Pro #3 is my main reason to use PII. All my gains are "realized" every month. These gains are reinvested and the snowball continues to grow until the revenue stream is needed.
This is a fantastic video. I'm 59, switched to PII two years ago. It's refreshing to see you young dudes getting it :) Adrian was the catalyst, Younger people should perhaps go for growth. I need steady income, I don't want to sell in a down market, as you mention. No wife and no kids, no mortgage nor car payment, so capital depreciation doesn't matter to me, I'll be DEAD
@@Backtoreality1873 Same here. My portfolio is holding up ok in 2022 because of VDY, EIT.UN and i plan to add HYLD come the new year. My other tech portfolio is wrecked lol.
@@blackmonk8602 I hear you on the tech it has been stupid painful. I added some JEPI but see its now part of HYLD which I keep adding to. DCA all the way. Income makes that easier too. I like SCHD for the growth side and still get some divs.
Very helpful points here, thank you. So it looks to me that if you're using a PII strategy for dividend income and can still grow your capital at a modest 2.1% (or better) on average, then you should have a pretty safe inflation-protected income stream for the long haul. That is an encouraging thought.
That is a wise comment. There is always the consideration of taxation treatment with any investment. RRSP's, TFSA and non rrsp accounts all have pros and cons...maybe another video on this might clarify a few things or at least give food for thought. Nice one Jason!
That right there is the key. Most people will never accumulate $2 million to retire comfortably the “traditional” way. With a PII strategy, 500k can be enough.
Yes and that is why which account you put your PII is another consideration. RRSP is one and TFSA is another. If in a non rrsp or cash account,, then taxation treatment is another layer to consider.
I saw a video with you and PII's Adrian so I fully expected you to praise Income Funds... but I found this video to be objective and factual with good arguments for and against. Great job!!!!
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Even thought I'm in my early 50s, pre-retired and have been reading and watching Adrian's content for around a year, I see 3 MAJOR additional CONS to consider when compared to true passive(index) investing: - PII has significantly higher fees (3x-4x on average from what I've seen) that will compound capital depreciation over the years - PII produces passive income but is actively managed by YOU. You have to find and assess all the funds in your account (vs "buying the market") - PII funds are actively managed, so their "effectiveness" are pretty hard to assess. Benchmarks are lacking since you can't compare a fund vs the whole market. Funds could dividend away into oblivion due to sheer poor management. That being said, I'd warningly welcome counter-arguments since I can't deny the appeal of the pro's of PII. :)
You’re partly right, definitely regarding the “actively managed by you” part. But at least for me that’s also a large part of the appeal of PII. Regarding higher fees and effectiveness or performance comparability, if you choose CC ETFs then those are only slightly more expensive since they also passively follow an index and apply their covered call strategy passively. Some CC ETFs even by Index ETFs and sell options of those ETFs. Cost and performance are absolutely comparable. Actively managed income funds, especially CEFs are of course different animals, but you can compare their total returns with other funds and indices by doing the math.
is their a way to set the total asset payout appreciation like you did comparing the TSX to LBS, I cant figure out how to compare stocks/etfs like brandon did on trading view or google finance....can anyone help?
Another Con to PII is that taxes are due because you are paid dividends throughout the year - for us monthly. I use a hybrid style and semi-growth style of investing. The income my spouse and I generate is twice our monthly take-home pay that I generate from my current, well-paying job. I consider our dividend income as a test run as we plan to retire in a couple of years. We take the income generated and selectively reinvest the dividends, and we average about 8.75% dividends growth each year... So far, so good!
Thanks Brandon. I've spent the past several days learning about the pros and cons of covered call ETFs. This video and many of your others have been helpful.
Excellent job. There is also the benefits Canadian eligible dividend stocks when it comes to taxation, and writing off interest on money borrowed to be used to invest in dividend income (although that can be very problematic with recent interest increases now).
Great video Brandon. One of your best. I’m mostly PII I’m 54 years old but still like holding some growth dividend stocks and I still have 2 stocks that pay no dividends LoL I have not completely turned passive yet. Some days I still cringe at seeing my covered call ETF going down as I’m not using my dividends to live off of yet as I’m just reinvesting it all back in and cost averaging down. I don’t plan on using the dividends until I’m not working. I would like to retire between 60 and 63 but need to see an retirement planer to get it all worked out first LoL. Thanks Brandon
On point 1 on the con side. Many high yield etfs have been dropping in value this is true however they do go up in value as the market rebounds granted at a slower pace. I do agree that many of these etfs like HYLD etc are new and long term performance is really unknown.
A lot of people look at dividend investing as a thing you do when you retire. IMO, do it well before you retire. It is advantageous to invest in a solid dividend grower at an early age, that way by retirement, you're not yielding 3-5%, your yield-on-cost is 10-20-30% after decades of dividend growth.
Exactly. You just allocate equally to grow so that when you begin liquidating the growth aspect before retirement you're still getting a higher yield on cost until you retire fully
Great video Brandon. I have been following Adrian's videos closely and had an idea of the pros and cons of PII. But you've summarized it really well. As you've said, its like advocating a diet. It boils down to individual choice and preference.
When you are doing PII as your main strategy you are basically doing a "rental" strategy. You need to hold the stock/etf until you original investment is 100% paid for then... and only then is it actually "passive income ". At that point it can become very easy to not worry about "the price ". There is times that the high yield etf's/ split funds don't pay monthly. That needs to be factored in to your lifestyle strategy as well.
Hey Brandon, been watching your videos for a long while now, and I think this video was spot on to shed some light on the negative assumptions on PII. I am 22-years-old and personally have a mixed 60-40 growth/PII investing approach, and I think this suits me fine for now. This obviously will probably change as time goes on, you never know!
Smart choice, the rising interest rates are pulling money out if the equities market into risk free assets. Growth stocks and PII stocks only go up if there is more and more money entering the market. The opposite of what's happening in 2023.
