Im not really a Boglehead as I do buy individual securities in addition to indexes.

i also dont have a fixed asset allocation like Bogleheads do.Currently, portfolio positioned quite conservatively. This is the approximate asset allocation of my portfolio:

50% Bonds
25% Equities
10% Gold
15% Cash

Huh, are you within 10 years of your horizon? That is a lot of bonds. What are those bonds comprised of if you don't mind?

Abt 10 years investment horixon

Roughly 90% are govt treasuries or govt guaranteed. Another 10% are high yield (5% of portfolio). Mostly in bond ETF that freefall last year.

As mentioned, I dont have fixed allocation and can make big switches using the ETF portion.

I see. I am really surprised because you are the first person I've encountered so far with an actual bond allocation - with the decade long bullrun, the conventional wisdom has quickly switched to having as much equities as possible to be able to catch up with inflation at least, and anything short of a 80/20 allocation have too high of a risk of running out of money before end of life.

Congratulations on making it to the wealth preservation stage/tail end of accumulation phase! What are your plans going forward this year if any?

This post has been edited by Hoshiyuu: Apr 2 2023, 11:36 PM

Its not a permanent or long term allocation.

2021-22 have been horrible years for the bond market. In fact, for USA, it was the worst bond rout in history. Usually, after such a bad period in market, there will be a rebound. And it does appear that interest rate has peaked or is very close to peak.

Basically, lock up current levels of high interest rate and sell n make capital gains when interest rate drops.

Win: Interest rate drop, esp if bad recession.
Lose: interest rate go much higher and stays there.

say after few years, as the number of shares accumulated hit 100, n we would then be able to sell covered calls for some premiums, due to this, is it better to accumulate SPY, compared to CSPX?

although SPY has slightly higher expense ratio & withholding tax

also accumulation process on SPY is easier coz able to buy fractional shares, for smaller monthly dca commitment

This post has been edited by premier239: Apr 7 2023, 02:46 PM

Yes, but:

1. You lose 30% witholding tax on dividend immediately so you start with a foot behind the starting line.

2. https://www.optimizedportfolio.com/covered-calls/

Contrary to our resident expert Ramjade which is doing this if I recall correctly, I recommend to just buy and hold and increase your income elsewhere.







This post has been edited by Hoshiyuu: Apr 7 2023, 03:23 PM

no, i mean start selling covered calls when it hit 100 shares

fractional shares mentioned here meant as better dca frequency only

need a excel to work on the math to see how much from covered call premiums is needed to cover the 15% loss on withholding tax dividend over lets say 5yrs to 10yrs

i would argue that unless black swam event happen, selling low expiry dates covered calls has very low risk of it being called, because s&p 500 volatility is not that high on short expiry dates



This post has been edited by premier239: Apr 7 2023, 03:44 PM

If worries about WHT better to accumulate those CSPX and only start major purchase of SPY once you are close 90% when you start doing covered calls

Wow..Bogleheads now also use options?

l always thought tht Boglehead is just simple investing strategy with a few broadbased index fund/etf, and just hodl with some rebalancing.

Modified version. Eg if you invest in voo in us, you get hit with 30% on the dividend tax. Now if you invest in CSPX in UK, you get hit with 15% tax only. However if one were to go with VOO/SPY, one can earn back the income by selling covered call on it.

Income earned from covered call > dividend taxed = more cash flow = more returns Vs just market returns. I know some people who actually earns extra 0.5-1% per month on the SPY. So combine with conservative returns of 7%, one is earning nett 13-19%p.a

Something to think about.

This post has been edited by Ramjade: Apr 7 2023, 04:59 PM

IMO, selling a covered call is still making a bet that the stock won't go up (or not by much). And first and foremost a Boglehead purist likely also believe that no one can predict the stock market.

The core philosophy/spirit is always setup a simply 2/3 fund portfolio, keep it simple, make regular deposits, never look at it and check back in 30 years.

