Fund managers/Crs - Don't use them at all if you can avoid them. They don't outperform SPY and SPY has a 0.09% expense ratio AND collects dividends for you (1.89%).
SPY is the blue line so that's where you would be over the past 5 years - no better, no worse than the S&P but you have 2% annual dividends in your pocket. As a long-term strategy, for a $100,000 portfolio I would:
- Buy 200 SPY at $274 ($54,800)
- Sell 2 SPY Jan $275 calls for $16.50 ($3,300)
- Sell 2 SPY Jan $260 puts for $11 ($2,200)
So you net into 200 SPY for $49,300 and, if called away at $275 you get $55,000 + about $6 in dividends is $1,200 so $56,000 for a gain of $6,700 (13.6%) or 6.7% of the whole $100K. If you get assigned 200 more at $260 ($52,000), you'd have 400 shares at an average of right about $250 (including the $1,200).
So the worst case is getting into SPY at $250, which is 10% lower than we are now or making 6.7% in year one. It's a good, conservative strategy that will vastly improve over time as you re-invest the profits. At $6,700 a year, in 7.5 years your have another $50,000 at work so your yield pops to 13.4% and then another $50,000 in 4 years and you're at 21.1% so 3 years later it's 27.5% and 3 years after that 34%.
So, using $100,000 now, in 7.5 years you'll have $150,000 and $200,000 in 11.5 years and $250,000 in 15.5 years and $300,000 in 19 years and $350,000 in 20 years at which point you'll be collecting $7,000 in dividends alone and your 6.5% would be dropping another $22,750 into the fund so - by year 20, you will be returning about $30,000 a year off your $100,000 now.
