I own two hundred and thirty shares of QQQI. A hundred and forty-one shares of JEPQ. And I just started buying SPYI. I’ve talked about these funds more than almost anything else I own.
And today I’m going to tell most of you not to buy them. What!
Not because they’re bad funds. They’re not. It’s because there’s a number, in one simple example about a quarter of a million dollars, that most people buying these funds have never done the math on. It doesn’t show up in the yield. It doesn’t show up on your monthly statement. And it’s the reason that if I were thirty years old, I wouldn’t own a single share of any of them.
And here’s the uncomfortable part. By the rule I’m about to give you, I might be one of the people who shouldn’t own them either. Okay, hold up. We’ll get to that in just a minute, so buckle up and stick with me.
All Four Trailed Their Index
Let’s start with the part nobody puts in the thumbnail. I took JEPI, JEPQ, QQQI and SPYI and lined each one up against the index it’s measured against. Same start date. Every check reinvested.
All four trailed. Not some of them. All four.
JEPI is the oldest, so it’s the clearest. Ten thousand dollars in JEPI the day it launched in 2020 is worth about nineteen thousand four hundred today, and yes, that’s with every distribution reinvested. The same ten thousand in the S&P 500? About twenty-eight thousand seven hundred. That’s more than nine thousand dollars behind.
Those numbers are as of the day I recorded the video, and they move a little every day.
To be fair, JEPI was a lot smoother. Its worst drop was a lot shallower than the S&P’s. But over the last six years, smooth cost a lot.
What You’re Actually Buying
Here’s what you’re actually buying with these funds. The fund owns a basket of stocks, basically the index or a hand-picked slice of it. And then it sells somebody the right to the index’s big up moves. QQQI and SPYI do that directly with options. JEPI and JEPQ do it through notes they buy from big banks.
Either way, that payment is most of your monthly check. So the deal is simple. You get paid every month, and in exchange, when the market rips, you only get part of the ride.
That’s not some sort of scam. That’s the product. And for the right person, it’s a good trade. And remember, these sit in the High Income bucket of my Investing Buckets strategy.
The 2022 Defense, and What Happened Next
Now, people who defend these funds will point to 2022. And they’ve got a point. The S&P 500 lost about eighteen percent that year, counting dividends. JEPI lost about three and a half. Part of that was the option income, and a big part was JEPI owning calmer, more defensive stocks.
So let’s give JEPI the scenario its fans always point to. Say you put ten thousand dollars in at the start of 2022, right before the worst year the market had since 2008. JEPI wins that year. Easy.
Then the market ripped back, and a fund that sells off its big up moves caps the rip. By the end of 2024, the plain S&P fund had already passed it. And by the end of 2025, the S&P money was worth about fifteen thousand two hundred. JEPI was about twelve thousand nine hundred.
That’s the scenario people use to defend it. The crash actually happened. And it still lost the race within three years.
Where My Money Actually Goes
So where does my money actually go? Every Friday when I invest, I’m aiming for roughly forty percent growth, about half in dividend growth, which is SCHD, and about ten percent in this high income bucket. Ten percent. The funds I talk about the most get the smallest slice of my new money.
And that’s because of one rule. Here it is.
If you’re not going to need the check for ten years or more, don’t start buying the check today. And if it’s five to ten years out, you only start slowly, with new money.
The Quarter-Million-Dollar Number
Let me show you why that rule matters so much, because this is where the quarter million comes in.
Take somebody who puts five hundred dollars a month into the market for twenty-five years. In one version, their money earns about ten percent a year. In the other, about seven. Three points a year. And I picked three on purpose, because that’s a smaller gap than any of these four funds has had against its own index so far. The oldest covered call index, going back to 1986, has trailed the S&P by about two and a half points a year.
After twenty-five years, the ten percent version is sitting at about six hundred and sixty-three thousand dollars. The seven percent version? About four hundred and five thousand.
I’m talking about the same person and the same five hundred a month. They had the same discipline, which is crucial for investing, as we know. But the numbers are still two hundred and fifty-eight thousand dollars apart.
That’s the number that doesn’t show up in the yield. The monthly check feels like winning. Trust me, I know, because I love the monthly check. And if you’re reading this, you probably do too.
But over twenty-five years, what makes you wealthy isn’t the check. It’s the compounding you gave up to get it.
“I’ll Just DRIP It” Doesn’t Close the Gap
Now the next thing people say is, Mikey, I’m not spending the checks. I’ll just DRIP it.
