#305~ Is OVL Better Than VOO?

So we're going to start with what's actually inside OVL because it surprised me.

And about 99% of it is just VOO, the Plain Vanguard S&P 500 fund.

So OVL is basically the S&P 500.

Then the managers add their paychecks.

power up juice power up on top which is a tiny sliver under 1% of the fund made of S&P 500 options and that little sliver of a layer is the overlay in the name so the whole machine works like this it owns the index then runs an option strategy on top to squeeze out extra income so 99% of it is boring index and 1% is power up juice Before we go any further, if you are new to investing, there is something very important that I want you to know.

Come close.

Listen.

A dividend does not magically make you richer.

Before some of you freak out, I'm not trashing dividends.

I'm just sharing a basic financial fact.

Think about your own wallet, right? If you move a $20 bill from your right pocket to your left pocket, are you any richer? Hell no, you're not.

You just moved your own money around.

And a dividend is exactly the same thing, except you might owe taxes on it.

Because when a stock or a fund pays a dividend, its share price drops by almost exactly that amount.

So picture the fund as a bucket of water and your share as a cup.

A dividend just scoops water out of the bucket and pours it into your cup.

So you've got more in your cup, but the bucket has exactly that much less.

Nothing new was created.

And in a regular taxable account, the government takes a bite on the way over, even though you never chose to sell anything.

Now real quick, to track this stuff, I use a tool called SimplySafeDividends.com and if you want to test it out for yourself, I have a unique link below and a QR code on the screen that gets you a full month completely free, no credit card required.

But back to some math that my guy Warren Buffett famously showed in his 2012 shareholder letter, which I have linked below if you want to read it for yourself, about how a company that keeps and reinvests its profits can leave you wealthier than one that pays them out as long as it puts that money to good use.

And he showed that if you own a truly wonderful company, you are better off letting them keep 100% of those profits to grow and simply selling a tiny 3.2% sliver of your shares every year when you need the cash.

And in his example, you'll end up with about 4% more money over time.

You'll have the same amount of cash and you have complete control over your tax bill.

So here's the takeaway I want you to tattoo on your brain is that a dividend is not the main course.