Hey buddy, that was very, VERY well done. Brandon white board explained 😎 I hope this helps to stop some of the PII is bad, Growth investing is bad, DzgI is bad, only 'this' strategy is good nonsense that is out there. Every investment strategy has its pros and cons and risk with it. I think you captured it all in a relatively short video for how big a topic this is. 💪
Great video Brandon, definitely pros and cons to any type style of investing but it does help to have a nice chunk of capital when it comes to relying on pii so it does tend to lean towards the 50+ crowd unless you have the balls like Adrian to sell your home/condo and put it all in dividend stocks like DFN, EIT , ENS, RS , FTN, LBS,GDV, HYLD etc but I’m like you I like a mix bag that lean towards dividends, I own the ones l listed and a few others but I also like and own some blue chips such as BCE, ENB, PPL a couple of our banks (BNS, TD) that also pay a nice yield and have potential for capital growth while I wait , but I also own some riskier stocks like META , BABA , NIO so every investment has its pros and cons but I think PII has more pros with the right picks .
I agree Bull Hammer, diversification is "King" or in a female perspective, "Queen." Single and Etfs or split corps in a portfolio feels like a wise way to go about the best way for peace of mind. 👍
I'm a passive income investor after looking at a variety of strategies because it suits my situation and desired lifestyle. So far it's gone really well and don't have any complaints. I've made a couple choices that I wouldn't do if I was starting over but overall it's working for me. Brandon's 100% right though, if anyone out there is saying one strategy is the best for everyone, run for the hills.
Good Job on this video buddy! - LBS has destroyed XIC even if it "missed" 18 monthly dividends. Excellent point about focusing on total returns instead of stock price returns. Also thanks for the shout out! I say this all the time: Investing (for us), is not just about numbers or total return (for many people it is and that's OK) its about using it to have a better quality of life and save time. Time is the most valuable asset in the end, not an extra 3 % return when i am 80 years old. Take care buddy! talk soon. P.S. no plans for kids that ship has sailed.... but we have over 55k kids to take care of now and growing everyday :)
I think I was witness to the two of you guys becoming "buddies" over the past year...I wouldn't be surprised if the Canadian in a T-shirt is the next person to comment here.. lol
I think a strong way to illustrate the difference between PII and Growth Strategies is a simple example. If you invest, say $100,000 using the PII Strategy, by the end of 30 years your Total Returns will be, again hypothetical example, $300,000 (10% over 30 years including a small portion from Returns and most of the amount collected as Dividends). If you invest $100,000 using the Growth Strategy, by the end of 30 years your Total Returns will be $390,000 (13% over 30 years with gains mainly coming from Returns and a small amount from Dividends) At the end of 30 years your $100,000 invested has generated $90,000 more using a Growth Strategy. But. You had to wait 30 years to benefit from that extra $90,000. Whereas using PII you have earned that $300,000 in $10,000 per year Dividend payouts for 30 years. When you finally cash out your investments at Retirement you will definitely have more money using Growth style investing. But, is 3% more worth it to you when you're older? That's the question to ask when deciding between PII and Growth style investing as far as I understand it.
Hi Brandon. Great video. I have been part of your academy for a few years now & also been following Adrian's PII site for about 1.5yrs. Since 2008 when I started investing on my own I was primarily using a dividend/growth long term approach trying to grow my capital. However, now that I am retired I really don't care a lot about growing my capital anymore & instead needed to change to concentrate on getting income from my capital. The PII was kind of the answer to my dreams of how to get a better return than just the avg 3-4% dividends from stocks. I agree with most of your points, but feel your first Con can mostly be avoided. Although I don't care a lot for capital growth anymore, neither do I want capital deterioration. There are many Income funds to pick from and certainly not all have their capital drop over time (although they don't grow much either). I just avoid buying funds such as CLM which tends to cannibalize itself over time in order to maintain the crazy high yield.
Brandon, you're wearing a hoodie and a toque. Is the heat off in your house? Did you miss a dividend? Just joking😁 I follow both you and Adriano. Two of my favorite investing channels. Also, enjoy hearing from your Dad. Great information. Happy Holidays 🎅🎄🤶
I really like total income and tend to like my investment style side with math. I do know, from my viewers, that a lot of people really like chasing yields. I do try to give them some total return sage advice but there are those die hards that just want the higher dividends.
Great video and very timely for my portfolio. I'm in my 50s and have 20-30 percent of my portfolio in PII holdings. I have yet to see if the pros outweigh the cons, but I'm definitely open to the idea. Adriano's channel kind of blew my mind when I started hearing about all of these 10-plus percent yielding funds, but I think I I've slowly begun to understand the tradeoffs.
I love income investing, i was a growth investor for 10 years then sold everything and transition to DIVO, JEPI, JEPQ and i am living the dream of passive income
A very important topic to cover. We do not hear PII's talking about cons so this was keeping things real and giving a lot of food for thought. Being a hybrid is practicing the healthy investing strategy of diversification! So a balance of single stocks as well as ETF's with cover call and modest leveraging and split corps. The dividends I have are from aristocrat companies, which means I can sleep with peace of mind. So, YES! Hybrid I totally support for a healthy balanced diversified portfolio. 👍🇨🇦
Great video I wish more were like this. I have a coworker that invested $100,000 in Tsly because they are under the impression it will grow to $1,000,000 in 5 years with the 60% dividend. With the ONLY risk is that Telsa goes lower.
I actually posted a question on his livestream video in the comments area, regarding ROC and ETFs possibly going to $0 if enough ROC is issued to the shareholders over time (the capital depreciation you mentioned). His response was "that's silly if you believe that".
That was a harsh response, but essentially correct. ETFs are not closed-end funds and hence issue new shares each time they have additional capital inflow. That offsets the ROC if there is any. Even CEFs like CRM, which is infamous for its high dividend distribution through ROC (21% of the NAV is the target) and a constant deterioration of its NAV and value, replenishes the depleted capital each year by issuing new shares. When you invest in such high yielding funds, you should be conscious about what you get into. Capital depreciation is one thing, but down to 0 is very unlikely.
