Income Investing Results

HFWR said:
I’m not a dividend investor, per se, but dividends and interest from last year provided about 75% of this year’s withdrawal.
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DW and I are in a similar boat; whatever interest and dividends the VTSAX, VTMGX, and bonds/MM throw off in the taxable account, we eat.
 
HFWR said:
I’m not a dividend investor, per se, but dividends and interest from last year provided about 75% of this year’s withdrawal.
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Interesting way to look at it. If I exclude the withdrawal in 2024 that was for a different house and just include 2024 withdrawals for spending, 2024 interest and dividends were 156% of 2024 withdrawals for spending.

If I annualize our spending for Jan-Mar and reduce it by DW's SS and my pension then our 2025 interest and dividends will be ~140% of our estimated 2025 withdrawals for spending.

All is good. We really need to spend more, but it is hard, more for DW than for me.
 
Koolau said:
Very interesting background. Thanks for sharing. Clearly, you're on top of your finances and probably don't spend a lot of time "worrying" about them (just managing.)

I'm stunned that anyone would actually own a rental unit with such long-lived rent controls. How is it possible to come out on a deal like that?

I'm aware in some areas, when rent controls are passed, rentals go down hill because owners can no longer afford to keep them up. I hope this is not your situation. But good for you in having found such a rent controlled apartment. That would certainly stabilize expenses to a degree.

I would think you are able to roam around Europe at your leisure. It sounds like a very good life. Enjoy!
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Thanks for the good wishes, Koolau. And I'm honored to get a thumbs up from you in particular on my managing the financial pie here! We do travel quite a bit--Central Europe is ideally located for air and train travel. We take trains frequently. Budget carriers EasyJet and Ryanair operate throughout Europe. We pay the extra few francs for the exit row seats since I have long legs. Milan and Zurich are our "nearby" airports here in Lugano.

Here's the deal on the "rent control". First, it's universal for all renters by law. Swiss national law links allowable rent increases to average mortgage rates (across all of Switzerland). If mortgage rates rise above the established reference rate, then increases are possible according to a predetermined rate schedule that must be followed. I think it's a maximum of 3% for each .25% rise above the reference rate.

Also increases can be imposed, if the owner makes an improvement (not a replacement of worn out facilities) inside your rented property that demonstrably raises its value. This excludes common area improvements, such as roofs, heating systems, building coatings, etc., which are considered normal maintenance. Finally, the owner can make a case for an increase if inflation rises above a certain increment. Inflation continues to be extremely low (currently a third of a percent) since we moved here 16 years ago. So, that's not an issue for us.

We haven't had any significant improvements in our flat made by the owner. That said, we have ourselves (with approval) made such improvements and paid for them ourselves (new kitchen for example, A/C, and replacement of flooring with nicer wood). I've estimated that it will still cost less over the next 15 years for us to pay the expense now and avoid the expected monthly rent increases that would come with the improvements. We love our flat (it is lakeside with an incredible view and has a local transit stop across the street) and have no plans to leave.

Renters can formally dispute increases and request adjudication. It's a tough case to make however, as I understand. Cantons are allowed to impose further restrictions on rental rates--I believe Basel-Stadt and Geneva cantons do so.

Here's an interesting facet of the system: if mortgage rates fall below the official reference rate, the tenant can apply for a reduction in the contracted rental rate. Recent research shows that only about 20% of renters actually bother to do that! Many are thought to just be unaware of the possibility.

It's a complicated environment which tries to balance benefits and costs fairly among renters and owners through various levers. Nonetheless not everyone is satisfied of course. But as to your point about how landlords make out, they seem to do well. Besides opportunities to increase rents, they have the benefit of the extreme demand for housing here, which over time is reflected in the rising value of their property and the market.

-BB
 
Retired in 2020. The first column on the left represents portfolio income for 2021. Column on the right represents projected income in 2025. Income currently = 2.5 times expenses

IMG_0624.jpeg
 
Bryan Barnfellow said:
Thanks for the good wishes, Koolau. And I'm honored to get a thumbs up from you in particular on my managing the financial pie here! We do travel quite a bit--Central Europe is ideally located for air and train travel. We take trains frequently. Budget carriers EasyJet and Ryanair operate throughout Europe. We pay the extra few francs for the exit row seats since I have long legs. Milan and Zurich are our "nearby" airports here in Lugano.

