Steven Bavaria: The Income Factory [book]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Posts: 10
Joined: Mon Nov 07, 2022 10:33 am

Steven Bavaria: The Income Factory [book]

Post by ExcireFoto »

I was a tad surprised not to find a few references to Steven Bavaria, author of "The Income Factory." The investor or retiree who needs income to sustain life may find this investment model of use. I'm experimenting with this income model and thus far have found it valuable.

Instead of using no-load mutual funds or ETFs, Bavaria recommends Closed-End-Funds (CEFs). Two critical rules for portfolio construction are: 1) Look for CEFs that are throwing off a dividend in excess of 8%. 2) Find CEFs that are priced below their Net Asset Value (NAV). A third, and less important rule is to find CEFs that are leveraged below 25%.

Where does one go to find this information and fulfill these two or three basic requirements. Check out the CEF Connect link below.

Find CEFs with a distribution rate of 8.0% or higher. There are many available. Then check the Discount/Premium and you will find many with a negative value. If leverage is of concern, check for CEFs for Effective Leverage. I don't pay as much attention to this metric.

For diversification, I've been populating portfolios with 20 to 30 CEFs that meet the two critical criteria. If any reader is interested in more information as to risk and return, I can add some specific data.

User avatar
Posts: 3444
Joined: Thu May 10, 2012 5:42 pm

Re: Steven Bavaria: The Income Factory

Post by 22twain »

Indeed, I don't remember seeing Bavaria and his book mentioned here before. Nevertheless, there has been occasional discussion of CEFs here. Enter 'CEF' in the forum search box and see what turns up.

There are some fans of them here, although they're not a "mainstream Boglehead" approach to investing. I've never been tempted by them, myself. I don't insist that all my portfolio income arrive by way of dividend checks, so I don't chase equity yield.
It's "IRMAA" (Income Related Monthly Adjustment Amount), not "IIRMA" or "IRRMA" or "IRMMA".
Posts: 335
Joined: Thu Mar 14, 2013 4:05 pm

Re: Steven Bavaria: The Income Factory

Post by Pops1860 »

This thread is temporarily locked for moderator review.

Moderator Pops1860
The power of accurate observation is often called cynicism by those who do not have it. ~George Bernard Shaw
User avatar
Posts: 8787
Joined: Fri May 20, 2011 2:50 pm

Re: Steven Bavaria: The Income Factory

Post by prudent »

Topic is unlocked.
Posts: 1489
Joined: Fri Jan 03, 2014 8:31 pm
Location: Kansas City, MO

Re: Steven Bavaria: The Income Factory [book]

Post by brad.clarkston »

Probably due to the higher risk than a low cost index fund. For CEF's you have ER and IE fee's to factor in.

I own two CEF's that nearly hit those rules (UTF & BCX) but I have them in my div stock port for exposure to Industrial and Commodities sectors without needing to buy them myself. UTF has been a good div earner it's slowly crept up into my top ten, BCX is a new position for 2022.

-- Only a Sith deals in absolutes --
Post Reply