Very good video Brandon! I am now almost fully dedicated to PII but of course I am near my retirement. Another good point to some high yield income focused investments is the benefit they get from taxation. Sometimes much better than just interests and eligible dividends, so always a plus obviously.
Thanks Brandon for making this video! Blossom is a great place to state your own investing strategy and not every investing strategy is a one size fits all. I like seeing different way of investing as they evolve. i was part of the passionate discussion in Blossom and stand by what i said I am a PII Investor, i dont care about capital gains/loss honestly, they arent realized until you sell them. i also enjoy averaging down on my ETFs or stocks. I intend to hold long term 5+ yrs and get a total return that benefits me better than a dividend growth or appreciation strategy. Like anything in the investing world or life in general is due your own due diligence. Love your honest approach and look forward to more videos!
I lose my job next year. Had I not invested in PII I would be staring at no income + my stock porfolio down by 40% due to matket crash... PII MUST BE PART OF PORTFOLIO!
I think the best part of this strategy is you can actaully create massive income with leverage and beat market performance. Treating high yield investments like real estate. Buying an asset with loans and using the yield to cash flow the loan and then you are left with the asset that you never even had to spend your money to get. Where as if we have a bear market and you tried using leverage to buy an index. Youre just at a lost. The yield these funds offer, allows you to not care where the market goes as long as the loan is being paid back. Thanks for the vid!
Is capital depreciation always gonna happen with PII? I was under the impression that we would sacrifice growth over time (the value of the fund goes up less than growth-focused funds/stocks) over a period of time, but if the value keeps declining over time then that could be a potential dealbreaker for many income-oriented investors.
The revenue is generated using covered call. If there is little movement, it's hard to bet against the fund. It's also dependent on the fund managers writing those calls. Most of the time, yea, there is capital depreciation.
Nice round up. One con that you missed is that the distributions of PII funds often do not grow, so the real income may shrink with inflation over the years. It is not a deal breaker, but it is something that needs to be planned for.
@@371MGH Exactly. That's the best way to plan for it. But I've seen FIRE types who get so excited about living off a relatively small nest egg with a high yield investment that they don't take inflation (or sometimes even taxes) into account.
This is one area I like about PII vs dividend stocks. A dividend stock may pay 3% but increases annually. A PII fund may pay 10% but never increase. What’s the better deal? 10% all day, IMO. Most people will never accumulate $2 million+ to live on dividend stocks. 500k in PII funds is far more realistic.
Hi Brandon, I think that you explained this very well. It's about time that someone has done this. I think that PII is something that can be added to a portfolio at any age. If you are young, how happy would you be if part of your portfolio paid for your vehicle insurance or utility bills, and if you are just about to retire this is a great solution to income stream. The older strategies of a 60/40 ( equity/bonds ) portfolio just don't work when markets are this volatile. Keep up the great work !
I do think that capital *preservation* is an important consideration. I'd prefer to at least keep the capital portion in pace with inflation, as a minimum (long term, of course.)
Nice work Brandon! I do follow Adriano's PII strategy but I am in my early 50's and semi-retired. It is an excellent source of income for sure. I do agree with you on the principle of having enough to put in to to use this strategy. I am not pulling out income yet as I am currently investing it back in while my wife is still working. I am just waiting to deploy roughly another $130,000 or so to be fully invested and am doing this as I buy the dip or find a better deal out there. I do have a few individual stocks but am moving to be all INCOME invested in the next year using ETF's, Covered Calls and funds like HYLD as an example to build my monthly income up. I realize my situation would be different if I were in my 20's or 30's likely. Great job! Love your channel as well.
@@RENEDU2 .. My strategy would likely reflect more of a combined asset approach including growth stocks and Div/growth stocks to go with the PII stuff.
Brandon, Thx for making this video and doing a good job of being fair to discuss the pro's and con's for this strategy. I was particularly pleased with the fact to not only spoke about a key aspect of investing that people don't even pay attention to and that is 'total return' on the investment. Every one simply focuses on on the value of the capital and when you do a comparison of tge charts between a PII fynd vs a growth oriented fund. I particularly wanted to thank you to site and show a valid example on this point of 'total return'...so thank you for that. I totally agree with you that there is no single strategy that works for all. Each investor must look at their own situation and have to make a choice which strategy suits their needs and objectives best and then should follow/stick to it. Lastly, I want to say that for me the pro's #2 and #3 were the key drivers for choosing this strategy along with a few other key investing objectives that has led to my decision. Thx
Good video. I invest in both growth and PII. With the PII strategy , some amount of reinvestment of your monthly income is necessary to help reduce the capital depreciation. And in most cases, those using this strategy also have another source of income that will cover their living expenses so they are able to reinvest a high percentage.
My concerns are how reliable are these covered call etfs? Reliable as in one day they won't change their policy and say "Starting next month no more covered calls. Thank you very much. It has been a pleasure serving you, our valued customers". And how much call options can these funds sell? What if demand for options dies down? There are so many covered call etfs coming out... are there enough call buyers to buy all these calls from these etfs?
PII strategy is enjoyable and cathartic... reinvesting dividends brings me joy!!! Index funds don't give me the same wow factor!!! LOL. Compounding Compounding Compounding...
Use a free brokerage, sell a percentage of your index funds every month and buy it again. There, you just accomplish the same thing as PII but you are using much more diverse funds and will likely have a higher overall return
You are right to say it's like a cult, some people invest as if they have blinders on lol. Good to see both side of the story. Adrian should be more forthcoming on the cons of the strategy for the benefit of his followers.
Liquidity can also be a huge factor on the CONS side for me. Many of the high yield PII investments have market caps in lowish millions and not billions. As such they are not (usually) suitable for a channel trading strategy as you are dealing with a small pool of buyers and sellers and you risk getting caught missing a monthly distribution. As long as people understand how PII can work, then they can decide whether it fits their needs and how to build it into their overall portfolio. Anyone putting all of their eggs in one basket (i.e. - trading strategy) is adding risk.
