Zijia Song at Bloomberg profiled "dividend nomads," people who fund a travel-heavy life abroad with high-yield income ETFs, and quoted me on the risk.
The story follows Jae Hyouk Jang, 43, who recently left his job as a security specialist and is living on about $130,000 in savings. He bought several derivative income ETFs, including one that advertises a 58% annual payout rate generated by selling call options on Coinbase shares. Bloomberg reported that funds offering yields like these can lose money when markets fall.
My point was simple: a retirement plan that only works when markets go up isn't a plan, it's a bet. Many of these funds cap your gains in strong markets and offer little cushion when markets drop, and one fund in the story fell nearly 40%.
Before you count on any income source, I would ask three questions. Where does the paycheck actually come from? How does it behave in a bad year? And what gets sold first when it does?
Read the full article at Bloomberg →
