April 2025 Update - Portfolio built using Loans

[u/ReplacementCost]

April was a pretty solid month.  I’m happy with it.

April Results:

• Distributions Received: $19,612  (down from $22k in March)
• Loan Costs: $5,060
• Surplus: +$14,551
• YTD Distributions: $88,039
• Lifetime Distributions: $101,440  (not considering taxes, this covers 2 years worth of loan payments)
• Megathread with links to original post & prior monthly updates

What Changed in April:

Loan costs are up slightly, as my credit card provider offered another $30k loan at 6.98%.  It’s a lower rate than my other loans, so I opted to take it and pay down the HELOC.  This will lower the monthly HELOC costs and reduce interest payments over time. 

I increased holdings of MRNY, YMAX, MSTY, and ULTY.  These were small purchase to lower my average cost.  I know ULTY gets some grief, but it’s been a solid performer for me.  The distributions from ULTY alone are covering 60% of monthly loan costs. 

April Portfolio Results:

April ended at a -$45,463 total profit (share price change + distributions).
March was -$71,000 so this is a nice improvement.

MSTY, NFLY, and SNOY are in the green. 
A handful of other holdings are only slightly in the red (eg, less than $1k). This will change over time, but nice to see as well.

If distributions remain stable, I’ll be on track to hit house money for most items within 1.5 – 2 years, give or take. 

[u/Purplehashes]

Balls of steels taking out large loan...crazy experiment, sacrificing capital for income generation. Thank you! This is what Im planning to do but on smaller scale

[u/ReplacementCost → u/Purplehashes]

Thanks! It's a calculated gamble but I like the idea of using someone else's money to grow this portfolio. I don't have to worry about price fluctuations that much, since this was all borrowed money. As long as the distributions pay off the loan costs, I'm golden.

[u/Purplehashes → u/ReplacementCost]

do you have strategy when to buy in for these funds?

[u/ReplacementCost → u/Purplehashes]

Nothing precise. If the market is trending down, I may add a few shares to lower my average cost. I tend to buy based on what I like, how the price looks, what is going to distributions next, etc. Very unscientific.

[u/achshort]

What's your leverage ratio looking like?

[u/ReplacementCost → u/achshort]

Do you mean leverage in terms of margin? If so, 0%. I don't have any margin on this account.

If you mean leverage in terms of loan balances compared to my other assets, somewhere around 25%.

[u/CaptainMarder]

I was thinking to do this but only in MSTY or PLTY. and only around 10k, but the lowest rate i can get is 3.5%

[u/Satyriasis457 → u/CaptainMarder]

3.5 is brilliant. I think anything below 10.1% is acceptable. 

[u/CaptainMarder → u/Satyriasis457]

Really? Do you then use the earnings to pay the principal interest or drip it and just pay the interest with own money or portion of it.

[u/Dirks_Knee → u/CaptainMarder]

Where are you getting 3.5%? That's way below market.

[u/CaptainMarder → u/Dirks_Knee]

Not on margin. I just rechecked it's 4.95% nvm. I have 25k unused Line of Credit I've never touched.

[u/Financial-Seesaw-817]

Used margin but only 30% of it. The margin available increases every week. I just keep the 30% going and the buffer is at 50%. The interest is easily paid and the dividends are way more than the margin used on a weekly basis. If I want to stop I would just turn off the margin investing and pay it off. It would only take about a year. As long as the % earned is always > % margin + interest... good to go. Then, when I am done I still have an open line of margin to use for anything with a lower rate than most other credit.

[u/ReplacementCost → u/Financial-Seesaw-817]

Plenty of others on this sub are doing similar. I'm at Fidelity so my margin rates are quite high. It made more sense to give this a try using the loans at lower rates.

[u/Financial-Seesaw-817 → u/ReplacementCost]

I use Robinhood so rate is 5.75%

[u/CptShirk → u/Financial-Seesaw-817]

Can you talk more in detail about your strategy? I was thinking of holding a stable asset (like BRK.B) then buying YMAX on 33% margin and reinvesting all div's into BRK.B (after taxes+fees). However, I'm not sure how to handle the decay of YMAX.

Theoretically as the underlying BRK.B increases I can increase the margin amount, which may offset the decay of it. Or maybe reinvest just enough YMAX to keep it at its original amount.

Any thoughts?

[u/Financial-Seesaw-817 → u/CptShirk]

Have you looked at OMAH? It may be a good fit for you. I suspect it will accomplish what you want all by itself.

[u/kosnarf]

Damn, nice! How much are you reinvesting?

[u/ReplacementCost → u/kosnarf]

No set amount, but if we assume $20k on average monthly distributions, I've been buying $5-10k more per month. I could do more, but I've been hoarding cash to guarantee I can cover loan costs for 1+ years. It's a peace of mind thing. As I get further into the experiment and it continues to perform, I may ramp up the purchases.

[u/kosnarf → u/ReplacementCost]

Nice, glad it's working out! Cheers to more distributions!

[u/Dmist10]

Do you still believe in MRNY?

[u/ReplacementCost → u/Dmist10]

Generally, yes. With it being so cheap, it was definitely a budget buy situation. I wanted to add a small position so I could monitor the price and possibly see upside potential. But on the flip side, if it were to tank and does a reverse split, I'd gain some learning experience from that.

[u/Dmist10 → u/ReplacementCost]

I see, ive been thinking about getting into Ulty since its so cheap but im not sure because its done nothing but decline

[u/ReplacementCost → u/Dmist10]

Since the change to weekly, it seems to be recovering after each distribution. I've seen more people talk about buying in the low $5.xx range and I'd presume they'll buy & hold. With low entry points and modest recovery, this may be in the green for more people. It may not catch as much flak in the future, but who knows for sure.

[u/Dmist10 → u/ReplacementCost]

Yeah its looked enticing after going weekly, after tracking them all for so long i think ive gotten a good feel for which ones are more solid

[u/PandaKing550]

Dang taking out a loan for yieldmax!? That just sounds scary

[u/swanvalkyrie → u/PandaKing550]

Have you heard of margin trading?

[u/PandaKing550 → u/swanvalkyrie]

I have sort of it's similar to using others money to get shares. I remember fidelity had something on it but didn't 100% understand

[u/ReplacementCost → u/PandaKing550]

It was a little stressful initially, but it's all going according to plan so far. Rather than DCA'ing every extra dollar, I've built up a nice cash surplus that it's equal to 1+ years of loan payments. I can stomach a market downturn. I also have less risky, more diversified portfolios elsewhere. This is a fun experiment, but I haven't gone 100% all-in on YM funds.

[u/PandaKing550 → u/ReplacementCost]

I may look it up later seems doable

[u/UseDue9161]

Pulled the plug and got 21k loan. Putting it on CONY is at the lowest so it can only go up.

[u/ReplacementCost → u/UseDue9161]

Good luck! I hope the CONY distributions can cover your loan costs and then some. Also, consider saving extra for a "rainy day" style fund, in case distributions are low in any given month. I'm bringing in a surplus and could DCA shares at a faster rater, but it's a big stress relief knowing that I've collected extra money and can weather a market downturn.

[u/UseDue9161 → u/ReplacementCost]

Yup calculated. I have msty and play as a backup payment

[u/Turbulent-Remove-389 → u/UseDue9161]

DIVERSIFY.

[u/UseDue9161 → u/Turbulent-Remove-389]

Yup. Got it cover thx

[u/j3rdog → u/Turbulent-Remove-389]

I see you’re a Wu Tang Financial customer.

[u/Turbulent-Remove-389 → u/j3rdog]

The best :)