So capital depression doesn't happen with every fund. Funds like CLM and QYLD are yes going depress. Funds through BMO or JEPI still get some capital gains.
Sorry Brandon, I disagree with what you are saying. I have invested with the standard investments for at least 30 years,but I have started to go the route of passive investing now. The benefit is it pays every month! If the price goes down, I get more shares each month until I retire.
Passive income investing will outperform non PPI investments if you will in 2023.. it will all come down to reliability, balance sheets for these companies and great leadership...
Only investment strategy you need to deploy is the one you can rest easy at night with. If you can sleep at night and not worry about your investments in the night, you have chosen the right one.
Also after watching full video: con 6. With PII if you use your dividends to pay your bills, then you are basically getting 0% dividend growth over the years + capital erosion. And for me that's one of if not THE major flaw. But I get that it has it's appeals and can be a good way to start generating income quickly. Great video!
I agree. Being a hybrid is practicing the healthy investing strategy of diversification! So a balance of single stocks as well as ETF's with cover call and modest leveraging and split corps. The dividends I have are from aristocrat companies, which means I can sleep with peace of mind. So, YES! Hybrid I totally support for a healthy balanced diversified portfolio. 👍🇨🇦
Good video - balanced with pros and cons. I love dividends and 90% of my portfolio pays me monthly. I hold 6 ETFs with a combination of growth, dividend and covered calls. I think balance is good - until I retire then maximize income. The income strategy also allows me to leave the portfolio to my kids. Earning just over 9% in dividends on my ETF portfolio.
I wanna drink the kool-aid cuz that's my stage of life, but #1 and (especially) #5 are making me hesitant. For my wife and I it's a lot of capital to invest, and sure the income stream will be phenomenal, but is the investment safe? Whether we leave a big lump sum for our kids in the end or a nice healthy cash flow is irrelevant to us, only that they get one or the other.
Living overseas is not all what it is cracked up to be, You miss all the things that living among friends and families give you. Missing the big and little things when you live overseas is a big price that has to be considered. You stop sharing things which brings you together with friends and families. One price to pay is the realization that you and your friends are on different trajectories and that, over time, these friendships get eroded.
I prefer to grow the dollar value, while receiving income - but tax efficiency also plays an important role - and I'm also retired / so a bank - telco and reit fulfils my needs - I'm also mortgage free and live a frugal low stress life - so that's me in a nut shell - I enjoyed this type of lecture very much - thank you Brandon 😊
Adrian can pass on an income stream... give your kid an income stream that lets them have a bit of freedom. or a bag of solid stocks with solid dividends.
Passive or income investing should make up a section of your portfolio along with others, frankly many should not be investing their own money due to a complete lack of knowledge….way too many going to be hurt by the PII channel
yes, a section of your portfolio. Isn't one of the guidelines for wise investing and managing your finances about diversifying? It is working for me and I can sleep well at night knowing I am making the best decision with the finance portion of our lives.
I like to listen to you and Adrian. After this video, I like you "less". I'm sure your intention was not to "attack " Adrian, but too much example was given about him. (FYI: Your analysis on pii perfect but you need to add discipline and temptation to sell in pii is less because you do not see the returns in percentage like in growth strategy)
My portfolio as a 4 years old cat : 80 % growth investing and 20 % passive income investing. While it's perfectly fine for a financially educated cat, I don't recommend this to the average person. For them, I recommend a robo advisor solution. It's set it and forget it and it works.
Since TFSA has a limit you can also use PII early to generate more income quicker and then reinvest those dividend into growth dividend stocks.
Exactly what I’m doing. And the math is exciting. Early retirement is totally reachable with this strategy. 😊
Pro #3 is my main reason to use PII. All my gains are "realized" every month. These gains are reinvested and the snowball continues to grow until the revenue stream is needed.
Exactly. We also only have one life on this earth. I’d rather enhance my life now rather than when I’m too old to do anything I can enjoy.
Those realized gains comes at a cost of growth so if you're just reinvesting into the same fund there's no difference than the fund having 0% yield.
@@rh3108 the difference is that the monthly income is available when needed regardless of how the market is doing. That's a huge plus.
This is a fantastic video. I'm 59, switched to PII two years ago. It's refreshing to see you young dudes getting it :) Adrian was the catalyst, Younger people should perhaps go for growth. I need steady income, I don't want to sell in a down market, as you mention. No wife and no kids, no mortgage nor car payment, so capital depreciation doesn't matter to me, I'll be DEAD
I’ve got a portion in PI, portion in dividend stocks and portion in growth. This recession taught me that one strategy only can get you wrecked.
Same here Sean!
@@Backtoreality1873 Same here. My portfolio is holding up ok in 2022 because of VDY, EIT.UN and i plan to add HYLD come the new year. My other tech portfolio is wrecked lol.
@@blackmonk8602 I hear you on the tech it has been stupid painful. I added some JEPI but see its now part of HYLD which I keep adding to. DCA all the way. Income makes that easier too. I like SCHD for the growth side and still get some divs.
Very helpful points here, thank you. So it looks to me that if you're using a PII strategy for dividend income and can still grow your capital at a modest 2.1% (or better) on average, then you should have a pretty safe inflation-protected income stream for the long haul. That is an encouraging thought.
I use this PII strategy in my TFSA. In my RRSP I invest in blue chip, dividend growth stocks. Why not implement both strategies in different accounts!
That is a wise comment. There is always the consideration of taxation treatment with any investment. RRSP's, TFSA and non rrsp accounts all have pros and cons...maybe another video on this might clarify a few things or at least give food for thought. Nice one Jason!
I think con #3 is actually a pro for PII vs dividend growth stocks where you need a one or two million dollar portfolio to retire.
That right there is the key.
Most people will never accumulate $2 million to retire comfortably the “traditional” way.
With a PII strategy, 500k can be enough.
