Q: Just opened a new TFSA. Looking for advice on how to invest the 15K. I am retired and would like a yield of 7% or higher while at the same time protecting the capital (I do hold PSA in my RRSP account and it offers ~5% limited risk return ... so if I can't get at least 7% from something else then why bother). I'm thinking an ETF might be the best route for diversification. I want to avoid ETF's with high ROC,"higher" risk, etc. Not adverse to covered calls. Any words of wisdom for me ?
5i Research Answer:
7%+ plus capital protection plus no ROC can be a difficult screen. In a TFSA total return is more important, since there is no benefit to ROC tax treatment. QYLD may be one option. Indictated yield is 8.4%, but 5-year total return is 6.2%. It does have some ROC but units have held up well enough regardless. This is suggested as it is more diversified than a sector-based covered call fund. In Canada, ZWH's indicated yield is 5.11%, but five-year return is better at 9.33%.