How to Create a Monthly Cash Flow of 3 Million Won

It's also important to consider the lost opportunity to reinvest for asset growth as much as the dividend received.

Most domestically listed covered call products consist of option premium income, resulting in a low proportion of dividend income tax.

This keeps annual financial income below 20 million won, reducing the burden of health insurance premiums, and making it a relatively advantageous structure for generating cash flow after retirement.

Domestic stock investment is relatively easy to calculate as there are no taxes, but the investment principal is depleted in the 14th year with an average annual return of 8%, and in the 27th year with 12%.

The minimum return rate to prevent principal depletion is 12.7% for domestic stocks, and considering a 22% capital gains tax for US stocks, a minimum return rate of 14.1% is needed for lifelong withdrawals.

The KOSPI has recorded an average annual return of 8.4% over the past 20 years, while the Nasdaq 100 has shown overwhelming performance at 15.6%.

Even when extending the period to 40 years of long-term investment, the KOSPI showed 8.5% versus the Nasdaq 100's 14.5%, indicating a higher probability that US index investments prevent asset depletion.

Covered calls are structured to fall along with the underlying index, offering weak defense against downturns.

During July, when the Korean stock market experienced a correction, covered call products recorded a maximum decline of -44%, causing monthly dividends to plummet from 3.92 million won to 2.53 million won.

The KOSPI index has experienced a 10% drop once every 2.7 years, a 30% drop once every 6.5 years, and a 40% drop once every 11.3 years.

Through past examples like the IMF crisis, the dot-com bubble, and the pandemic, it's necessary to recognize the possibility of a crisis within 5 years and hedge against downside volatility by combining covered calls and US index investments.

If 300 million won is invested, split into 150 million won in covered calls and 150 million won in US stocks, and 3 million won is withdrawn monthly, with 2.75 million won from covered call dividends and the remaining 250,000 won covered by selling US stocks, assets will be depleted after 17 years.

Reflecting 2.5% inflation, 3.31 million won would need to be withdrawn monthly in the 5th year, and 4.45 million won in the 17th year. Mechanical decline due to dividend payments (ex-dividend drop) must also be considered.

If dividends are not used and are reinvested for the initial year, the asset depletion point is significantly extended from the original 17 years to 28 years.

For portfolios with a higher proportion of US indexes, the depletion point can be extended to 32 years. Changing the reinvestment target from covered calls to US indexes can further extend the depletion point by 1 year and 4 months and increase available assets by 100 million won.

If the exchange rate falls by 1% annually, the asset depletion point decreases from 33 years to 23 years. Conversely, if it rises by 1% annually, assets show an effect of not being depleted for over 100 years.

Since 1993, the won-dollar exchange rate has steadily increased by more than 0.5% annually, and a portfolio composed of 100 million won in covered calls and 200 million won in US indexes is expected to secure long-term cash flow.

For the covered call distribution rate to be maintained, the soundness of the underlying index is crucial. In the case of KOSPI 200, manufacturing, including semiconductors, accounts for 69.4%, with Samsung Electronics and SK Hynix alone making up 62.3%.

For Nasdaq 100, it is important to continuously check whether it maintains an annual return rate of over 15%, and it's advisable to use a buffer strategy of depositing one year's worth of cash in a parking account to prepare for market downturns.

This structure means that the overall return of domestic covered calls is determined by the performance and stock price direction of these two companies, so this point must be considered when investing in domestic covered calls.

With the advent of the AI era, its growth momentum is strengthening, so it's important to continuously monitor whether it maintains an annual return rate of over 15%.

By starting withdrawals from the third year of operation, a one-year safety margin is secured, meaning assets don't have to be sold hastily even if a downturn continues for a year.

Retirees with withdrawal plans should consider a barbell strategy that combines covered calls and index investments.

In contrast, investors in the asset accumulation phase before retirement should combine dividend growth stocks like SCHD with growth stocks like Nasdaq 100 or Nvidia, and it's necessary to adjust investment strategies according to individual asset management stages.