qyld we've talked a lot about this etf in the past and today we're going to talk about this crazy 49
cents per share dividend paid down on january 7 2022. what does this mean for you what does this
mean for your taxes and then we're going to also dive into what actually is qyld for those people
that might be a little bit new to this and not too sure of what's going on because let's face it a 12
dividend yield can seem quite attractive but is it worth it let's talk about first is 49 cents
now first things first if we hop over here to the dividend tracker website by the way this is the
new website i'll be using to track my dividends and you can check it out for yourself they have
both a free as well as a premium version linked down below in the description but look forward
to more videos on this particular website in the future but you can see right here payment
date one seven of four nine nine so let's do a quick calculation on what's going on here now
i personally hold about 400-ish shares of qyld that's what we want to plug in so think about if
you if you're invested in this how many shares do you have put that number in right now into
your calculator so for me it's 466.1593 and then multiply it by that .499 that is a total of 232.61
earned on january 7th that's pretty exciting but the big difference here is this is not your
typical distribution let me take a step back in time to show you what it typically is with qyld
if we go over here to their website and i'll link this down below if you want to check it out but
you can see 2021 let's start off with november this is the latest report that they offered for
19a and i click on it and i gotta zoom in because that's kind of small okay so here we are you can
see this is what's going on for the average of about a 22 per share dividend this is typically
what we get when we get these distributions but net investment income that's a result of what they
do in this fund which is covered call writing option strategies then return of capital of
21 cents 21.71 totaling 2246. that is typical of what we see for our monthly distributions of qyld
if you want to learn more about return of capital i talk about it in my tax video also linked above
in the info card as well as down below in the description you can check out that video after
this one but what's most important here is this is a difference this 49 cents is nothing to do with
net investment income it is nothing to do with return of capital this is all short-term capital
gain so a short-term capital gain distribution works just like this it's a payment made either
by a mutual fund or an exchange traded fund in this case qild which represents a portion of
the proceeds from the funds sales of stocks and other assets from its portfolio basically think
about it as the investors share the proceeds from the funds transaction now that's not the
fund's overall profit this is just as a result of them potentially selling some of the funds within
their holdings some of that activity that happens does get passed along to the investor but in this
case it's called a short-term capital gain because it was a fund or a transaction or something that
happened that was short-term meaning less than the last year and that's why this is called a
short-term capital gain what this means is that it is taxed as ordinary income so what you should do
is check with your cpa or your accountant and talk a little bit about short-term capital gain as well
as ordinary income and how this could impact you especially if you own a lot of shares and
got a huge distribution in this past month i think somebody got well over like five thousand dollars
in the last month as a result of having so many shares and this 49 cents per share distribution
that just launched big difference and you got to make sure you're keeping your eye on the game
with these particular things when it comes down to tax that does not mean that globalx
for qyld is going to start quarterly dividends or quarterly distributions i should say this is more
this is the short-term capital gain that is at the end of the year here it is great we're moving
on and we should see what we saw earlier in the form of either return of capital or net investment
income for the rest of 2022 so expect that 18 to 22 cent per share distribution as we move forward
because you got to remember the goal of qyld right here on their website check this out high income
potential and that's the goal of this particular fund with monthly distributions and they've done
that for the last eight years running so they're going to continue that on in 2022. now obviously
look right here and this is where a lot of people get trapped up in qyld and i want to make this
point in today's video a lot of people say hey i have a lot of money and i'm going to just put it
in the qrld because i like the idea that i could make a lot of money every single month and you're
thinking about it in the form of i could make enough money just with qyld to replace my job
income and then i could just live off of qild it sounds sexy but it's not always what it seems
so a couple things could happen especially if you're younger first of all look at this little
call it fine print at the end of this first page covered call writing can limit the upside
potential of the underlying security what this means this is the nasdaq 100 this is the index
that not only qyld is buying into but they write covered call options writing strategies against
the thing with that is these are the top 100 non-financial companies comprised of the nasdaq
index what you're finding when you're doing this activity is it's aimed at monthly distributions
it's aimed at income now if you're in retirement this could be a good opportunity to look into
but if you're like 20 years old and you're putting all your eggs into this basket i'd warn you about
that because there are opportunities with growth i would rather look into a growth etf or a growth
stock or a growth mutual fund before i would dump all my money into an income producing fund like
this one such as qqq that is one that tracks the nasdaq 100 index but is focused primarily
on growth in fact if we go over to the portfolio visualizer and we plug in a difference of a ten
thousand dollar investment between 2019 and 2022 and that 10 000 dollar investment will be invested
into qyld and qqq we're going to hit analyze portfolio and as you can see here the difference
between qqq and qyld is quite significant my ten thousand dollar balance if i put it all into qyld
only grows with dividends reinvested to 14 905 but look at qqq going up all the way to 26
277 that obviously leads you to believe that that growth is much more important than
dividend distributions now i will tell you one thing what i do with qyld the reason i have the
shares that i have is because i treat this as a short-term cash reserve so for example let's say
a year from now or two years from now i want to buy something or i'm i'm saving up for something
or maybe i want to have a secondary emergency fund to my emergency fund well i'm going to put money
into qyld just to kind of keep it flatlined and enjoy some extra distributions if i compare this
to a bank account where i can store this money instead the bank account only pays me about
0.50 in interest i'd rather go and lean towards something that's going to pay me distributions
as opposed to the bank account now of course that's my own risk in my own decision this is
not financial advice to buy hold or sell qyld or any investment but that's personally what
i'm doing the majority of my income though and the majority of my investments are going toward things
that are growth even vti vtsax voo and things like that those vanguard funds that are tracking either
the entire s p 500 or the entire stock market and are poised for growth over the long period
that's where the bulk of my investments are going but if i have some additional cash that i'm just
sitting around for a little period of time and at short term within the next two years i might use
that money i'm gonna put it into something like this qyld which tracks the nasdaq 100
ryld which tracks the russell 2000 or xyld that tracks the s p 500 and they all write covered
call option strategies against those three indexes so make sure you keep an eye on the qyld website
make sure you keep an eye on your tax bill and really start thinking about your ordinary income
the short term capital gain of this 49 cents and what this might mean for your tax bill
if you want to learn more about what's going to happen in 2022 with the return of capital
and net investment income distributions of qyld make sure you check out that tax video
right after this one i'll link it down below in the description other than that if you
have any questions comment below check out this video next and we'll see you on the next video