I am 72 and I can tell you income is so important in retirement and as you age. There is no simple formula, but you want sufficient cash flow with little worry to be happy. For people planning retirement it is still theoretical. But when it is real time, you want stability...
I am a retired, 70-year old first-time buyer, and managed save enough money to pay cash for a house… also, I have a monthly pension that will cover utilities, maintenance and insurance; however, I am still nervous/anxious/leery of taking the house purchase plunge for what will be my “forever home”.
54 years old and at $5,000 a month dividends. I reinvest still as I’m working currently. One day, I’ll transition to part time work and supplement my income with dividends
You left out one major consideration of having a dividend portfolio. T%hat is the favorable tax treatment of qualified dividends. In your example, a couple with $24K per year in dividends and 48K per year in social security, their income would make $9,400 of their social security taxable. However, at the $72K gross income the tax rate for the $24K of dividends would be 0%. Thus the total taxable income for the couple would be $9,400. In 2023 assuming the couple are both 65 or older the standard deduction is $30,700, so the couple would pay no federal income tax. Similarly if the same couple took $24K out of their 401K, IRA of from pension income, their taxable income would be $9,400+$24,000 = $33,400. After the standard deduction they would owe tax on $2,700 or $270 in 2023. This become a significant factor as income increases. If their income was $90K, taxable income would be $41,400 if the money came from a 401K etc. and the tax owed would be $1,070. If that same money came from dividends the taxable SS would increase to $24.7K with the dividends still taxed at 0% giving taxable income of $24,7K, which is still less than the standard deduction so no tax would be payable. That couple could have a gross income up to about $108K before any of their dividend income would be taxable, where the tax saving due to dividend income would be about $6,500 at $108K total income. If your dividend portfolio is paying say 3.25%, the tax saving is the equivalent of about $200K in your dividend portfolio. Note this is just the federal tax situation. Obviously state taxes also need to be considered. This just illustrates that any retirement financial plan must include tax planning.
Yeah, Todd. I've seen a few of James' videos. He glosses over some of the more salient points, regularly. I believe his videos are just to generate the RUclips revenue for his family. If he were to give all his knowledge and advice in a single, coherent video, then I'm sure it would be phenomenal. Unfortunately, it would also be several hours long and RUclips wouldn't pay him anymore (having only a single video). But I agree, I do wish he would at least make reference to some critically-important, related topics.
Amazing that a CFP speaks about dividends in a positive way... unless youre way into retirement... Love dividends and the snowball effect... Thanks for the great video.... Very well done.... Great information....
This video is not correctly titled. It's about living off dividends AND other streams of income. Fact is you do need a few million to actually live off dividends . 😮
For dividends living, you need minimum a 300k portfolio with 8% div yield to get 24k yearly or 2k monthly dividends. Thats the bare minimum with highest paying stable dividends etfs like jepq.
I use growth stocks to add to my dividends. Im 40 and once I get to a certain level on my growth stocks, Ill take some profits and add to my dividend stocks. Then Ill look for more growth stocks and add to those with some profits.
Excellent video. I am a passive income investor, which means in retirement, I can avoid sequence of return risk and leave a legacy to my family. But I recognize it isn’t the only approach. Others have their merits.
@@helloitsmehbIf he has enough to earn $25k/year in dividends, he likely has enough to draw down on his balance to meet his needs, should the dividends disappear. I'd rather have my dividends disappear than not invest because of fear.
I look for dividend "aristocrats" and I prefer monthly dividends though quarterly is ok. Right now I have $20,000 in stocks and it projects to $1,253 in annual dividends. I'm aiming for $1,000/month in dividend income.
Isn't Simon Property Group a REIT (Real Estate Investment Trust)? Dividend from a REIT is taxed as ordinary income instead of being taxed as qualified dividends at a lower rate. There are also other tax implications associated with investing in a REIT.
I would think that a major benefit of dividend investing is that calculating portfolio size needed is not relevant. We don't care about the value of the portfolio. We care about the sustainable income it pays. As you invest you can gradually see the income rise as you invest more and pull the retirement trigger when it's high enough regardless of the market sentiment.
@@miked412 by calculating how much additional income the contributions produce and estimating how that income rises. the capital value will fluctuate up and down over time so the amount of income new additions give you varies. so capital value being high with a market yielding 2% is no worse for retirement than the same portfolio at a different timepoint where the capital value is half and so the yield is 4%. so long as the yield is sustainable in real terms the capital value being half does not matter. its the same income stream at a different moment of low market sentiment vs high market sentiment.
