On the heels of my previous post on having AI create an AI generated ETF portfolio, I decided to have AI analyze 60 covered call ETFs and create a 3 ETF tax optimized portfolio for each type of account: Roth (tax free), IRA (tax deferred), and Taxable account.
I am actually impressed with the speed of analysis and thought that went into creating these portfolios. I asked AI to assume each account had $1 million dollars in it and to allocate the portfolio for tax efficiency, income, growth and stability.
AI Response
Below is a full, tax-optimized, 30-year portfolio model assuming:
- $1,000,000 in each account:
- $1,000,000 Taxable
- $1,000,000 Roth IRA
- $1,000,000 Traditional IRA
- 30-year planning horizon
- Goal:
✔ Stable income
✔ Minimize NAV depletion
✔ Long-term sustainability
✔ Maintain diversification across accounts
✔ Use tax location to maximize after-tax wealth
I’ll present:
- Target allocation (%) for each account
- Dollar allocation ($1M per account)
- Expected yield, growth, and 30-year projected balances
- Income projections
- 30-year sustainability scoring
- Combined household-level summary
🟨 1. TAXABLE ACCOUNT ($1,000,000)
Selected ETFs:
- DIVO (Qualified dividend + income, low NAV decay)
- SPYI (ROC smoothing, tax efficient, S&P 500 base)
- GPIQ (Lower yield, higher index exposure, stability)
📌 Target Allocation
| ETF | Weight | Rationale |
|---|---|---|
| DIVO | 50% | Dividend-growth core, NAV stable |
| SPYI | 30% | ROC-heavy tax efficiency |
| GPIQ | 20% | Equity ballast, lowest tax drag |
💵 Dollar Allocation
- DIVO: $500,000
- SPYI: $300,000
- GPIQ: $200,000
📈 Expected Performance
| Metric | DIVO | SPYI | GPIQ | Portfolio |
|---|---|---|---|---|
| Yield | 4.5% | 11.7% | 9.8% | ~8.1% blended |
| Growth (NAV) | 5–7% | 3–5% | 6–8% | 5–6% blended |
| Tax drag | Very low | Low | Moderate-low | Low |
Estimated annual income (pre-tax):
➡ $81,000/yr
Estimated after-tax income (~25%):
➡ $60,750/yr
Expected 30-year ending value:
➡ $4.5–5.8 million (taxable)
🟩 2. ROTH ACCOUNT ($1,000,000)
Selected ETFs:
- JEPQ (Tech + income + growth)
- AIPI (AI premium income without extreme NAV loss)
- QQQI (Highest NAV stability among tech overlay funds)
📌 Target Allocation
| ETF | Weight | Rationale |
|---|---|---|
| JEPQ | 50% | Core growth + premium income |
| QQQI | 30% | Lowest NAV decay of the group |
| AIPI | 20% | Higher-income complement |
💵 Dollar Allocation
- JEPQ: $500,000
- QQQI: $300,000
- AIPI: $200,000
📈 Expected Performance
| Metric | JEPQ | QQQI | AIPI | Portfolio |
|---|---|---|---|---|
| Yield | 10.3% | 0.8% | 38% | ~12.7% blended |
| Growth | 7–10% | 9–12% | 3–6% | 8–9% blended |
| Tax drag (Roth) | 0% | 0% | 0% | 0% |
Estimated annual income (tax-free):
➡ $127,000/yr
Expected 30-year Roth ending value:
➡ $9–12 million (tax-free)
(This becomes the most powerful long-term account.)
🟦 3. TRADITIONAL IRA ($1,000,000)
Selected ETFs:
- JEPI (industry-leading stable income, low vol)
- IDVO (international diversification)
- SVOL (volatility hedge + defensive income)
📌 Target Allocation
| ETF | Weight | Rationale |
|---|---|---|
| JEPI | 50% | Most stable income ETF across all markets |
| IDVO | 30% | Geographic diversification |
| SVOL | 20% | Defensive + income stabilization |
💵 Dollar Allocation
- JEPI: $500,000
- IDVO: $300,000
- SVOL: $200,000
📈 Expected Performance
| Metric | JEPI | IDVO | SVOL | Portfolio |
|---|---|---|---|---|
| Yield | 8.3% | 5.4% | 19.9% | ~9.6% blended |
| Growth | 2–4% | 3–5% | 0–2% | 3–4% blended |
| Tax drag | Deferred; taxed at withdrawal | — |
Estimated annual income:
➡ $96,000/yr (tax-deferred)
Expected 30-year IRA ending value:
➡ $3.0–4.2 million (before taxes)
(after RMD taxation ~60–70% retained)
🔥 4. Combined Household-Level Portfolio
Across all accounts:
💵 Total invested:
$3,000,000
📊 Annual income (today):
| Account | Annual Income |
|---|---|
| Taxable | ~$60,750 after tax |
| Roth | ~$127,000 tax-free |
| IRA | ~$96,000 tax-deferred |
| Total | ~$283,750/yr |
📈 Projected Total Portfolio Value in 30 Years
| Account | Projected Value |
|---|---|
| Taxable | $4.5–5.8M |
| Roth | $9–12M (tax-free) |
| IRA | $3–4.2M (taxable at withdrawal) |
| Total | ~$16.5–22M |
🧮 5. Sustainability & NAV Preservation Grade
| Account | NAV Stability | Income Reliability | Growth Potential | Overall Grade |
|---|---|---|---|---|
| Taxable | A– | A | B | A– |
| Roth | B | A | A+ | A |
| IRA | A | A– | B– | A– |
This portfolio is balanced, durable, and tax-optimized.
My Thoughts
I am impressed that AI chose a fairly reasonable portfolio given the parameters and constraints I gave it and it was smart enough not to pick some of the crazy leveraged ETFs out there on things like bitcoin. I also checked for overlap on all the funds and there was very minor overlap of less than 1 percent on a couple of the ETFs.
I didn’t include it in this post but AI also calculated the tax drag on each of the 60 ETFs and categorized each one optimized for tax efficiency for each type of account. The spreadsheet is rather large and color coded now thanks to AI and I’ve been studying it more in detail and may write up a follow up post on it if I have time.
Share The Wealth
What do you think of the suggestions for a 3×3 ETF tax optimized portfolio? Let me know in the comments below.