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Post by archer on Apr 19, 2023 14:11:15 GMT
steelpony10, johnsmith, Thanks for clarifying. I was having a bit of mental lapse as to what "income" was referring to.
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Post by judger on Apr 19, 2023 18:39:30 GMT
steelpony10 , rhythmmethod , I get it since I own PTY. My only point was in January 2020 one could have paid $33 for PDI. Since then it has yielded about $6. Today the price is about $18. That is a long way to go to recover. When we talk about "spend down" investors we overlook the "drawn down" investors, which really is spend down too. The poor guy that paid $33 and is spending his $6 in yield may never see his principal again. I am lucky because I am not using the PTY yield and will recover any cost before I need it plus pump up the income. I am using this post to admit that when I got into CEF's, I got in in a BIG way and own A LOT. Put that down to naive. And, yes, I just checked and I do own a lot of PDI at $30 or more. I own a few other CEF's at high prices also. But I have learned a lot too.
Let me just throw out how I sleep at night. I own almost all of these CEF's in IRA's and Roth's. I generate significant income tax-free from the Roth's. I have been changing my policy of auto dividend reinvesting to taking the unneeded income and investing it in the S&P 500 and low-volatility ETF's. I do also own quite a bit of equity and at my age I am trying to undo my mistakes by prudently selling and reinvesting the same way as for CEF's. I am positioning our portfolios for simplicity so that my spouse who is likely to out-live me and then our children who mostly don't have the time, interest or knowledge to invest will have an easier time when they inherit.
Let me throw out the major comforting thought that I have for any significant CEF loses. First, I rejected annuities long ago. Too complex. Not enough income, Many go under. Second, when I pass, unlike annuities, our CEF's will continue to generate income for those who inherit AND I WILL NEVER GIVE ANY OF MY PRINCIPAL TO AN INSURANCE COMPANY! :-)))
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Post by steelpony10 on Apr 19, 2023 22:36:09 GMT
judger , Don’t forget the Bogeyman in the shadows. I used CEF’s generating 8-10% distributions to slow spend down for LTC, my parents last income generator. Luckily it was under good market conditions, 2017. In the end it didn’t matter. My sleep well story is everything we spend in April will be replaced in May with SS and an auto transfer of CEF income from our TIRA for the foreseeable future.
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Post by Chahta on Apr 20, 2023 0:07:26 GMT
steelpony10 , rhythmmethod , I get it since I own PTY. My only point was in January 2020 one could have paid $33 for PDI. Since then it has yielded about $6. Today the price is about $18. That is a long way to go to recover. When we talk about "spend down" investors we overlook the "drawn down" investors, which really is spend down too. The poor guy that paid $33 and is spending his $6 in yield may never see his principal again. I am lucky because I am not using the PTY yield and will recover any cost before I need it plus pump up the income. I am using this post to admit that when I got into CEF's, I got in in a BIG way and own A LOT. Put that down to naive. And, yes, I just checked and I do own a lot of PDI at $30 or more. I own a few other CEF's at high prices also. But I have learned a lot too.
Let me just throw out how I sleep at night. I own almost all of these CEF's in IRA's and Roth's. I generate significant income tax-free from the Roth's. I have been changing my policy of auto dividend reinvesting to taking the unneeded income and investing it in the S&P 500 and low-volatility ETF's. I do also own quite a bit of equity and at my age I am trying to undo my mistakes by prudently selling and reinvesting the same way as for CEF's. I am positioning our portfolios for simplicity so that my spouse who is likely to out-live me and then our children who mostly don't have the time, interest or knowledge to invest will have an easier time when they inherit.
Let me throw out the major comforting thought that I have for any significant CEF loses. First, I rejected annuities long ago. Too complex. Not enough income, Many go under. Second, when I pass, unlike annuities, our CEF's will continue to generate income for those who inherit AND I WILL NEVER GIVE ANY OF MY PRINCIPAL TO AN INSURANCE COMPANY! :-)))
Not sure where you are in taking RMDs, but you may take smaller ones now.
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Post by retiredat48 on Apr 21, 2023 15:04:26 GMT
So everyone has had this question, how come they have 0 income for the last few months. Dick Cod recently posted on the SeekingA boards : I might not get this right, here goes anyways: PDI has RR where they are paying SOFR + 4.5% and getting Fixed Rates 2% - This is a notional amount of 1 Billion Dollars. So they have taken current income and given it away - therefore the no income. I think what he is saying is that PIMCO expects interest rates to change in the future and this should have a beneficial effect on the NAV. In exchange for this RR (Reverse Repo) they have around 15.7% in cash. The intricacies of this are beyond me, so I might have it wrong, hope it makes sense to some people. But giving away this income is done in swaps whereby the giver receives capital gains in the future...like a bond that matures and one swapped it at a discount. PIMCO may be getting these cap gains in December, and can thus make distributions thereof. Note I do not run PIMCO and have no direct knowledge of this...just gleaning what posters/income services are saying. The logical part is PIMCO income does not go quickly to zero, w/o an offsetting gain somewhere/sometime. R48 Continuing on this point, I do not think Capecod would mind me posting a snippet from one of his recent posts: ---------------------------- "... positioning strategy undertaken just before year-end '22. PDI entered over $1 billion notional pay-daily-SOFR and receive 2% fixed swaps. This was clearly a purposeful strategic move. It's immediate consequences are...
1. It began dramatically reducing NII as the CEF paid 4.75+% but received only 2%.
2. It created a lot of cash --- apparently over $94mm, some of which can be observed in the YE cash position of roughly 15% ---- about double that of many other PIMCO CEFs. And while it may not be classified as NII, it is obviously available to help cover distributions.
3. This swap positioning is the rough equivalent of buying intermediate Treasurys at negative carry --- financing them above current yield. The position will increase in value if/as rates drop in the future, driving NAV.
This positioning may or may not work, but it is clearly purposeful and strategic. Large reductions in distribution coverage don't "just happen," particularly for a portfolio that holds roughly 50% floating rate assets that adjust upward with lags.'
--------------------------- R48
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Post by richardsok on Apr 21, 2023 15:56:27 GMT
Thanks, r48.
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Post by judger on Apr 22, 2023 19:03:03 GMT
Yes, @chahta, RMD's are going down rapidly and conversions are also part of the plan to simplify life and make taxes cheaper for those that follow. I also discovered Qualified Charitable Distributions( QCD's) and have been using RMD's. And increasing the amount if IRA's I can convert to Roth's due to the reduced taxes on the RMD's. QCD's also have make it practical to do some charitable donations prior to the last of us passing.
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