@@miked412Dividends are a $ amount per share per quarter or whatever interval the stock pays out. As long as you don’t sell any shares, you’ll receive the same dividend every period. The when the company raises the dividend, you get a raise.
I disagree, you don’t want your capital to disappear in order to pay for distributions. My preference is high yields with relatively lower risk. In other words, I don’t want to use covered call ETFs, for example.
@@wcg66 yes. that's why i was careful to say... "We care about the sustainable income it pays" key word being "sustainable". that normally means not too high yield traps. if the income stream proves sustainable and increasing i think the capital value will follow in the fullness of time but no need to delay retirement simply because the market is at a low eb. it's cyclical so it is bound to have it's low and high moments. i actually think you do agree with me if you focus on the word "sustainable" that i used. your approach sound a lot like what i meant when i used that word.
I keep an investment journal and the main item I record almost daily is my projected annual dividends, not my stock valuation. Then when the market goes haywire, I just look at my investment journal and appreciate how much my dividends have increased.
What about income funds do they work the same such as vanguard windsor admiral fund? Is it the same benefit just a basket of stocks vs individual stocks?
Thank you for the high dividend ETF suggestion. I'm not big on individual stock purchases for myself since I bought at the high and sold at the low several times in my 20's.
Like me you panic sold....not good.....panic selling and excessive trading will get nobody anywhere😢 the last 2 years I have sold nothing...stay the course the market is a marathon not a sprint...
Our advisor has us invested to earn dividends, withdrawing $5,800/month. We are not withdrawing all we earn monthly. Add to that $4,600/month in SS and we’re doing just fine. You hit the nail on the head.
Just started buying SCHD. Just accumulating several shares a month. One day I think my daughter will have a great little chunk to generate her passive income.
I’d recommend making a trust and having that trust own that account so you can ensure your daughter doesn’t accidentally blow that money and you won’t have to worry about certain probate taxes. I’d definitely work on teaching your child the foundation so when the time comes she can grow it and live on it to pass it on to the next generation the way you are doing.
I'm just the opposite. I invest for total return and ignore what portion of that return is dividends versus capital gains. As long as I spend less than total return, portfolio values increase. Dividend investing is enormously popular among retirees. And people tend to do better when they are emotionally comfortable with an investment strategy. But I have always made more money from capital gains, so I don't understand ignoring what I consider the most important investment results. Dividends are an important component of total return, but they show up in my accounts whether I look at them or not. Of course, dividend investors get to keep capital gains whether they ignore them or not. But not if they chase yield, buying stocks like T or GE in 2000.
If the Government can pull 130 billion out of thin air to give to Ukraine, they can toss billions into Social Security to repay what they have "borrowed" over the decades
@@helloitsmehbnah I don't know about millions of people but if I pay into that program my whole life and get nothing.....I won't be on the street I'll be in prison lol
The dividend stocks he mentioned can be expect to return another 5% to 10% in capital appreciation along with increasing the dividend amount by 5% to 10% per year.
What? Tell me what investment is guaranteed ( not to crash and burn). I’ve been through a few crashes and there isn’t time left for those who are close to retirement or already retired if there is a crash. Solid dividend companies are a good bet. You can keep your Apple stocks. They make millions and give nothing to their investors.
That's the average tho. If the market tanks right before you retire you'll be selling low and never make that money back. The numbers show that an average stock portfolio runs out of money in ten years if you retire right when there's a crash. It works out much better if you retire when the market goes up for several years first.
I look for dividend "aristocrats" and other smaller individual stocks. set a goal of how many shares i want in each and let it reinvest since its better than zero income at retirement.
Great video, since I have become a dividend investor the entire investment game has changed. Less volatility and more buying opportunities that actually have delivered gains for me to reach my goal much quicker despite popular belief..
This a good video but your scenario also depends on the stability of social security. I do believe SS will be there in some form going forward but the future payouts that are promised today maybe only 70=80%, or they'll have to raise the age to start collecting or raise FICA taxes. All three options are not popular.
Older people vote in much higher percentages than younger people. That makes it more likely that either FICA taxes will be raised or the retirement age will be raised (again) than a decrease in benefits. Raising the cap on income so that higher incomes pay FICA taxes is another way to go.
