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Deep-Value Investor, Ex-Tech Executive, Agentic Equity Research Builder
The S&P 500 fund VOO beats covered-call income ETFs like GPIX and QQQI because covered calls cap upside, leaving long-run returns worse. Since GPIX's October 2023 inception, VOO has compounded 26.4% a year versus GPIX's 23.6%, while QQQ's 25.4% beat QQQI's 21%. Fees add drag of about 1.1% for GPIX and 2.2% for QQQI versus 0.1% for VOO, and large monthly payouts are tax-inefficient. x.com x.comÂ
The S&P 500 is one of the best long-term investments, giving instant diversification across 500 of the largest US companies in one low-cost, tax-efficient fund. The index has returned about 10% a year on average with dividends reinvested, its dividend has grown about 7% a year over five years, and it has rallied back from nearly every crash or downturn, supporting steady dollar-cost averaging. x.comÂ
The Vanguard S&P 500 ETF works as a foundation that doesn't depend on getting every stock pick right. It gives exposure to about 500 large US companies for a 0.03% annual expense ratio, roughly $3 a year per $10,000 invested. The plan is to keep adding to it over time and build individual stocks around it. x.comÂ
The US stock market as a whole is pretty expensive relative to history, making this a better time to pick individual stocks than to put a lump sum into an S&P 500 index fund. x.comÂ
Owning the S&P 500 and Nasdaq-100 through low-cost index funds captures tomorrow's winners as they emerge without predicting them, since both indexes keep replacing fading companies with stronger ones. Since inception, the S&P 500 fund is up about 814% and the Nasdaq-100 fund about 1,683%. Contribution rate matters more than timing: $400 a month at 10.5% for 30 years grows to about $876,000, double the $438,000 from $200. x.comÂ
Buying an S&P 500 index fund at 26 is an incredible strategy for reaching future financial freedom, because of the time value of money over a long horizon. Allocating capital to individual stocks is fine, but the index fund should not be forgotten. x.comÂ
The new generation of covered-call income ETFs on the S&P 500 and Nasdaq 100 is preferable to traditional dividend funds like SCHD, serving as counterbalances built to underperform in bull markets and outperform in flat or down ones. Given a bullish long-term market outlook, plain S&P 500 or Nasdaq 100 funds should still outperform them over decades. x.com x.comÂ
Most retail investors who hold concentrated portfolios underperform a diversified benchmark like VOO. Depending on the study, typically 70-85% or more of those holding 10 or fewer stocks trail it most of the time, because of behavioral biases, higher volatility and missing the skewed winners that drive market returns. x.comÂ
Buying the S&P 500 and forgetting about it for 30 years beats 95% of hedge funds. Average results are the winning strategy, yet almost nobody can sit still long enough to execute it. x.comÂ
An all-cash rental property beats the S&P 500 on cash flow. $150,000 in an S&P 500 index fund yields about $250 a month in dividends, while the same amount in an all-cash rental yields about $1,000 a month, with 4% annual property growth budgeted. x.com x.comÂ
OVL can be one of the best monthly dividend ETFs of all time because it pays double-digit income without capping S&P 500 upside. It holds VOO as its core and earns income from defined-risk put spreads on the index rather than covered calls; its yield rose from about 3.5% to over 10% as it began paying out more option premium. Since January 2020 it returned 196% versus VOO's 178%. It shines in bull and flat markets but adds complexity and can underperform in severe crashes. x.com x.comÂ
