Input on Alternative Platforms

Comments on “A Look at Five Leading Alternative Investment Platforms,” by AAII Staff, in the March 2023 AAII Journal:

I had investments with Fundrise that returned around 5%. Due to accounting costs, I closed my account. I had an account with Prosper, but with some debts unpaid the return was not great.
—Narendra P. from Georgia

I tried Yieldstreet, it’s an interesting concept and has a lot of options. Unfortunately, I had issues with a structured note: The Yieldstreet site kept showing a stock that was in a losing position as “performing” up beyond the time when the term expired and the funds were distributed. Also, Yieldstreet doesn’t have the ability for multiple secondary beneficiaries—the only platform I have seen with this constraint.
—Jeff C. from Pennsylvania

There are also some crowdfunding bond platforms: SMBX and Honeycomb Credit. They enable small businesses to issue bonds at higher interest rates than you get from junk bonds with very low default rates.
—Mark D. from Michigan

Weighing in on Annuities

Comments on “The Truth About Annuities and Inflation,” by Stan Haithcock, in the March 2023 AAII Journal:

Stan’s writing is easy to read and entertaining/educational. The AAII Journal offers a better level of insight than what the newsstand magazines offer. I won’t buy a commercial annuity, but I also think being knowledgeable of them is prudent even if only to be able to discuss the topic with a person who is smitten by their allure. Inflation and the level of payout keep me worried about buying a commercial annuity.
—David L. from Arkansas

Anyone contemplating an annuity has probably missed the golden opportunity of having built a diversified dividend-paying stock portfolio over time. In my opinion, buying an annuity is not investing; it’s a form of thinking you are avoiding risk and getting “guaranteed” income by buying a contract. The trouble is the insurance companies continue to take a basic product and add all sorts of bells and whistles that make comparisons difficult.
—Charles M. from Virginia

When I was younger, I learned that it makes more sense to buy a term life insurance policy if you feel you need insurance and invest the rest in an index fund, rather than buying a whole life policy. I think the same holds true for an annuity. It seems to me you are basically giving someone a loan with money up front and then they pay you back incrementally. Nothing in this article entices me to purchase an annuity.
—Andrew S. from New Mexico

Strategies Used for Covered Calls

Comments on “Using a Covered Call Strategy to Generate Income,” by Brian Haughey, CFA, FRM, CAIA, in the March 2023 AAII Journal:

There is some merit to this strategy, but it is not for the typical retail investor. There are a few exchange-traded funds (ETFs), such as QYLD, RYLD and XYLD, managed by professionals. They typically aren’t going to outperform the S&P 500 index on total return, except in years like 2022. However, they put out significant income, so I use QYLD in my income strategy. Over the last three years, it had a better total return than 40% of my dividend stocks and better income than 70% of them.
—Dave G. from Texas

I use covered calls at times, usually when the market is flat or going down and I have decided it is time to sell the stock soon anyway.
—Michael S. from California

Behavioral Sell Rules

Comments on “Developing Sell Rules for Stocks Based on Your Buy Criteria,” by Matt Markowski, in the March 2023 AAII Journal:

Once I buy a stock, I hold it until either 1) I’m certain the company is going down the tubes or 2) I find something substantially better. Although I have no objective research to support it, 40+ years has shown that it prevents me from selling good stocks, thereby allowing me to reap the benefits of compounded growth over decades. Also, it doesn’t require you to be right all the time. Just a few long-term winners can make one pretty wealthy.
—Robert A. from North Carolina

Understanding Fund Grades

Comments on “Tilting AAII’s Asset Allocation Models to Match Your Growth or Value Style,” by John Bajkowski, in the March 2023 AAII Journal:

How are the fund grades calculated?
—Susan F. from Oregon

The editors respond:
Susan, the A–F grades are assigned based on the percentile rank of the return compared to that of all funds in the same category. An A is awarded for returns in the top 20% for all funds in the investment category. B indicates above-average rank, C is average rank, D is below-average rank and F is the lowest 20% rank.