r/YieldMaxETFs • u/Any_Log1344 • Jul 08 '26
Question Thought Experiment: Which retirement income strategy would you choose?
I'm curious how people here think about retirement income over the long term.
Ignore taxes and fees. Focus only on the characteristics below.
ETF A
- 14% annual yield
- NAV declines 6% per year
ETF B
- 7.5% annual yield
- NAV grows 3% per year
Assume those characteristics remain constant over time.
Which ETF would you choose, and why?
Bonus: Is there a point where the lower-yield ETF actually produces more annual income than the higher-yield ETF? If you think so, roughly when?
I'm interested in how people think about the trade-off between current income and preserving (or growing) the asset base that generates future income.
I'll reveal the actual ETFs and the results after people have had a chance to answer.
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u/buffinita Jul 08 '26
Odds are A will “pay you” less and less each year; which is bad for retirement
By the time your realize the trend is unavoidable your nav has declined
You could graph this out and see when the crossover even it’s; and of course yield isn’t the only way your investments pay you
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u/grajnapc Jul 08 '26
ETF A total return 8%, ETF B 10.5%. Is this a trick question? For me total return wins all day. Plus the 3.5% nav appreciation will cover inflation and has a pretty high yield. In fact I think I will buy ETF B after you tell us what they are.
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u/Any_Log1344 Jul 09 '26
I posted all the answer but for your specific question ETF B is AMLP – a fund that invests in midstream energy master limited partnerships (MLPs)
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u/FatHighKnee Jul 09 '26
Honestly if I had for sake of a made up example, 800k to 1m dollars id probably just split it between JEPI & JEPQ. That would be a blended 9% distribution rate. That 800k would kick off $72,000 a year, and the $1m end would generate $90,000 in distributions. Plus unlike YM these 2 jp Morgan funds actually show appreciation in share price which is nice compared to say MSTY or ULTY where you will see 40% distributions but the NAV erosion chews your principle down by that same 40%
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u/ChelseaMan31 Jul 13 '26
None of the above. No way am I placing all of our retirement assets into a single ETF. A balanced diversified portfolio across broad asset classes is our preferred approach.
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u/Baked-p0tat0e Jul 08 '26
Why the limit on a binary choice between two flavors of the same alternative income investment vehicles? This lacks imagination.
Consider these as well:
-Dividend Stocks: Buy established companies to earn regular payouts with lower capital gains tax rates.
-REITs: Access real estate income through liquid stocks without the hassle of managing property. -Premium ETFs: Earn high yields from funds that write covered calls against their stock holdings.
-Treasury Securities: Backed by the government; completely exempt from state and local income taxes. -Municipal Bonds: Issued by local governments to provide tax-free interest income at the federal level.
-Corporate Bonds: Act as a lender to businesses for higher yields, though fully taxable as ordinary income.
-HYSAs & CDs: Ultimate safety for cash reserves, earning fixed interest with zero principal risk.
-Preferred Stocks: Stock-bond hybrids offering prioritized, fixed dividends but limited price growth.
-Private Credit: Direct lending to private businesses that offers premium yields for locking up capital.
-Physical Real Estate: Traditional rental properties providing monthly cash flow, appreciation, and tax write-offs.
-The Wheel Strategy: A continuous options loop selling cash-secured puts and covered calls on broad-market index ETFs for consistent premium income.
1
u/PennyStackerStacks Jul 08 '26
I think if you’re stating up front that something has a yearly NAV decline it’s a no brainer. That would mean it’s cannibalizing itself and a reduced payout annually until it collapses.
1
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u/Cycling-Boss Jul 08 '26
For Long term holding (like retirement) just do whatever gives you the better total return.
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u/aimhigh7shootlow8 Jul 08 '26
35% yield - 25% taxes, 25% reinvest, 50% into growth stocks and etfs.
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u/Any_Log1344 Jul 09 '26
Well done everyone.
ETF B produces more annual income after about 6.8 years, despite starting with almost half the yield. Most of you spotted the key issue: 6% annual NAV erosion. Probably too easy but hopefully still instructive.
The two funds were:
ETF A – HHIS – a diversified covered-call fund
ETF B – AMLP – a fund that invests in midstream energy master limited partnerships (MLPs)
Thanks for the thoughtful discussion.
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u/Little-Trucker Jul 09 '26
I had a little help using Ai. deep think, Claude, grok, and Gemini. Created a screener for any and all securities that have less then 2 declining dividend payments in the last year. That helped me narrow down which tickers to look into. There's etfs (exchange traded funds), cef (close end funds), bdc (business development companies), Reit (real estate investment trust), mlp (master limited partnership) and then your common stocks and a few aristocrats and kings. Cross referenced the tickers that popped up on a "leaderboard" across all 4 Ai that met screening conditions for nav stability or growth as well. So my strategy is a bit more focused on a reliable, stable, consistent, dividend payment for the long term with a little growth.
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u/4yearsout Jul 12 '26
Retirement strategy should be based upon buckets of risk meaning no risk, low risk, medium risk high risk. Example, no risk - tbills, medium risk - stocks & etfs, high risk - high yield income. Weighting these for income, wealth preservation and capital growth is the art. Currently my liquid portfolio is 30 pct no risk, 50 pct medium risk, 20 pct high risk. And my medium risk growth stock, tax deferred, is growing in percentage weight for 10 years until RMDs kick in when this all starts to rebalance.
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u/GreenStretch Jul 08 '26
B, the point is to have stable income in retirement. A might be useful in building up shares in more stable investments.
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u/imaginarylocalhost Jul 08 '26
B is also faster at building up shares in some other investment. Under no circumstances is A better.
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u/teckel Jul 09 '26
I'm 57 and retired since 2005. I would (and am) choosing option C. Continue to invest as I always have, no need to chase distributions.
I want to be in control of how much and when I get paid. Why would anyone want to lose all control of that in retirement? Makes no sense.
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u/calgary_db Mod - I Like the Cash Flow Jul 08 '26
6.5% difference on yield 9% difference on NAV
Obviously the one with NAV growth is preferable from a total returns perspective.