Isn't one of the biggest pros of PII is tax, eligible dividends tax rate much lower than paying capital gains on growth (when you sell)
Yes and that is why which account you put your PII is another consideration. RRSP is one and TFSA is another. If in a non rrsp or cash account,, then taxation treatment is another layer to consider.
I saw a video with you and PII's Adrian so I fully expected you to praise Income Funds... but I found this video to be objective and factual with good arguments for and against. Great job!!!!
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This was not concise.
Well done!! Would like to hear your thoughts on growth investing. The pro’s and con’s
Even thought I'm in my early 50s, pre-retired and have been reading and watching Adrian's content for around a year, I see 3 MAJOR additional CONS to consider when compared to true passive(index) investing:
- PII has significantly higher fees (3x-4x on average from what I've seen) that will compound capital depreciation over the years
- PII produces passive income but is actively managed by YOU. You have to find and assess all the funds in your account (vs "buying the market")
- PII funds are actively managed, so their "effectiveness" are pretty hard to assess. Benchmarks are lacking since you can't compare a fund vs the whole market. Funds could dividend away into oblivion due to sheer poor management.
That being said, I'd warningly welcome counter-arguments since I can't deny the appeal of the pro's of PII. :)
You’re partly right, definitely regarding the “actively managed by you” part. But at least for me that’s also a large part of the appeal of PII.
Regarding higher fees and effectiveness or performance comparability, if you choose CC ETFs then those are only slightly more expensive since they also passively follow an index and apply their covered call strategy passively. Some CC ETFs even by Index ETFs and sell options of those ETFs. Cost and performance are absolutely comparable.
Actively managed income funds, especially CEFs are of course different animals, but you can compare their total returns with other funds and indices by doing the math.
is their a way to set the total asset payout appreciation like you did comparing the TSX to LBS, I cant figure out how to compare stocks/etfs like brandon did on trading view or google finance....can anyone help?
Another Con to PII is that taxes are due because you are paid dividends throughout the year - for us monthly.
I use a hybrid style and semi-growth style of investing. The income my spouse and I generate is twice our monthly take-home pay that I generate from my current, well-paying job.
I consider our dividend income as a test run as we plan to retire in a couple of years. We take the income generated and selectively reinvest the dividends, and we average about 8.75% dividends growth each year... So far, so good!
Thanks Brandon. I've spent the past several days learning about the pros and cons of covered call ETFs. This video and many of your others have been helpful.
Excellent job. There is also the benefits Canadian eligible dividend stocks when it comes to taxation, and writing off interest on money borrowed to be used to invest in dividend income (although that can be very problematic with recent interest increases now).
Great video Brandon. One of your best. I’m mostly PII I’m 54 years old but still like holding some growth dividend stocks and I still have 2 stocks that pay no dividends LoL I have not completely turned passive yet. Some days I still cringe at seeing my covered call ETF going down as I’m not using my dividends to live off of yet as I’m just reinvesting it all back in and cost averaging down. I don’t plan on using the dividends until I’m not working. I would like to retire between 60 and 63 but need to see an retirement planer to get it all worked out first LoL. Thanks Brandon
On point 1 on the con side. Many high yield etfs have been dropping in value this is true however they do go up in value as the market rebounds granted at a slower pace. I do agree that many of these etfs like HYLD etc are new and long term performance is really unknown.
A lot of people look at dividend investing as a thing you do when you retire. IMO, do it well before you retire. It is advantageous to invest in a solid dividend grower at an early age, that way by retirement, you're not yielding 3-5%, your yield-on-cost is 10-20-30% after decades of dividend growth.
Exactly. You just allocate equally to grow so that when you begin liquidating the growth aspect before retirement you're still getting a higher yield on cost until you retire fully
Great video Brandon. I have been following Adrian's videos closely and had an idea of the pros and cons of PII. But you've summarized it really well. As you've said, its like advocating a diet. It boils down to individual choice and preference.
Thanks for the information. I am definitely for PII but also look at some growth; I suppose I am hybrid, leaning on PII.
Cheers!
When you are doing PII as your main strategy you are basically doing a "rental" strategy. You need to hold the stock/etf until you original investment is 100% paid for then... and only then is it actually "passive income ". At that point it can become very easy to not worry about "the price ". There is times that the high yield etf's/ split funds don't pay monthly. That needs to be factored in to your lifestyle strategy as well.
The pros far outweigh the cons here passive income strategy, hands-down I don’t want to wait 20 years for my money
Could you clarify why a fund's value or a stock's value goes down due to dividend (not return of capital) distributions?
Do you have to pay taxes(depreciation) on dividend the stocks are in an untaxable account (tfsa/celi) ?
Hey Brandon, been watching your videos for a long while now, and I think this video was spot on to shed some light on the negative assumptions on PII. I am 22-years-old and personally have a mixed 60-40 growth/PII investing approach, and I think this suits me fine for now. This obviously will probably change as time goes on, you never know!
Smart choice, the rising interest rates are pulling money out if the equities market into risk free assets. Growth stocks and PII stocks only go up if there is more and more money entering the market. The opposite of what's happening in 2023.
if the funds capital depreciation is faster than its yield payout, isn't it just one giant ponzi scheme?
I agree. It is like diversifying and keeping your options open.
Is it accurate to make such a case for capital depreciation or is it more that you may not necessarily get much capital appreciation?
Hey buddy, that was very, VERY well done. Brandon white board explained 😎 I hope this helps to stop some of the PII is bad, Growth investing is bad, DzgI is bad, only 'this' strategy is good nonsense that is out there. Every investment strategy has its pros and cons and risk with it. I think you captured it all in a relatively short video for how big a topic this is. 💪
But dude... He called it a cult... im dead LMAO
Great video Brandon, definitely pros and cons to any type style of investing but it does help to have a nice chunk of capital when it comes to relying on pii so it does tend to lean towards the 50+ crowd unless you have the balls like Adrian to sell your home/condo and put it all in dividend stocks like DFN, EIT , ENS, RS , FTN, LBS,GDV, HYLD etc but I’m like you I like a mix bag that lean towards dividends, I own the ones l listed and a few others but I also like and own some blue chips such as BCE, ENB, PPL a couple of our banks (BNS, TD) that also pay a nice yield and have potential for capital growth while I wait , but I also own some riskier stocks like META , BABA , NIO so every investment has its pros and cons but I think PII has more pros with the right picks .