Here's the deal on the "rent control". First, it's universal for all renters by law. Swiss national law links allowable rent increases to average mortgage rates (across all of Switzerland). If mortgage rates rise above the established reference rate, then increases are possible according to a predetermined rate schedule that must be followed. I think it's a maximum of 3% for each .25% rise above the reference rate.

Also increases can be imposed, if the owner makes an improvement (not a replacement of worn out facilities) inside your rented property that demonstrably raises its value. This excludes common area improvements, such as roofs, heating systems, building coatings, etc., which are considered normal maintenance. Finally, the owner can make a case for an increase if inflation rises above a certain increment. Inflation continues to be extremely low (currently a third of a percent) since we moved here 16 years ago. So, that's not an issue for us.

We haven't had any significant improvements in our flat made by the owner. That said, we have ourselves (with approval) made such improvements and paid for them ourselves (new kitchen for example, A/C, and replacement of flooring with nicer wood). I've estimated that it will still cost less over the next 15 years for us to pay the expense now and avoid the expected monthly rent increases that would come with the improvements. We love our flat (it is lakeside with an incredible view and has a local transit stop across the street) and have no plans to leave.

Renters can formally dispute increases and request adjudication. It's a tough case to make however, as I understand. Cantons are allowed to impose further restrictions on rental rates--I believe Basel-Stadt and Geneva cantons do so.

Here's an interesting facet of the system: if mortgage rates fall below the official reference rate, the tenant can apply for a reduction in the contracted rental rate. Recent research shows that only about 20% of renters actually bother to do that! Many are thought to just be unaware of the possibility.

It's a complicated environment which tries to balance benefits and costs fairly among renters and owners through various levers. Nonetheless not everyone is satisfied of course. But as to your point about how landlords make out, they seem to do well. Besides opportunities to increase rents, they have the benefit of the extreme demand for housing here, which over time is reflected in the rising value of their property and the market.

-BB
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Thanks for the explanation. I always thought that if I could live in Europe, I'd prefer Switzerland though I'm not sure how easy it is to get full-time status.

I saw the Alps in Austria and was totally impressed. I'm thinking the Swiss Alps would be even more impressive.

Enjoy your retirement.

Much aloha.
 
Flieger said:
I thought it might be interesting to have a thread that those folks that have chosen Income Investing to fund retirement might share experiences, plans, investment decisions, and results so far if you so chose to divulge. This isn't intended to debate the investment choice/style as that has been done in other threads. This is for people that, at least for the time being, have made this strategy as their primary choice of income. I, for example, have a portion of total portfolio invested this way, while also continuing to have a smaller portion in Growth as "more" hedge to inflation. I'll start in the next post!

Flieger
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Sold all of our shares of O (Realty Income) today. It has served us well, but I want to move into positions where I can trade more weekly covered call options. MTD options income is $23K, which is far more than we get from dividends. I will stick with dividend growth investments but really like options trades for goosing our income.
 
Waynew said:
Sold all of our shares of O (Realty Income) today. It has served us well, but I want to move into positions where I can trade more weekly covered call options. MTD options income is $23K, which is far more than we get from dividends. I will stick with dividend growth investments but really like options trades for goosing our income.
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Wow. Can you teach a class on options? :)
 
DuluthGA said:
Wow. Can you teach a class on options? :)
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This guy has a YouTube "Options for Beginners" walks you through the basics very clearly

Personally I got very interested on covered calls but your broker requires you to submit an application that requires approval. Made me kind of chicken out. Found it intimidating for some reason.
 
marko said:
This guy has a YouTube "Options for Beginners" walks you through the basics very clearly

Personally I got very interested on covered calls but your broker requires you to submit an application that requires approval. Made me kind of chicken out. Found it intimidating for some reason.
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Not to suggest it can't w*rk but a cautionary tale: I've told the story of how two of my direct reports got talked into early retirement by a broker who claimed that they could take 8% of their portfolio to live on each year by his writing of covered calls for them. Worked fine for a year or two then they virtually went broke and had to go back to w*rk at 1/3 or less of what they had been earning at Megacorp.

