Why Saying “Margin Is Always Bad” Ignores Decades of Evidence

 

Learning From the Pros: How PIMCO Taught Me That Leverage Isn’t the Enemy

One of the most common comments I see on the channel is simple:

“Margin is always bad. Don’t use it.”

I understand why people feel this way. Leverage can absolutely be dangerous if used recklessly. But the idea that leverage is always bad ignores decades of real-world evidence from some of the most respected income managers in the world.

And honestly, this realization was a major turning point in my own investing journey.

---

The Moment My Perspective Changed

When I first discovered the funds from PIMCO, it flipped a switch in my brain.

Here were funds that had:

• Decades of history

• Massive institutional credibility

• Loyal investor bases

• Consistent income distributions

• Strong long-term total returns

And they all had one thing in common:

They use leverage.

The funds that really caught my attention were:

• PIMCO Corporate & Income Opportunity Fund (PTY)

• PIMCO Dynamic Income Fund (PDI)

• PIMCO Income Strategy Fund (PCM)

Later, I discovered another income powerhouse:

• Virtus InfraCap U.S. Preferred Stock ETF (PFFA)

And suddenly the “leverage is evil” narrative didn’t match reality anymore.

---

Investors Pay a Premium for a Reason

One of the most fascinating things about PIMCO funds is this:

Investors often pay a premium to own them.

Think about that.

People willingly pay more than the value of the underlying assets just to access:

• PIMCO’s strategy

• Their income stream

• Their long-term track record

Why would rational investors do this?

Because over time, these funds have delivered:

• Reliable monthly income

• Competitive total returns

• Professional use of leverage to enhance yield

The market has essentially said:

“We trust these managers to use leverage responsibly.”

That realization changed everything for me.

---

The Key Distinction Most People Miss

When people hear “margin,” they picture:

• Risky day trading

• Overleveraged gamblers

• Blowups and margin calls

But professional income funds use leverage very differently.

They use it like a business loan, not a casino chip.

Their goal is simple:

• Borrow at a lower rate

• Invest in income assets yielding more

• Capture the spread for investors

This is not speculation.
This is structured income generation.

And it has been happening for decades.

---

PFFA: The ETF Version of the Same Philosophy

When I discovered PFFA, it felt like the modern ETF version of this same mindset.

Preferred stocks already sit between stocks and bonds.
They tend to produce strong income on their own.

Add moderate leverage, and suddenly:

• Yield increases

• Income becomes more meaningful

• Cash flow becomes a central focus

Again, this isn’t reckless behavior.
It’s professional portfolio construction.

---

Why This Matters for Individual Investors

Seeing institutions do this for decades helped me reframe leverage entirely.

Instead of asking:
“Is leverage bad?”

The better question became:
“How is leverage being used?”

Because when used responsibly:

• It can enhance income

• It can improve cash flow

• It can help turn a portfolio into an income-producing asset

In other words:

It can make investing feel more like running a business.

---

The Real Takeaway

You don’t have to use leverage.
You don’t have to like leverage.

But it’s impossible to ignore this truth:

Some of the most respected income funds in the world have built their entire strategy around it — and investors have rewarded them for decades.

That realization was a cornerstone of my own investing education.

And it’s a big reason why I no longer see leverage as the enemy.

I see it as a tool.

One that must be respected.
One that must be used carefully.
But a tool nonetheless.

---

Disclaimer
The information provided is for educational and entertainment purposes only and should not be considered financial, investment, or trading advice. I am not a licensed financial advisor. All investing involves risk, including the potential loss of principal. Always do your own research and consult a qualified financial professional before making any financial decisions.

#PersonalFinance #FinancialFreedom #InvestingForBeginners #SmartInvesting #WealthMindset #Leverage #MarginInvesting #InvestingMyths #InvestorEducation #RiskManagement #WealthBuilding #LongTermInvesting #Cashflow

Income Insurance: High Yield ETFs for Stability

 High Yield ETFs as “Insurance” for Your Income Business

One of the biggest mindset shifts in income investing is this:

Stop thinking like a stock picker.
Start thinking like a business owner.

A real business never relies on one machine to generate all of its revenue. If you owned a construction company and had only one excavator, your business would be incredibly fragile. If that machine breaks, revenue stops.

Smart owners spread their income across multiple pieces of equipment that perform differently in different environments.

Your income portfolio should work the exact same way.

Today I want to talk about a group of high-yield ETFs that can act like insurance policies for your income equipment. 

The goal here is not to chase yield.
The goal is to protect your income across different economic environments.

---

Why “Income Insurance” Matters

Markets move in cycles:

• Sometimes stocks lead

• Sometimes real estate leads

• Sometimes credit leads

• Sometimes gold leads

• Sometimes nothing works except defensive strategies

If your income depends on one asset class, your “business” becomes fragile.

But if your income comes from multiple sources that behave differently, your income becomes far more resilient.

This is where a diversified set of high-yield ETFs can shine.

Let’s walk through the “equipment lineup.”