I agree Bull Hammer, diversification is "King" or in a female perspective, "Queen." Single and Etfs or split corps in a portfolio feels like a wise way to go about the best way for peace of mind. 👍
I'm a passive income investor after looking at a variety of strategies because it suits my situation and desired lifestyle. So far it's gone really well and don't have any complaints. I've made a couple choices that I wouldn't do if I was starting over but overall it's working for me. Brandon's 100% right though, if anyone out there is saying one strategy is the best for everyone, run for the hills.
Nice comparison of LBS vs XIC. Not everyone can see the bigger picture.
can u talk about aqn
I loved the two graphs comparing total return performances, thank you. What software does generate the total return graphs?
Good Job on this video buddy! - LBS has destroyed XIC even if it "missed" 18 monthly dividends. Excellent point about focusing on total returns instead of stock price returns. Also thanks for the shout out! I say this all the time: Investing (for us), is not just about numbers or total return (for many people it is and that's OK) its about using it to have a better quality of life and save time. Time is the most valuable asset in the end, not an extra 3 % return when i am 80 years old. Take care buddy! talk soon. P.S. no plans for kids that ship has sailed.... but we have over 55k kids to take care of now and growing everyday :)
I think I was witness to the two of you guys becoming "buddies" over the past year...I wouldn't be surprised if the Canadian in a T-shirt is the next person to comment here.. lol
@Passive Income Investing so true.. I need to dive deeper into this strategy as it is foreign to me but intriguing.
Oh hi there :)
@@greendraggun That would be great. Adrian. Adrian. And Brandon. The Canadian Investment Triangle.
I think a strong way to illustrate the difference between PII and Growth Strategies is a simple example.
If you invest, say $100,000 using the PII Strategy, by the end of 30 years your Total Returns will be, again hypothetical example, $300,000 (10% over 30 years including a small portion from Returns and most of the amount collected as Dividends).
If you invest $100,000 using the Growth Strategy, by the end of 30 years your Total Returns will be $390,000 (13% over 30 years with gains mainly coming from Returns and a small amount from Dividends)
At the end of 30 years your $100,000 invested has generated $90,000 more using a Growth Strategy.
But.
You had to wait 30 years to benefit from that extra $90,000.
Whereas using PII you have earned that $300,000 in $10,000 per year Dividend payouts for 30 years.
When you finally cash out your investments at Retirement you will definitely have more money using Growth style investing.
But, is 3% more worth it to you when you're older?
That's the question to ask when deciding between PII and Growth style investing as far as I understand it.
Are you interested in doing a video about the brookfield spin off.
Hi Brandon. Great video. I have been part of your academy for a few years now & also been following Adrian's PII site for about 1.5yrs. Since 2008 when I started investing on my own I was primarily using a dividend/growth long term approach trying to grow my capital. However, now that I am retired I really don't care a lot about growing my capital anymore & instead needed to change to concentrate on getting income from my capital. The PII was kind of the answer to my dreams of how to get a better return than just the avg 3-4% dividends from stocks. I agree with most of your points, but feel your first Con can mostly be avoided. Although I don't care a lot for capital growth anymore, neither do I want capital deterioration. There are many Income funds to pick from and certainly not all have their capital drop over time (although they don't grow much either). I just avoid buying funds such as CLM which tends to cannibalize itself over time in order to maintain the crazy high yield.
Carr to shared some of your holding that don't depreciate over time? I'm my opinion split shares preferreds are a serious contender
Great summary! I've encouraged some friends to check out your channel. Good work bro
Brandon, you're wearing a hoodie and a toque. Is the heat off in your house? Did you miss a dividend? Just joking😁
I follow both you and Adriano. Two of my favorite investing channels. Also, enjoy hearing from your Dad. Great information.
Happy Holidays 🎅🎄🤶
Thank you for talking about total return 👍
I really like total income and tend to like my investment style side with math. I do know, from my viewers, that a lot of people really like chasing yields. I do try to give them some total return sage advice but there are those die hards that just want the higher dividends.
good to see you here candace!
@@thetiredlinecook Thanks 🙂
@@MountainFinance holy banana bread let's do this !
Great video and very timely for my portfolio. I'm in my 50s and have 20-30 percent of my portfolio in PII holdings. I have yet to see if the pros outweigh the cons, but I'm definitely open to the idea. Adriano's channel kind of blew my mind when I started hearing about all of these 10-plus percent yielding funds, but I think I I've slowly begun to understand the tradeoffs.
I love income investing, i was a growth investor for 10 years then sold everything and transition to DIVO, JEPI, JEPQ and i am living the dream of passive income
Thank you for the video. Hybrid style sounds good.
A very important topic to cover. We do not hear PII's talking about cons so this was keeping things real and giving a lot of food for thought. Being a hybrid is practicing the healthy investing strategy of diversification! So a balance of single stocks as well as ETF's with cover call and modest leveraging and split corps. The dividends I have are from aristocrat companies, which means I can sleep with peace of mind. So, YES! Hybrid I totally support for a healthy balanced diversified portfolio. 👍🇨🇦
Great video I wish more were like this. I have a coworker that invested $100,000 in Tsly because they are under the impression it will grow to $1,000,000 in 5 years with the 60% dividend. With the ONLY risk is that Telsa goes lower.
Great video idea , the comparison and mostly the quizz .
Hey. I'm from Brazil. Thank you for sharing your knowledge about the market.
I do PII. My one account I started 4 months ago average dividend is 6 percent and I’m currently down 4 percent. Hope it’s black after 12 months.
