was a guy named Madoff that promised something similar. A "safe" 8% real return with low volatility is not possible, unfortunately. ...But if u do find it please let us know.
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generating 1000 $ per month on 150 k investment
- Thread starter oktiri
- Start date
Play around with this, perhaps a such a product would meet his needs.
http://www.brkdirect.com/spia/EZquote.asp
http://www.brkdirect.com/spia/EZquote.asp
Quote from oktiri:
Folks,
I need you help on this one.
I need to invest some money for the old man. all is needed if for it to generate a 1000 monthly taxable income from a 150k lump sum. i'm aware how to easily generate such returns, The problem is how to minimize volatility.
I was thinking
25 % quality dividend generating (T, VZ, Con ed, KMB....)
25 % junk bonds (JNK, HYG)
25 % BAB (build america bonds)
25 % corporate bonds.
Any ideas ?
Sell otm puts on low-betas and use zero leverage. BLK has a buy-write fund, but you should do this yourself in shares. Pick a diverse group; many sectors, best in class. 100 shares notional exposure per ticker (1 put), no more than 4 tickers per sector. Go one strike otm and do not adjust. Buy some upside calls in VIX or bull vertical as a hedge on vol, or buy an atm index put for gamma.
Quote from Free Thinker:
wouldnt dividend paying indexes or etfs make more sense. no specific stock risk?
Not IMO, it's what adds alpha to a dispersion book. I would stick to shares. Dividends are priced into the equation, so no advantage there.
I have done this strategy for a <1 beta portfolio and it is doing very well. ~18%/year over almost 4 years.
Quote from atticus:
Sell otm puts on low-betas and use zero leverage. BLK has a buy-write fund, but you should do this yourself in shares. Pick a diverse group; many sectors, best in class. 100 shares notional exposure per ticker (1 put), no more than 4 tickers per sector. Go one strike otm and do not adjust. Buy some upside calls in VIX or bull vertical as a hedge on vol, or buy an atm index put for gamma.
wow atticus i didnt know you do this stuff as well. Curious, what do you do if the underlying went itm? Do you just take assignment then sell otm covered calls 1 strike out against it or take the loss and close before expiration. thanks