---

KHPI — Hedging & Volatility Income

KHPI has a low best, Yields 9% and will protect your portfolio when everything is going down.  This will help preserve your margin of safety while still generating income. 

Funds like this use options and hedging strategies to generate income, especially during volatile markets.

When markets get messy and unpredictable, this type of strategy can help stabilize the overall portfolio.

In business terms:
This is the backup generator that keeps the lights on when the power goes out.

---

JEPI — Low-Beta Equity Income

Low-beta equity income fund aims to create stability in up or down markets, and yields 6% to 7%

• Generate income

• Reduce volatility compared to the broad market

• Smooth the ride during downturns

This fund still participate in equity markets, but with a more conservative income-focused approach.

In our business analogy:
This is your reliable everyday work truck — not flashy, but consistently productive.

---

PBDC — Business Development Companies (Private Lending)

BDCs lend money to middle-market companies and has a 10% yield.

This gives you exposure to:

• Private credit

• Floating-rate lending

• The real economy

BDCs often perform well in higher interest-rate environments because the loans they issue frequently have floating rates.

This adds a powerful diversification layer beyond traditional stocks.

In business terms:
You’re now acting like the bank that finances other businesses.

---

IYRI — Real Estate Income (REIT Exposure)

Real estate behaves differently than stocks and bonds with an 11% yield.

REIT income tends to be influenced by:

• Rent growth

• Property values

• Inflation

• Long-term economic expansion

Adding real estate helps balance interest-rate cycles and adds another independent income stream.

This is like owning the land and buildings your business operates from.

---

IAUI — Gold as a Portfolio Stabilizer

Gold isn’t an income asset — but it is a powerful stabilizer this fund designed to be less volatile than gold prices adding extra safety with an 11% yield.

Historically, gold has helped portfolios during:

• Inflation spikes

• Currency stress

• Market panics

• Geopolitical uncertainty

Gold acts as storm insurance for your portfolio.

It’s the asset you hope you don’t need… until you really need it.

---

AAA CLO Exposure (JAAA) — Senior Secured Corporate Loans

Collateralized Loan Obligations (CLOs) sound complicated, but the concept is simple and yields 5% to 6%.

AAA CLO tranches:

• Sit at the top of the capital structure

• Are backed by diversified pools of corporate loans

• Have historically experienced extremely low default rates

They are designed to be one of the most defensive layers of the corporate credit world.

Important:
AAA CLO tranches have historically had extremely low default rates!

Think of this as owning the safest slice of a very large loan portfolio.

---

Putting It All Together

When you combine these income sources, something powerful happens.

You are no longer dependent on:

• One market

• One sector

• One economic environment

Instead, you’ve built a portfolio designed to generate income from:

• Options strategies

• Equity markets

• Private lending

• Real estate

• Hard assets

• Corporate credit

That’s what real businesses do.

They don’t rely on one machine.
They build a fleet.

---

Final Thought

High yield investing isn’t about chasing the biggest number you can find.

It’s about building a resilient income machine that can keep producing cash flow across bull markets, bear markets, recessions, and recoveries.

That’s what real income investing looks like when you think like a business owner.

---

Disclaimer
The information provided is for educational and entertainment purposes only and should not be considered financial, investment, or trading advice. I am not a licensed financial advisor. All investing involves risk, including the potential loss of principal. Always do your own research and consult a qualified financial professional before making any financial decisions.

#IncomeInvesting
#DividendIncome
#HighYieldETF
#CashFlowInvesting
#ThinkLikeABusiness
#PortfolioProtection
#PassiveIncomeStrategy
#YieldPortfolio
#FinancialFreedomJourney
#IncomePortfolio

Building Income From Day One: Entry Strategies for High-Yield ETF Investors

 

Ways to Open a Position

One of the biggest misconceptions in investing is that the only decision is what to buy.
Experienced investors know the real question is how you enter the position.

How you buy often matters just as much as what you buy.

Today we are walking through three ways to start a position and how they apply to income-focused investors looking at:

Microsoft → MSFY
Amazon → AMZP
Google → GOOP
Netflix → NFLP

These KURV income ETFs turn mega-cap growth stocks into cash-flow producing assets, which makes the way you enter positions even more important.

---

The Three Ways to Open a Position

There are three main ways to start a position:

Go all-in
Dollar Cost Average (DCA)
Leg in

Each approach fits a different personality and investing style.

---

Going All-In

This is the simplest approach. You have cash and you buy the full position today.

This makes the most sense when you believe the asset is attractive long-term and your focus is income generation rather than short-term price timing.

This mindset is similar to buying equipment for a business. If you purchase a mini excavator, you do not wait six months hoping the price drops a few percent. You buy it when you need it so it can start generating cash flow.

Income investors often approach MSFY, AMZP, GOOP, and NFLP this way. The faster the asset is working, the faster it can begin paying you.

The tradeoff is emotional. Prices may drop after you buy. Income investors measure success in cash flow, not short-term price movement.

---

Dollar Cost Averaging (DCA)

DCA means investing a fixed amount on a schedule regardless of market conditions.