I still recall both of them bragging about how they were going to beat me out the door even though I made so much money than they did. Of course, with the OT they w*rked, they made as much as I did, but I guess their old resentments at "the boss" came out when they thought they were golden.

I actually ended up "w*rking" for one of the guys briefly - repositioning cars for a used car dealer. I did it for fun and to help the guy out.
 
Waynew said:
Sold all of our shares of O (Realty Income) today. It has served us well, but I want to move into positions where I can trade more weekly covered call options. MTD options income is $23K, which is far more than we get from dividends. I will stick with dividend growth investments but really like options trades for goosing our income.
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I am srptarting to explore selling short-date options on nigh income products like AGNC. The options are often priced pretty silly.
Regards, Dick
 
How many options are writing? Looks like 174 a month now... vs 64 last year...

How many per stock? And how many different stocks? And what stocks do you write the most? Are they all covered? It seems like you have to have a lot of stock to be able to do this...

I did not go back and look but I think you said you do only a week or so out... how much 'gain' do you price into your options?

I might have to get one of my accounts set up for this if I can do this..
 
Texas Proud said:
How many options are writing? Looks like 174 a month now... vs 64 last year...

How many per stock? And how many different stocks? And what stocks do you write the most? Are they all covered? It seems like you have to have a lot of stock to be able to do this...

I did not go back and look but I think you said you do only a week or so out... how much 'gain' do you price into your options?

I might have to get one of my accounts set up for this if I can do this..
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You can go to my web page if you want more details. (My web page address is shown in the information about me if you want to learn more about my options trading.) The short answer is that "174 trades" is not reality. Some trades are for one contract, and some are for 10 or 30 (1,000 shares or 3,000 shares.) All of my options trades are either covered calls or cash covered put options. I like my minimum gain to be at least $100, but I have some trades where my gain is $1,000. It depends on the share price and the number of shares I am trading. For April 2025 I have only entered 86 trades. Each one takes less than five minutes of my time. This includes covered call rolls and puts and put rolls. In Q1 2025 I averaged 100 trades per month. That takes about eight hours per month. In other words, I work one day per month on average. I don't want to spend my day trading options.
 
Waynew said:
You can go to my web page if you want more details. (My web page address is shown in the information about me if you want to learn more about my options trading.) The short answer is that "174 trades" is not reality. Some trades are for one contract, and some are for 10 or 30 (1,000 shares or 3,000 shares.) All of my options trades are either covered calls or cash covered put options. I like my minimum gain to be at least $100, but I have some trades where my gain is $1,000. It depends on the share price and the number of shares I am trading. For April 2025 I have only entered 86 trades. Each one takes less than five minutes of my time. This includes covered call rolls and puts and put rolls. In Q1 2025 I averaged 100 trades per month. That takes about eight hours per month. In other words, I work one day per month on average. I don't want to spend my day trading options.
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Thanks....you got me off my duff and examining possibilities to increase my own income. Of course, no CEFs have liquid options, but I began experimenting with Agency MREIT AGNC that I bought because of its currently overearned 17+% distribution yield and have sold / rolled calls on it. Of course, one must be comfortable owning the underlying asset! I'll report how it goes.
Regards, Dick
 
My DB does this and it makes my head spin. He tries to explain it to me, all about calls and puts and options. I find myself daydreaming in the middle of it:). He's pretty good at it. Another family member on the other side of the family did this as well and lost his shirt to the tune of -$100k because he did not understand it and went all in and got sort of addicted to the game until he was done. It scared me and I would never try it.
 
Rianne said:
My DB does this and it makes my head spin. He tries to explain it to me, all about calls and puts and options. I find myself daydreaming in the middle of it:). He's pretty good at it. Another family member on the other side of the family did this as well and lost his shirt to the tune of -$100k because he did not understand it and went all in and got sort of addicted to the game until he was done. It scared me and I would never try it.
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This is why if you want to dip your toe you go covered calls... you cannot 'lose your shirt' as you control what price everything is...

Now, you can 'lose' potential gain if your shares are called... but not anything else... since I would not be doing it with a portfolio the size WW has I might not want to spend the time... IOW, making a few hundred for the same time WW makes $100,000 might not be worth it for me... who knows, it might be fun...

