks don't offer high yields unless they are in distress.

[@AmeriGlobal]

One doesn't need to time the market perfectly to avoid some pain. I sold off my REIT funds several years ago when they had fantastic returns in multiple years but then took a beating with higher interest rates. REIT investors have suffered mightily since 2022.

[@armchairincomechannel]

Perhaps interest rats will fall to the level where REIT's will shine again. There's not much in that space that's appealing at the moment for my criteria.

[@holyhandgrenadeofantioch2019]

For the algo

[@armchairincomechannel]

Thanks for watching!

[@Steverino70]

4 A I, well thought out strategy.

[@armchairincomechannel]

Thank you! Glad it was helpful.

[@johnmaria205]

I sold all my SVOL

[@armchairincomechannel]

I reduced mine and have my hand on the trigger...

[@martinweber202]

i need to park some cash for a yr so that i can buy a house any suggestions other than cds

[@armchairincomechannel]

That's outside my area of expertise because I don't hold cash, and am 100% focused on income investing. What you need isn't really an investment (ie reward for risk). You need 100% security. Other than treasuries there are short term treasury funds and money market funds. Check out the Diamond NestEgg channel....she specializes in what you're looking for.