I think this was an excellent video, you seemed transparent and fair to both sides, and explained things clearly.
Great video Brandon! Thanks for all the awesome content you put out.
I actually posted a question on his livestream video in the comments area, regarding ROC and ETFs possibly going to $0 if enough ROC is issued to the shareholders over time (the capital depreciation you mentioned). His response was "that's silly if you believe that".
That was a harsh response, but essentially correct. ETFs are not closed-end funds and hence issue new shares each time they have additional capital inflow. That offsets the ROC if there is any.
Even CEFs like CRM, which is infamous for its high dividend distribution through ROC (21% of the NAV is the target) and a constant deterioration of its NAV and value, replenishes the depleted capital each year by issuing new shares.
When you invest in such high yielding funds, you should be conscious about what you get into. Capital depreciation is one thing, but down to 0 is very unlikely.
Very good video Brandon! I am now almost fully dedicated to PII but of course I am near my retirement. Another good point to some high yield income focused investments is the benefit they get from taxation. Sometimes much better than just interests and eligible dividends, so always a plus obviously.
In the same boat. Considering split shares preferreds to avoid depreciation and still generate decent income
Awesome video Brandon, great info in this vid!
Very thorough! Good video.
PII has been working great for my wife and I. It's been working better than 10cent and alibaba
Thanks Brandon for making this video! Blossom is a great place to state your own investing strategy and not every investing strategy is a one size fits all. I like seeing different way of investing as they evolve. i was part of the passionate discussion in Blossom and stand by what i said
I am a PII Investor, i dont care about capital gains/loss honestly, they arent realized until you sell them. i also enjoy averaging down on my ETFs or stocks. I intend to hold long term 5+ yrs and get a total return that benefits me better than a dividend growth or appreciation strategy.
Like anything in the investing world or life in general is due your own due diligence. Love your honest approach and look forward to more videos!
I lose my job next year. Had I not invested in PII I would be staring at no income + my stock porfolio down by 40% due to matket crash... PII MUST BE PART OF PORTFOLIO!
I think the best part of this strategy is you can actaully create massive income with leverage and beat market performance. Treating high yield investments like real estate. Buying an asset with loans and using the yield to cash flow the loan and then you are left with the asset that you never even had to spend your money to get. Where as if we have a bear market and you tried using leverage to buy an index. Youre just at a lost. The yield these funds offer, allows you to not care where the market goes as long as the loan is being paid back. Thanks for the vid!
Is capital depreciation always gonna happen with PII? I was under the impression that we would sacrifice growth over time (the value of the fund goes up less than growth-focused funds/stocks) over a period of time, but if the value keeps declining over time then that could be a potential dealbreaker for many income-oriented investors.
The revenue is generated using covered call. If there is little movement, it's hard to bet against the fund. It's also dependent on the fund managers writing those calls. Most of the time, yea, there is capital depreciation.
Nice round up. One con that you missed is that the distributions of PII funds often do not grow, so the real income may shrink with inflation over the years. It is not a deal breaker, but it is something that needs to be planned for.
You can reinvest part of your passive income to cover inflation rate.
@@371MGH Exactly. That's the best way to plan for it. But I've seen FIRE types who get so excited about living off a relatively small nest egg with a high yield investment that they don't take inflation (or sometimes even taxes) into account.
This is one area I like about PII vs dividend stocks.
A dividend stock may pay 3% but increases annually. A PII fund may pay 10% but never increase. What’s the better deal?
10% all day, IMO.
Most people will never accumulate $2 million+ to live on dividend stocks. 500k in PII funds is far more realistic.
Great video dude. You rock.
Hi Brandon, I think that you explained this very well. It's about time that someone has done this. I think that PII is something that can be added to a portfolio at any age. If you are young, how happy would you be if part of your portfolio paid for your vehicle insurance or utility bills, and if you are just about to retire this is a great solution to income stream. The older strategies of a 60/40 ( equity/bonds ) portfolio just don't work when markets are this volatile. Keep up the great work !
Very informative. Thanks Brandon!
I do think that capital *preservation* is an important consideration. I'd prefer to at least keep the capital portion in pace with inflation, as a minimum (long term, of course.)
Nice work Brandon! I do follow Adriano's PII strategy but I am in my early 50's and semi-retired. It is an excellent source of income for sure. I do agree with you on the principle of having enough to put in to to use this strategy. I am not pulling out income yet as I am currently investing it back in while my wife is still working.
I am just waiting to deploy roughly another $130,000 or so to be fully invested and am doing this as I buy the dip or find a better deal out there. I do have a few individual stocks but am moving to be all INCOME invested in the next year using ETF's, Covered Calls and funds like HYLD as an example to build my monthly income up. I realize my situation would be different if I were in my 20's or 30's likely. Great job! Love your channel as well.
What would be (so much) different ?
@@RENEDU2 .. My strategy would likely reflect more of a combined asset approach including growth stocks and Div/growth stocks to go with the PII stuff.
@@RENEDU2 Time bud. Definitely time.
Thank you for a very good video Brandon, very good examples.
thanks for the video Brandon!!
Brandon,
Thx for making this video and doing a good job of being fair to discuss the pro's and con's for this strategy.
I was particularly pleased with the fact to not only spoke about a key aspect of investing that people don't even pay attention to and that is 'total return' on the investment.
Every one simply focuses on on the value of the capital and when you do a comparison of tge charts between a PII fynd vs a growth oriented fund.
I particularly wanted to thank you to site and show a valid example on this point of 'total return'...so thank you for that.
I totally agree with you that there is no single strategy that works for all. Each investor must look at their own situation and have to make a choice which strategy suits their needs and objectives best and then should follow/stick to it.
Lastly, I want to say that for me the pro's #2 and #3 were the key drivers for choosing this strategy along with a few other key investing objectives that has led to my decision.
Thx
Another great video ! In a good looking hoodie !