Unfortunately next to no investors are willing to do that. Most people believe they can do something to chase alpha. Some are able to, but most fail to do so.

Most people prefer to believe they are the former. And therein lies the root cause of most portfolio failures.

This post has been edited by Hoshiyuu: Apr 7 2023, 05:57 PM

It's also worth considering that even with CSPX, you are trading diversification away - you are choosing to exclusively bet on US stock outperformance for years to come just to make a few extra bucks along the way.

Actually you are not trading diversification away. Cspx have 500 companies. That's more than enough diversification. Not to mention what affects the US affects the world. Even if you were to buy a whole world etf, the whole world etf US makes up 40-60% of the geography that they invest in.

If really want to diversify find a way to open Vietnam brokerage and invest in Vietnam.

This post has been edited by Ramjade: Apr 7 2023, 07:22 PM

Yeah, I understand that viewpoint too, and is what Jack Bogle (IIRC) and J.L. Collins have said too. I myself have a slight preference to be closer to 60-40 according to cap myself, but it's totally not an absolute must.

(Hell, I'd argue that if people just applied the "invest in the right instrument and never think about it again" mentality, and did nothing but buy Maybank shares with high saving rates every month, for 30 years, they would still easily outperform 90% of the retail investors)

Since you are here, do you mind chipping in your two cents on the idea that selling covered calls on long term buy-and-hold stock is not free lunch, and that the investor would be limiting its upside while risking big downsides for only marginal extra income?
I've seen this argument thrown around a lot within the Bogleheads community, and I am really curious what are your thoughts on it, as you seem to be a strong proponent of this method for as long as I remember you started offering valuable free and genuine advice on this subforum.

This post has been edited by Hoshiyuu: Apr 7 2023, 07:22 PM

For me I am not boglehead fan. I don't believed in buying etf cause there are rubbish companies in the etf. By buyin the etf you are essentially supporting these rubbish companies think IBM, Boeing. GM, Ford, intel and many more. I won't support those companies.

For me I choose the best quality companies and just buy when it's cheap and continue to sell naked puts/covered put and covered calls when price is low.

If you scared about the upside one can always do a spread. Buy and sell a call and pocket the difference. For me I stick with the basic. Once I learn more maybe will experiment.

For me, as long as the money keep rolling in, I will continue selling covered calls, naked puts/covered puts. I am aim USD300/week. Here's my record for 2023.


My rule for puts is simple
1. Make sure you want to buy them
2. Pay off debts as soon as possible (if assigned))
2. Don't be greedy. Aim USD 15-20/counter/week. For stuff like visa I am getting around USD15/week and I am ok with that. Stuff like tesla, you can aim like USD50/week.

Use the cash generated to buy shares that you like when they are beaten down
(Adobe, BlackRock, crowdstrike, microsoft, UNP are real life example of reinvesting premium earned from selling options)

This post has been edited by Ramjade: Apr 7 2023, 07:34 PM

Interestingly there are covered call ETFs. XYLD and QYLD are the ones I found. XYLD selling calls over the S&P500 and QYLD selling calls over QQQ. The yields are quite high right now, 12% and 13%.

I personally wont buy these as being ETF the WHT will kill the returns.

However its interesting to see the price history of these ETF.. It seemed that this strategy makes it hard to recover during market crashes in terms of the value.

Thank you for your valuable insight as always, that's the missing puzzle of this method I was looking for.

WSJ MARKETS: STOCKS

Stock Pickers Failed to Take Part in First-Quarter Rally
Bearish positioning, less exposure to big tech stocks hurt active fund managers

https://www.wsj.com/articles/stock-pickers-...share_permalink

(Cross-posted with USA Stock Discussion thread)

Thanks! Appreciate that you expand your financial news sharing to this thread too.


If finance majors from ivy league couldn't do it, what makes the average retail investor think they can beat the market consistently?

This post has been edited by Hoshiyuu: Apr 11 2023, 09:37 AM