Earn extra income like a pro

In the zero interest world nowadays, you virtually lend money to your bank for free if you keep your money in the bank. Savvy people invest their money in the traditional income assets such as bonds or bond-like securities, i.e. preferred stocks, utility stocks, and mortgage REITs etc. Yes, these assets used to be safer income investments but not any more. You see, the interest rate has nowhere to go but up, which will kill bonds and similar assets. Therefore one has to explore non-traditional ways to generate income. One way to do so is to write covered calls, an option strategy which is rather safe and effective for generating extra money. In a nutshell, you use your existing stock shares as a pledge to allow the other person to buy your shares at a pre-determined higher price at a later date, if the stock price goes to that price. In exchange, that person will pay you some money upfront. If the stock does not go up to that price by the expiration date, you keep the money free and clear. You can then make such a deal again and again. The worst case scenario? You sell your shares at a higher price after earning that extra money first. This is a technique professionals are using all the time for safe income, which can usually generate 15-20% income per year rather easily. But it sounds pretty complicated & daunting, doesn't it?

Well, you don't need to worry about the complicated technique anymore but can still enjoy the income strategy now. How? There are closed-end mutual funds or ETFs which employ such a low risk and high probability covered-call strategy,  called "buy-write" funds or "covered-call" funds. The fund managers will do all the dirty work for you to select the right stocks and write the corresponding covered calls. They then distribute the income via dividends, which are usually quite high. It is more attractive to buy such funds at the moment because they are trading below their book values, or at a discount to their net asset values. In other words, with one click away, one will not only enjoy the high dividend income, they may also get additional capital gain when the funds return to their normal values. Sounds a pretty good deal to me! I think the following 2 funds worth considering:
Madison/Claymore Covered Call & Equity Strategy (MCN) with a current yield close to 9%. The other one is BlackRock Enhanced Dividend Achievers (BDJ) with a current yield around 7%.

Of course, I cannot say these are risk free investments. Rather, they just offer you an easy way to explore another powerful income strategy, if you want to diversify a bit.