Good video. I invest in both growth and PII. With the PII strategy , some amount of reinvestment of your monthly income is necessary to help reduce the capital depreciation. And in most cases, those using this strategy also have another source of income that will cover their living expenses so they are able to reinvest a high percentage.
My concerns are how reliable are these covered call etfs? Reliable as in one day they won't change their policy and say "Starting next month no more covered calls. Thank you very much. It has been a pleasure serving you, our valued customers". And how much call options can these funds sell? What if demand for options dies down? There are so many covered call etfs coming out... are there enough call buyers to buy all these calls from these etfs?
PII strategy is enjoyable and cathartic... reinvesting dividends brings me joy!!! Index funds don't give me the same wow factor!!! LOL. Compounding Compounding Compounding...
Use a free brokerage, sell a percentage of your index funds every month and buy it again. There, you just accomplish the same thing as PII but you are using much more diverse funds and will likely have a higher overall return
@@rh3108 Stock market is down over 25% this year, how is an index fund going to help us if we were to retire now? PII has is uses!
Very good presentation 😊
"as humanly possible" is the words we wanna hear
You are right to say it's like a cult, some people invest as if they have blinders on lol. Good to see both side of the story.
Adrian should be more forthcoming on the cons of the strategy for the benefit of his followers.
Liquidity can also be a huge factor on the CONS side for me. Many of the high yield PII investments have market caps in lowish millions and not billions. As such they are not (usually) suitable for a channel trading strategy as you are dealing with a small pool of buyers and sellers and you risk getting caught missing a monthly distribution. As long as people understand how PII can work, then they can decide whether it fits their needs and how to build it into their overall portfolio. Anyone putting all of their eggs in one basket (i.e. - trading strategy) is adding risk.
So capital depression doesn't happen with every fund. Funds like CLM and QYLD are yes going depress. Funds through BMO or JEPI still get some capital gains.
Sooo, where do we get the awesome blossom merch? 🎅
Sorry Brandon, I disagree with what you are saying. I have invested with the standard investments for at least 30 years,but I have started to go the route of passive investing now. The benefit is it pays every month! If the price goes down, I get more shares each month until I retire.
Passive income investing will outperform non PPI investments if you will in 2023.. it will all come down to reliability, balance sheets for these companies and great leadership...
Only investment strategy you need to deploy is the one you can rest easy at night with. If you can sleep at night and not worry about your investments in the night, you have chosen the right one.
Great Video😄
Also after watching full video: con 6. With PII if you use your dividends to pay your bills, then you are basically getting 0% dividend growth over the years + capital erosion. And for me that's one of if not THE major flaw.
But I get that it has it's appeals and can be a good way to start generating income quickly. Great video!
I started small knowing nothing and became a "hybrid".
I agree. Being a hybrid is practicing the healthy investing strategy of diversification! So a balance of single stocks as well as ETF's with cover call and modest leveraging and split corps. The dividends I have are from aristocrat companies, which means I can sleep with peace of mind. So, YES! Hybrid I totally support for a healthy balanced diversified portfolio. 👍🇨🇦
You said..were are in market crash....so sell ..sell
great presentation... you need to work on the calligraphy if you are going to write things on that board...sorry!
Good video - balanced with pros and cons.
I love dividends and 90% of my portfolio pays me monthly.
I hold 6 ETFs with a combination of growth, dividend and covered calls.
I think balance is good - until I retire then maximize income. The income strategy also allows me to leave the portfolio to my kids.
Earning just over 9% in dividends on my ETF portfolio.
Thanks Daryn! Agreed 😎
Very insightful! Thank you so much for this Brandon. :^)
Passive income is kinda like buying urself time but even that isnt guaranteed
I wanna drink the kool-aid cuz that's my stage of life, but #1 and (especially) #5 are making me hesitant. For my wife and I it's a lot of capital to invest, and sure the income stream will be phenomenal, but is the investment safe? Whether we leave a big lump sum for our kids in the end or a nice healthy cash flow is irrelevant to us, only that they get one or the other.
Im middle age living in canada so i hold vdy and xeqt 😂 best of both worlds with extra canadian weight in our high divi stocks.
Living overseas is not all what it is cracked up to be, You miss all the things that living among friends and families give you. Missing the big and little things when you live overseas is a big price that has to be considered. You stop sharing things which brings you together with friends and families.
One price to pay is the realization that you and your friends are on different trajectories and that, over time, these friendships get eroded.
I prefer to grow the dollar value, while receiving income - but tax efficiency also plays an important role - and I'm also retired / so a bank - telco and reit fulfils my needs - I'm also mortgage free and live a frugal low stress life - so that's me in a nut shell - I enjoyed this type of lecture very much - thank you Brandon 😊
Adrian can pass on an income stream... give your kid an income stream that lets them have a bit of freedom. or a bag of solid stocks with solid dividends.
Passive or income investing should make up a section of your portfolio along with others, frankly many should not be investing their own money due to a complete lack of knowledge….way too many going to be hurt by the PII channel
yes, a section of your portfolio. Isn't one of the guidelines for wise investing and managing your finances about diversifying? It is working for me and I can sleep well at night knowing I am making the best decision with the finance portion of our lives.
I like to listen to you and Adrian. After this video, I like you "less". I'm sure your intention was not to "attack " Adrian, but too much example was given about him.
(FYI: Your analysis on pii perfect but you need to add discipline and temptation to sell in pii is less because you do not see the returns in percentage like in growth strategy)
Problem is that if a covered call ETF drops, it will never recover because they never appreciate. The SCHD ETF has no cons.
Growth early than PII later in life
a really valid discussion but a brutal presentation, this guy is tough to watch.
Good for old Canadians??? Don't forget that at 71 you have to begin to sell your RRSP !!!!! Not certain about that.
My portfolio as a 4 years old cat : 80 % growth investing and 20 % passive income investing. While it's perfectly fine for a financially educated cat, I don't recommend this to the average person. For them, I recommend a robo advisor solution. It's set it and forget it and it works.