September Slump, finally! QYLD

 As I sit down to write this, I realize that I am being pressured to fill out the FAFSA for my college-bound child as of October 1st.  This is a bit of a landmark moment, as the first of my two children will be leaving, clearing up a some household expenses.  Since she picked the major, and the university, she will be required to pay for her tuition.  She needs to have some "skin in the game" so to speak, so that money is not thrown away.  She was able to reduce her bachelor's degree by one year by taking community college classes (surprisingly, they all transferred).  Senior year is completely dual enrollment with said picked university.  She also qualified for a scholarship that pays for 1/4 of each year's tuition for up to four years (keep that GPA up and take the ACT/SAT).

Ideally, this is they best way to do it:  Starting Freshman/Sophomore year (easier for homeschooled kids), take general classes with your local community college (College Algebra, a lab science, a general history class (American or World), etc.).  Online seems to be popular, so no worries about how they look to the other kids, and no worrisome interactions (do be careful with lit courses, though, they might end up reading 50 Shades of Grey!).  Try and pick the school you want, make sure they have dual enrollment starting Junior year, and take classes with said school the last 2 years of high school.  Upon graduation, you should have to get a bachelor's in only two years with that school.  I learned with my first, now I need to apply this to my second child.

Now for the FAFSA - the FAFSA punishes you for saving, and having middle/upper middle class income.  You truly see how this country is made on the backs of these two classes, when you see friends and relatives get free rides thanks to the FAFSA.  Having a taxable brokerage account the size of mine, without putting it into a "can't touch until 65" retirement account, automatically qualifies my daughter to NOT get any college money.  I've taken several faux FAFSA indication tests and they all say that she cannot get any support.  This is how the system punishes the FIRE set, and forces you to play by their rules.  Just like the current infrastructure bill has a clause to get rid of the backdoor ROTH option (this will make things painful if that passes!  I'll explain if it does in a later blog).  You MUST not make too much money, and you MUST put it into a plan that MUST require you to work until 65 years of age (the age determined by the government that you are fit to contribute to the strength of your nation).  And it makes sense from a governing point of view, I get it.  I don't like it, and I don't have to play by those rules.  I will get penalized for not playing by the rules, but I am determined to march to the beat of a different drummer.  As I contemplate taking the FAFSA (one of those F's stands for futility, I'm sure), I'll post if I do.

I told my daughter that she needs to work on scholarships and writing all her friends and relatives for assistance.  She is also working part time to save up as well.  Who knows, the old man might pass away and she can pay off her loan with dividends sooner than later.  We did open a 529 for her, which does cover dual enrollment tuition (just not other fees), and people can donate to it (gifting up to $15k tax free per year) and she won't have to pay taxes on the funds received.  That coupled with the several writeoffs for college tuition & expenses should help ease some of the financial burden.

Anyways, after 9 months of my net worth going up, FINALLY it has pulled back thanks to the market slump.  I tried to predict it the last 2 months, because prior, 6 months was the max before a pullback.  I'm actually grateful, and I think it isn't done until earnings season starts in the middle of October.  Now if Q3 earnings are also slumped, this will last until mid November to mid December.  I think that companies have tightened up enough that profits will still hold over and Q4 following will be no exception.  Q1 next year on the other hand will probably be the next slump.  I also hope that it continues to slump, because dividends have not yet caught up to profits, so yields are still low.  Granted I've lost about 10% of my brokerage value, but I can endure a lot more pain to gain better yields.

This is why I decided to check out QYLD.  QYLD is not a company's stock.  It is an ETF.  I know, ETF is usually a bad word for me, but this ETF is unlike any other ETF I've ever seen.  It doesn't buy stocks.  Yes, that's correct, an ETF that does not buy/sell stocks.  It stands for, well, let me just cut and paste:

"Global X Funds - Global X NASDAQ 100 Covered Call ETF is an exchange traded fund launched and managed by Global X Management Company LLC. The fund invests in public equity markets of global region. The fund invests directly and through derivatives in stocks of companies operating across diversified sectors. It uses derivatives such as options to create its portfolio. It invests in growth and value stocks of large-cap companies.  Global X Funds - Global X NASDAQ 100 Covered Call ETF was formed on December 11, 2013 and is domiciled in the United States."

So basically, it is an ETF of covered call options.  I don't do options, as I'm not looking to make a quick buck.  I also know there can be risks, (as with all make-money-quick ideas).  But here's the kicker:  It averages an 11-12% yield, and guarantees NO GROWTH, and is managed (probably by a computer).  It is basically an income vehicle with little work on my part.  Now, I like a little growth with my dividends, so I was quite skeptical at first, but the growth + dividends with Hormel (HRL) in my portfolio is pretty petty, although stable and reliable.  QYLD offers no such stability or reliability, but it does offer some nice MONTHLY dividends.  I am cautiously buying into this one with some mad money, because I want to see how it performs in a bear market like September Slump, or perhaps a crash.  I suggest you do massive research before buying into it, and be ready to jump if needed.  Otherwise, it's not bad for a ROTH or HSA side dish.

My ROTH is fully funded for the year already, and I hope they don't eliminate the backdoor ROTH conversion, as I hope to do this over time.  I'm playing catch up with my HSA, and am using that to invest into lower yielding & stable stocks to keep my portfolio balanced.  Otherwise I'm hanging onto cash at the moment until the slump looks to be over.

Dividend Increases & Special Payouts

• Verizon (NYSE:VZ) declares $0.64/share quarterly dividend, 2% increase from prior dividend of $0.6275.  Best to be expected from a communications company.
• W. P. Carey (NYSE:WPC) declares $1.052/share quarterly dividend, 0.2% increase from prior dividend of $1.050.  One of their minor increases throughout the year before the big one.
• McDonald's (NYSE:MCD) declares $1.38/share quarterly dividend, 7% increase from prior dividend of $1.29.  Very Nice!
• September Purchases:
• XEL - 7 (HSA account)
• ORI - 18 (HSA Account)
• That's it.  Maybe late October I'll have some purchases.