This is one of the least stressful ways to invest because it removes timing decisions. You focus on building shares over time instead of worrying about buying at the perfect moment.

DCA works especially well for high-yield ETFs because you steadily increase the number of shares and the income they produce. Instead of asking if you bought at the top, you ask how many income-producing shares you added this month.

This approach is ideal for investors still accumulating capital.

---

Legging Into a Position

Legging in is the middle ground between going all-in and DCA.

You buy in stages based on opportunity. For example, you might buy part of the position now, add more if the market dips, and complete the position later.

This gives you immediate exposure while keeping flexibility if volatility appears. For tech-linked income ETFs, this approach often feels natural because it blends income generation with patience.

---

DRIP vs. Non-DRIP for Income Investors

Once you own high-yield ETFs, a new decision appears. Do you reinvest the income or take the cash?

This is the DRIP decision.

---

DRIP (Dividend Reinvestment)

With DRIP, your distributions automatically buy more shares.

This creates automatic compounding and accelerates portfolio growth. DRIP makes the most sense when you are still building your income engine and do not need the cash yet.

This is the business expansion phase. Your assets reinvest profits to buy more assets.

---

Non-DRIP (Taking the Cash)

With Non-DRIP, you collect the distributions as income.

This is the business payout phase. Your assets are now helping fund your lifestyle and financial independence.

Many investors transition from DRIP to Non-DRIP over time. Early years focus on growth. Later years focus on harvesting the income.

---

Bringing It All Together

When building positions in MSFY, AMZP, GOOP, and NFLP, you have two big decisions.

How to enter the position:
All-in, DCA, or leg in.

How to use the income:
Reinvest it or take it as cash.

This mirrors how a small business operates. First you acquire assets, then you grow the assets, and eventually you live off the cash flow they produce.

The real goal is to acquire income-producing assets in a way you can stick with emotionally. Consistency matters more than perfection. Cash flow matters more than timing. Ownership matters more than hesitation.

The sooner your assets start working, the sooner they start paying you.

---

Disclaimer
The information provided is for educational and entertainment purposes only and should not be considered financial, investment, or trading advice. I am not a licensed financial advisor. All investing involves risk, including the potential loss of principal. Always do your own research and consult a qualified financial professional before making any financial decisions.

Margin Investing for Cash Flow: A Business Owner’s Perspective

 

Borrowing to Invest: Lessons From Buying a Mini Excavator

If you own a construction business, you already understand leverage, even if you don’t call it that.

Let’s say you want to buy a mini excavator. You’re not buying it because it looks cool. You’re buying it because you expect it to produce cash flow for years.

You generally have two options.

---

Option 1: Pay Cash

You write a big check and own the excavator outright.

That feels safe, but there’s a hidden cost.

If that cash could have sat in a high-yield savings account earning 3.5%, you just gave that up. That’s your opportunity cost.

You eliminated debt… but you also eliminated future flexibility.

---

Option 2: Finance the Excavator

Instead, you finance it at 4.5%.

Now:

• The excavator works every day

• The jobs it produces bring in cash

• You keep your original cash available

• The machine pays for itself over time

You’re not hoping the excavator “goes up in value.”
You’re counting on it to produce income.

That’s not speculation, that’s a business decision.

---

Margin Investing Works the Same Way (When Done Right)

Margin gets a bad reputation because most people use it wrong.

But margin, when paired with income-producing assets, is just financing.

If you borrow at 4.5% to buy a high-quality income ETF like SPYI or QQQI, you’re doing the same thing you did with the excavator:

• Borrow at a known cost

• Deploy into a productive asset

• Let cash flow service the financing

The goal isn’t price appreciation.
The goal is cash flow.

---

Why the Math Is So Resilient

Let’s use simple numbers.

• Borrowing cost: 4.5%

• Income yield: ~14%

That gives you a ~9.5–10% spread.

Here’s the key part most people miss:

For the income to fall below your borrowing cost, the market would need to drop almost 66% and stay there.

That’s not a normal correction.
That’s a full-scale, multi-year collapse.

And even then:

• Income would likely decline gradually, not instantly

• You still own all your shares (which will recover!)

• You are still breaking even in a depression level event.

This is why income-focused strategies behave more like operating businesses than lottery tickets.

---

The Mindset Shift

You don’t buy an excavator hoping to flip it next year.
You buy it because it helps you earn.

The same mindset applies here.

• Margin isn’t gambling

• Leverage isn’t dangerous

• Income changes the entire risk equation

When an asset pays you consistently, time starts working for you instead of against you.

---

Final Thought

Smart leverage isn’t about going faster.
It’s about building something that can carry itself.

Just like a mini excavator on a job site,
income-producing assets should:

• Pay their own way

• Protect your cash

• And quietly compound in the background

It's not flashy.
It’s durable.

---

Disclaimer
The information provided is for educational and entertainment purposes only and should not be considered financial, investment, or trading advice. I am not a licensed financial advisor. All investing involves risk, including the potential loss of principal. Always do your own research and consult a qualified financial professional before making any financial decisions.