This analysis is good. But people should never forget about the "T" word. I refer, if course, to Taxes, both Federal and, as applicable, State and Local Taxes. For Federal Taxes, some dividends may be qualified, meaning that lower rates may apply, similar to capital gains rates. But certain dividends may be considered to be ordinary income, which are typically higher rates. State and Local Tax rates, when they apply, are typically on a percentage basis, sometimes with different brackets, depending on the dollar amount of dividends generated. So, while sound diversification of income-producing stocks should be done to reduce risks, each person has to take his/her individual tax situation into account so that the proper rates can be applied and determined (or estimated) for each stock investment. And while many States don't tax Social Security benefits, if your dividend income is sufficiently high, as much as 85% of your Social Security benefits could be subject to Taxation, depending on your personal Federal tax bracket. So, don't automatically assume that all your Social Security benefits are yours to keep. [Although there's been talk of eliminating the perncious Taxation of Social Security benefits (basically a tax on the SS taxes you've paid in), Congress will just keep kicking the SS can down the road until forced to implement changes.]
I don't understand the formula desired-annual-income / percentage-of-revenue-paid-aa-dividends Shouldn't the revenue of the company be included in the formula to know how much will actually be distributed?
At current market current prices and so on i would need around 4-500.000 $ to almost match my salary of today. And in Sweden we have pension and such so for me building a dividend portfolio is to bring more value to life . A few years before retiering i can work 4 days a week instead of 5 and such
Wow that is way too many. Zero chance you can keep track of all those stocks. Zero chance you have an efficient portfolio. Monte Carlo analysts has shown about 30 stocks is all you need for a diversified portfolio anything more is a waste of time. Also you can get the exact same benefit with about 10 etf dividend funds with far less risk than having 150 individual stocks.
I am 74. How I wish I had this financial advise presented so clearly years ago. My husband and I stumbled through investing and did a fair job but we could be so much better off if we had someone that presented this so clearly to our younger selves.
With the way things are moving ,I think I need to see a video on “how to survive amidst the present recession “.I mean everything in shambles Surprisingly I heard people still make over a 100k within a few months ,and i’d like to know how and if it’s still possible in these times or am I being lazy
Be careful about REITs and other real-estate based funds as they are highly sensitive to interest rates. Equities may be volatile, but if you go for a dividend aristocrat, even though the yield is not as juicy, you will be in more consistent passive income building situation
5600 DIV from TSLY in June, I am loving this ETF. Just 200,000 in TSLY will give you 12,270 shares at 0.81 shares is 9,939 a month. You could easily retire off of TSLY and yes the div will change each month but if you believe in Tesla going up then TSLY DIV will also go up! I am retired and all i care about is dividends!
One thing my advisor pointed out to me was to factor in inflation. So if I want 5k/mo in today's value, what will that be when I want to retire? Same for my bills. It was annoyingly helpful.
@@RootFP i figured out on how much money I need and how many stocks dividends companies I need to get I want to make $20k a month so I would need to invest in 12 monthly stocks dividends companies invest enough to make $750.00 in each 12 monthly stocks dividends companies now to make extra $11k to make up the $20k a month I need to invest in four different quarterly stocks dividends companies to make $2,750.00 so four times that amount is $11k quarterly four times a year so $9k plus $11k =$20k a month 50% monthly and 50% quarterly but for me cheap stocks dividends companies shares is the only way to go so that is $152k a year that's enough money for me
Great points. I’m trying to talk my daughter and her husband into investing in. Roth IRA before investing into a regular taxed account even for her emergency fund . For tax purposes because they can take initial money out penalty free and may not need it anyway. I’m my mind I’m thinking take advantage of tax breaks for as much as possible. Then open a regular taxed account. Am I right or wrong in my thinking please ?
You are correct! Get any matching 401k and HSA funds through work first. Then both need to max out their own Roth. And try their best to never touch their Roth. The long term advantages are huge. It makes tax planning in retirement so much easier.
You need to take into account the impact of inflation. You calculated the size of a portfolio needed to generate 24,000 per year with a hypothetical 3.5% yield. In your first year, you would be close to being correct but if inflation was running at 7% in ten years you would need about double that amount to generate the same purchasing power.
How about live off of interest? Savers are finally being rewarded. 5% CD’s and treasury bills with no risk of principle. 6% corporate bonds that are highly rated. TIPS at 2% plus inflation. 42/58 allocation. Interest from fixed income + dividends from stock allocation > expenses = a great nights sleep.
Yes, all well and good but what you have not covered is what happens when the stock go down. If you are reliant on this in order to have passive income or be able to retire then it’s not ideal as the stock are so volatile it would not be something that I would rely on.
