Topic: How to achieve a 10% annual return with 10 million?
The hot topic these days, I see that most of the discussed strategies are quite flashy and carry a risk of loss, making things overly complicated.
Currently, the 20-year U.S. Treasury yield is at 5%, so directly buying the 20-year Treasury ETF $TLT provides monthly dividends. With the most conservative options selling strategy, you can achieve an additional 2% annualized return without losing your position, resulting in an overall annualized return of over 7%. Long-term bonds become more attractive when interest rates decline, and if the Federal Reserve cuts rates in the future, $TLT has room for appreciation. Considering the potential rise in Treasury prices, over the next 1-3 years, the probability of achieving an average annualized return of 15-20% through a combination of options selling is quite high. If you are not familiar with options, you can buy the TLT options strategy ETF $TLTW, which has a capacity of $1 billion, likely sufficient for most people.
Now, let's talk about the risks of $TLT:
If Treasury yields continue to rise, Treasury prices will continue to fall. The current yield on 20-year Treasuries is 5%, and the market expects it to reach 6%. New bonds will be difficult to sell, approaching the critical point of U.S. debt default. A real default would mean a global risk asset sell-off. During the process of falling from 5% to 6%, a put selling strategy can be employed to offset losses.
A significant drop in the U.S. dollar exchange rate.
This is quite a possibility. If you are seeking returns in U.S. dollars, you naturally need not worry, but if you are looking for returns in RMB, you can use a 1% cost to hedge against long-term exchange rate fluctuations.
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