I was making some money buying preferred shares just before ex divi and selling a little after (sometimes a couple of weeks)... usually they bounced back about half the divi pretty quickly... decided the time it took to do this was not worth the gain... even though it seems like easy money...
 
Waynew said:
You can go to my web page if you want more details. (My web page address is shown in the information about me if you want to learn more about my options trading.) The short answer is that "174 trades" is not reality. Some trades are for one contract, and some are for 10 or 30 (1,000 shares or 3,000 shares.) All of my options trades are either covered calls or cash covered put options. I like my minimum gain to be at least $100, but I have some trades where my gain is $1,000. It depends on the share price and the number of shares I am trading. For April 2025 I have only entered 86 trades. Each one takes less than five minutes of my time. This includes covered call rolls and puts and put rolls. In Q1 2025 I averaged 100 trades per month. That takes about eight hours per month. In other words, I work one day per month on average. I don't want to spend my day trading options.
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I think you got everyone off their duff like Dick said. Would you say your Options Trading series on your site is up to date on what method you are still using? I see the first post is from December 2022. Or do you have anything to add to it that you have learned over the past 2+ years?
 
C-man23 said:
I think you got everyone off their duff like Dick said. Would you say your Options Trading series on your site is up to date on what method you are still using? I see the first post is from December 2022. Or do you have anything to add to it that you have learned over the past 2+ years?
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I doubt that there is any single post that gives a complete picture of the way I do options trades. I have been thinking about an updated summary post to describe my logic and the data points I consider when doing a covered call or cash covered put. There are some key elements in a post I did in January where I discussed "My Blueprint or Roadmap", but even that is just a snapshot.
The main thing I have learned is that you don't have to live or die by your original contract. One of the ways I have increased my options income is by rolling the contract to later or earlier dates based on market behaviors. If the market is down, and the option exopires in September, I'm willing to buy back the original option and sell a replacement covered call for a lower price and a more current expiration date. On the flipside, if the market is moving up, I can buy back the original contract and sell a new one with a higher contract price and longer expiration date.
So far this is working. I have had 696 contracts expire and none of my shares have been sold.
The other thing that I strive for is simplicity. I don't want to spend my life looking at every possible data point.
Finally, I want consistency. By that I mean I will always consider certain data points before making a trade.
 
I played around with Options on some longer term stocks I held a while back. Won some, lost some. Now that I have moved to this style of investing (Income) I don't believe most of the instruments I hold for this are Options traded but haven't checked. What I remember about it was it was very tome consuming and more (well, at least the time) stressful. That's why I switched to this strategy.

Flieger
 
I'll do month end update once April is over, but so far, while income (Div's) looks steady, Basis is not a pretty graph....

Flieger
 
As with any other investment strategy, total returns across meaningful time spans are the only appropriate measure of success.
Regards, Dick
 
Back when interest rates on cash were much lower I did a bit of selling one month way out of the money cash covered puts on stocks that I liked and wouldn't mind owning. Did ok, had some tickers put to me here and there but then I would either sell them or write covered calls on the holding.

I specifically recall having Disney put to me after Desantis was hassling them over their LGBTQ policies and their stock price dropped.

I considered doing it again recently, but it seems to be too much work to identify suitable opportunities.
 
dickoncapecod said:
As with any other investment strategy, total returns across meaningful time spans are the only appropriate measure of success.
Regards, Dick
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Agree, and in the LONG run I'm hoping income remains and my basis returns. I am looking for the income for my retirement, not growing my stash.

I could exit and wait, but doing so means I have to accept ~7-8% less income and therefore potentially deplete some of my holdings for monthly income. And then the ever present question, when to re-enter! I'm holding on to the "theory" that the market will return and therefore so will my basis, all the while my income distribution remains for the most part consistent. This month (with a drastic market fluctuation, seems to be confirmation of the 2nd part of that "theory".

Flieger
 
I’ve been taking advantage of some more recent values in muni bonds and swapping taxable for double tax free in our taxable account. I track our income down to the dollar. I now have our taxable income at just over $71,000, but our gross income is more than 5 times that amount. It’s all just a game.
I reported a good guess to ACA so we should be OK for health insurance premiums, but I will probably have to pay more to IRMMA when we get there. Both entities add back in tax free income.
 
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