Rico Nasol: Paying Off Mortgage vs QQQ vs SCHD | Which Wins With $300,000?
If you had $300,000 right now… would you pay off a 6% mortgage or invest it into something that actually pays you every month?
Full disclosure: I own shares of QQQI. (As well as several other NEOS Covered Call ETFs).
Disclaimer: Investing in stocks and ETFs and/or real estate involves risk, and may involve loss of some or all of your invested capital. I am not a certified investment advisor and am not recommending any financial actions. Rather I am posting this as a topic for discussion for NT users to share ideas.
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Mortgage vs QQQ vs SCHD | Which Wins With $300,000?
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Paying Off Mortgage vs QQQ vs SCHD | Which Wins?
Paying off a mortgage early is almost never the best idea. It's counterintuitive, but it's actually a much riskier plan than keeping the money invested.
That's basically what Rico Nasol says.(And he thoroughly works out the numbers in a video)
I really don't know. If I were adept at investing I would have bought a lot of gold when it was, as I remember it, $35 an ounce a little more than half a century ago. I was okay with real estate. I sold my first home 4 years after I bought it for 3 1/2 times what I paid for it, and my second home I sold for around 8 times what I paid for it 18 years after I bought it. I only bought 2 stocks in my life. The first was Brazilian Traction and I did okay with it, but the second one was recommended by a close friend that had all of our friends buying it. It was called Grade Ore Rights. We sat and watched it on the ticker in the stockbroker's office, falling within hours from what we paid for it to zero. One of my friends then said, "I should have known from its name, GRADE ore." Never bought a stock after that.
Some people are generally good with any type of investment. Others may be excellent in certain types of investing but terrible in others.
I could be wrong but my guess is that the reason you were so sucessful with real estate is because you've lived in several different houses-- so you are familiar with houses.
But you had no experiences with owning stocks. So you are not familiar with that.
Also, living in those houses must've been enjoyable. But just knowing you own a stock for you was not necessarily done for that experience.
Some time ago I inherited some money. Ithough I knew what I was doing and made some investmentsments,
I didn't know what I was doing-- and lost almost all of it! Then stayed away from the market for many years.
But eventually came back and was persistant. IMO the main reason I'm doing well is that one thing I really enjoy is research. So I enjoy researching stocks-- and in general wealth creation.
NOT SO!!! Read my comment again. I o wned Brazilian Traction stock, a Canadian company.
QQQI is my largest holding and I am glad I own it.
(Note: QQQI consists of the Nasdaq 100).
I DRIP it and on rare occasions buy a little more. (While not appropriate for all investors, the fact that it pays large dividends and also that it uses Covered Call strategies tends to lower risk).
That's a pretty good distribution rate.
Often a high distribution/dividend rate can be a "red flag" But with covered calls it often isn't.
It took me a while to understand how covered calls work-- and then it took longer to learn how to use them strategically.
But to trade options yourself can be time consuming. (Covered call ETFs do the selling of the calls (and occasionally buying back) for you. The ETFs charge an annual fee for this--- often .6% per year-- not bad when an ETF itself yields 10%-12%.
You can earn good income with Covered Call ETFS. But you can earn even more if you don't need to spend the distribution right away. (Over time the income is really impressive if you DRIP it!)
It's worth the effort to learn how. Once you develop a reliable strategy, you can do better than the ETFs, even at 14%.
I've been trading them regularly for about 4 years now. If you're good at math, you learn to manage the probability.
I tend to sell puts or put spreads on the S&P. The large number of stocks makes it more predictable, reduces a lot of the event driven volatility, and the time decay works in your favor.
I've made about 5% YTD, and I'm hoping to close another trade today or tomorrow for another 1% or so.
It's a nice way to generate extra income. My wife and I are headed to Europe later this year and I've already made enough to cover most of the 6 week trip.
Yes but its important to note:these are not regular ETFs that generate income by wise selections of stocks, by buy and selling stocks.
These are all ETFS that sell covered calls.
If they just generated income buy holding stocks that paid dividends, their yields might be naybe 1 or 2 %. or even 5%/ .But they yield much more from the call premiums. (I own a few covered call ETFS-- there may be a few that also sell puts).
I own a fair amount of NEOS covered call ETF for gold: IAUI. That one pays "only" 12% or so. (And I DRIP it).
GDXY is tempting but it looks really risky-- could probably really lose money with that one!
I think most of Trump's policies are fairly inflationary, so I'm slightly "overweight" Gold.
Most of the ones I own are from a company called NEOS. And they recently added several new ones.
Occasionally I watch videos from Rico Nasol. He's very thorough and provides lots of information. (Sometimes almost too much!)