so can you explain the difference in outcome between those two extremes the one who withdraws everything and the one who reinvests everything you know what will happen is when you have such high yields right the the the price the nav the price of the ETF goes down by the amount we distribute so let's use the example of let's say a hundred shares and we distributed a dollar right you get a dollar you get a hundred dollars in dividend so it's like that's great that felt good but the stock price drops right by that dollar right if we were 20 bucks and we distributed a dollar when we go X div you'll get a dollar of cash and the stock goes down to 19. well if you don't reinvest now your market value is uh you know 1900 and if you were at a 20 stock right for 2019 you went from two thousand to nineteen hundred dollars in your in your stock value the next yield that you get will be based off of 1900 not based off of 2000 right because you know you're good now look the market value may go up but let's just say market value stays flat you know in that scenario the yield you're going to get it might not be a dollar right it might be less it might be more so you have the same number of shares and if our yield goes down right you're not going to get the same amount so one of the things that the reason we talk about reinvesting the dividend is because putting that back in you get back up to the two thousand dollars of market value right and actually you'll compound your shares which we all know the power of compounding uh and you'll end up kind of improving the amount of yield you're getting by reinvesting those dividends because you're really making an additional investment back into the portfolio whereas if you don't right you'll be kind of stuck at that one yield rate so you know look I think it all depends what people you know why they buy the ticker in the first place if you're grow if your idea is this is kind of a risk you know alternative risky asset for me which I would say teslie falls into that category then you probably should be reinvesting the dividends so that you've already known there's risk associated if you're just going to take the cash out you have this risk that the ETF drops and drops and drops as we're Distributing the yield now the flip side of this is as we're generating that covered call Premium the price of the ETF will go up so let's say Tesla would happen to be flat for a whole month right we would take up one percent a week if we could sell calls for one percent a week right we would tick up up up and then do and distribute right back down in the Navajo drop to where we started that's if Tesla was flat of course it is not but that's an in vacuum what would happen there whereas if you reinvested that amount yes the stock would drop but then your balance would go right back up because you've reinvested it and then the amount you get paid on the yield next time would be higher even in a flat market so it's it's one of those things that all depends how you're using these um yeah how you know what your intention is we in general I'm a bigger fan of knowing why I'm invested in teslie because it's an alternative because I'm trying to do something that's not stock or Bond related it makes sense to reinvest but some people go I want to use this to pay my mortgage okay right just realize the risk you're taking back to that question you do hear these comments sometimes and I know that you've emphasized in other interviews that you lean more towards reinvesting so that explains the reason behind that it's just what you're using it for in your portfolio right I mean that's that's you know like if you're like oh I want like if I want some kind of nice income that I can you know pay my mortgage on you're taking a lot of risk with your principal just using Tesla right because you're taking Tesla risk and you can get the benefit of Tesla going to 400 and your balance would grow and your yields would grow and that would be great but there is a flip side to that [Music]
