I am considering a following 25-year-long investment strategy:
- as the new savings come in, write cash-secured puts on EFA ETF, with an expiry of 2-3 months
- accept that from time to time puts will be exercised and I will end up with EFA shares
- continue the above for the first 15 years
- after that, for the last 10 years invest new savings in fixed-income securities
- re-allocate funds from EFA to fixed-income securities as soon as target profit in EFA is reached.
I am targeting an annualised rate of return of 9% for put options and hope that EFA will return 5% annually (including dividends) on average.
I would like to execute this strategy in GBP-denominated securities embracing international equity markets including U.S. but there is no equivalent instrument with both adequate low share price and option market liquidity - unless anyone could suggest something else?
My main concern is that EFA holdings might lose value in the last 10 years of this strategy and the GBP/USD exchange rate risk.
I would welcome all critical comments that would help me identify any drawbacks I might have missed.
- as the new savings come in, write cash-secured puts on EFA ETF, with an expiry of 2-3 months
- accept that from time to time puts will be exercised and I will end up with EFA shares
- continue the above for the first 15 years
- after that, for the last 10 years invest new savings in fixed-income securities
- re-allocate funds from EFA to fixed-income securities as soon as target profit in EFA is reached.
I am targeting an annualised rate of return of 9% for put options and hope that EFA will return 5% annually (including dividends) on average.
I would like to execute this strategy in GBP-denominated securities embracing international equity markets including U.S. but there is no equivalent instrument with both adequate low share price and option market liquidity - unless anyone could suggest something else?
My main concern is that EFA holdings might lose value in the last 10 years of this strategy and the GBP/USD exchange rate risk.
I would welcome all critical comments that would help me identify any drawbacks I might have missed.