John, a 51-year-old investor, recently shared his concerns about his investment strategy on Reddit. He has $125,000 invested in high-yield ETFs and aims to generate $12,000 annually in dividends. His portfolio includes a combination of high-yield ETFs such as JPMorgan Equity Premium Income ETF, JPMorgan Nasdaq Equity Premium Income ETF, PIMCO Dynamic Income Fund, and Petroleo Brasileiro.
John acknowledges that he is yield chasing but believes his strategy is reasonable. He plans to reinvest the dividends to compound his investments over time. He is also considering shifting to a cash pool for future investments.
John mentioned that he has about $25,000 left to invest and is seeking advice on how to diversify without too much overlap among the funds. His central concern is whether his current strategy is suitable for long-term growth, particularly as he approaches retirement.
John’s yield-chasing strategy and diversifying
Reddit users emphasized the importance of portfolio diversification to mitigate risks associated with high-yield investments. One Redditor suggested investing $25,000 each in JEPQ, Reaves Utility Income Fund, NEOS S&P 500 High Income ETF, YieldMax AMZN Option Income Strategy ETF, Ares Capital Corporation, and Cohen & Steers Quality Income Realty Fund. Another Redditor recommended adding a fund in collateralized loan obligations to diversify further, such as Janus Henderson AAA CLO ETF, Janus Henderson BBB CLO ETF, Clough Global Equity Fund, Eagle Point Income Co. Inc., and Eagle Point Credit Co. Inc.
Several commenters advised John to prioritize long-term planning to achieve financial goals, especially for retirement. One Redditor said, “Have you modeled your portfolio out to your projected retirement age? Recommend you do to help with retirement investment strategy and goals.”
Many Reddit community members suggested exploring alternative investments such as business development companies.
One Redditor recommended taking a look at Putnam BDC Income ETF, stating, “BDCs pay high yields, and I listened to a podcast interview with the fund manager. Letting a professional with 20 years of experience decide how to select and weigh the different BDCs sounded alright to me.”
John’s strategy has its merits, but diversification and long-term planning are crucial. By considering a broader range of investment options and modeling future financial needs, he can better position himself for sustainable growth and a comfortable retirement.
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