I hear ya. We all love the DRIP, right? (I walked through my own decision to turn it on in I Turned On QQQI DRIP… Then I Saw the Tax Problem.)
Here’s the problem with the DRIP theory. Every fund comparison I’ve shown you already assumes you reinvested every check. DRIP doesn’t close the gap. It’s already baked into the gap.
And if you’re doing that in a regular brokerage account, it can actually be worse. JEPI and JEPQ get most of their income through those bank notes, and that income mostly gets taxed at the same rates as your paycheck. Even if you reinvest every penny and never spend a dollar. So you’re paying tax every year on money you never even used.
QQQI and SPYI are different. So far, most of what they pay has been labeled return of capital. That’s a tax label, not a red flag. No tax now; it lowers your cost basis, and the bill shows up later when you sell. That’s a real advantage, and it’s why QQQI is my biggest one. But pushing a tax bill down the road doesn’t fix a return gap.
If You’re Under Thirty-Five
And if you’re under thirty-five, I think this whole thing is upside down for you.
These funds soften a crash a little. In the 2025 sell-off, QQQI still fell about twenty percent when the Nasdaq fund fell about twenty-three. But they cap the rebound. So you take most of the drop and get only part of the recovery.
That hurts a little bit!
And when you’re young, a crash isn’t the thing you need protection from. If you’ve got a steady job, an emergency fund, and you keep buying every month, a thirty percent drop is a sale. And my viewers love a good stock sale! You want the whole recovery, even when it’s slow. Giving that up for a monthly check is backwards.
Remember, your biggest asset at thirty isn’t your portfolio. It’s the next thirty years of paychecks. You don’t need to protect a portfolio that small. You need to grow it. You need to embrace the long game. The sooner you can do that, the sooner you will be free! (I broke down this same thinking for a younger investor in SCHG vs. SCHD: Which ETF Should a 25-Year-Old Buy?)
And if you’re twenty-six and thinking, Mikey, I need income now: a twelve percent payout on five thousand dollars is about fifty bucks a month. That’s lunch money. At that stage, the fix is your paycheck or a side business, not squeezing yield out of a portfolio that hasn’t had time to grow.
You’re young. Let that bad boy investment account grow up a little!
Am I a Borderline Case?
So now the uncomfortable part. By my own rule, should I even own these?
I think I’m a borderline case. I don’t need this income today. Yeah, it’s nice. My businesses pay my bills. So on a strict reading of my own rule, I’m close to the line.
Here’s why I still keep a small slice. I’m about to turn fifty. Actually, I’m turning fifty about the same time you’re reading this, so I appreciate the happy birthday in the comments to make me feel special.
I don’t have a pension. I mean, those things are going away anyway. I don’t have an inheritance coming. I have no idea what the hell my family has been doing for the last few generations. I don’t have a big safety net. And everything I do for a living carries operational risk.
If a business has a bad year, nobody sends me a check. And I have had bad years in business. So for me, this bucket isn’t about growth. It’s the start of an income floor, so that if a bad year in business ever lines up with a bad year in the market, I’m not forced to sell anything at the bottom.
That’s a reason that fits me. I am about to be a fifty-year-old business owner. It doesn’t fit a thirty-year-old with a steady job. If I were thirty, I’d own zero shares. I’d be all growth with something like QQQ or VOO, and dividend growth with SCHD or DGRO, and I wouldn’t lose a minute of sleep over it.
Where You Stand: One Question
And when your window does get closer, there’s a right way to make the switch. So here’s how to figure out where you stand right now.
Count the years until you actually need this money to pay you. Not want it. Need it. There is a difference, because we all obviously want it.
If it’s more than ten years, your answer is zero. Growth and dividend growth. That’s the whole plan. Let time do the work.
If it’s five to ten years, start building the income bucket with new money, a little at a time. Don’t sell your growth to do it. In a regular brokerage account, that can hand a big piece to taxes right before you need the money.
And if it’s under five years, or you’re already living off your portfolio, this is where these funds can make sense, as part of an income plan. Just remember they’re still stock funds. They can drop twenty percent, and the check isn’t guaranteed. Money you need in the next year or two belongs in cash, not here.
That’s it. One question: do you need this income in the next ten years? Yes or no, drop it in the comments on the video. Think about it for a second, because I will respond.
And if the answer’s no, you already know what I’d do.
If you already own these funds, where you hold them matters as much as whether you hold them. That’s the next post to read: I Had QQQI and SCHD in the Wrong Accounts.
Watch the full video above, or on YouTube: https://youtu.be/pAQy5fJ_RK4