It looks like the safer route is the dividend fund. what is the most efficient way to transition your portfolio as you approach retirement? gradually or just rip off the bandaid?
New to this but would like to know where and how I can invest say $20k to start with. what web site do I look into investing in stocks that pay dividends. I would like to invest enough to make $1,000 to $1500 a month since I am already 76 years old and stable I would like to make that much to call vacation or fun money. I have at least $300k cash to totally get into it once I feel comfortable. Because of age i don't need long term investments since I already have a 401K which I pull 8% out of TY
Like what you said about diversity of investments. Unless you have money to burn it is hard to rely on just one thing. Maybe in this case "diversity is our strength" could really be true.
those income amounts work nice if they're net after taxes. you're gonna need more income before taxes to get those net amounts, depending on your state. Unless my math is wrong? For an easy example, let's say I want $7000 / month net, and I get $2000 / month from social security, I need $5,000 net per month more. So for the year, I get $24,000 from social security and need $60,000 in dividend income. In my state, using those numbers, I have a pre-tax income of $80,000 - $12,679 (Federal and State taxes) = $67,321 net income after taxes, which is net $5,610.08 per month, not $7,000 / month I wanted. To get $7,000 per month after taxes with $20,000 from social security per year, I'd need $84,000 pre-tax in dividend income = $104,000 - $19,339 (Fed & State taxes) = $84,661 annual income after taxes = $7,055.08 net income per month. What am I missing?
I want a balanced portfolio, with growth investments, safe investments, and also a focus on dividends to gain up to $20K monthly with minimal risk. is this your strategy sustainable?
There is such a thing as Mutual Bond funds that pay 6% dividend monthly. Many are very boring with little to no share movement up or down. Very low share price and expense ratio.
You pay no tax on long term capital gains until a certain level. Your dividends and interests are charged as regular income EVEN IF they are reinvested. Hence I is always better to go for fast growing companies over stable high dividend companies.
What are the quality companies that pay good dividends that are NOT subject to dropping in value when the FED decides inflation is to high and they raise rates?
Exxon Mobil Corp. (ticker: XOM) Campbell Soup Co. (CPB) Williams Cos. Inc. (WMB) Coca-Cola Co. (KO) Genuine Parts Co. (GPC) Equinix Inc. (EQIX) Cisco Systems Inc. (CSCO) Texas Instruments Inc. (TXN) Johnson & Johnson (JNJ) you are welcome
What’s the portofolio that gives a 3% dividends, that’s already super high. It needs to be more like 0.91% like what the s&p provides. Investing in high dividend stocks is dumb. Those stocks don’t appreciate and usually depreciate. Yeah you make more in dividends but you lose in net worth. I am turned off by high dividend stocks companies, they are trying to fill holes.
Something people also forget is that if you have a million dollars for example in your portfolio and you're living off your dividends, you still have that million dollars. You could have no dividends and still make 40k a year for 25 years after retirement just by siphoning off your investments
There's a major flaw with the premise of getting something from social security... if you're a millennial (1980) or younger you're probably not going to get much unless perhaps you earn a very high income and contribute quite a lot during your career or some very major reforms are successfully implemented.
Well, its not exactly. Start deducting taxes and inflation. From the equity point of view, there is no difference between getting dividends or selling portions of ETFs you're holding in your portfolio, but there is from how this being taxed and dividends being taxed heavily, while in some countries selling portion of ETFs is 0% taxed.
$500 a month is $6,000 a year. Now divide $6,000 by your portfolio dividend yield (since we don’t have that info let’s say your yield is 3%) 6,000/0.03 = $200,000 dollars invested in that portfolio. Don’t forget about the snowball effect which means you don’t have to invest $200,000 for your portfolio to be worth $200,000 but your trade off is time to get there.
I am 72 and I can tell you income is so important in retirement and as you age. There is no simple formula, but you want sufficient cash flow with little worry to be happy. For people planning retirement it is still theoretical. But when it is real time, you want stability...
Did you re-invest your dividend? I am. How much , for example, how much Coke-Cola in share would I need to have payments to live off of $40000/year??
@@stevenharris6626Why would you only invest into one stock like KO when you can diversify your portfolio with ETFs, Covered Call ETFs, and REITs?
Fear. Uncertainty. Doubt.
You will never have enough to not worry.
This is not a numbers issue.
@@sammencia7945, In this case vote for right people!
I am a retired, 70-year old first-time buyer, and managed save enough money to pay cash for a house… also, I have a monthly pension that will cover utilities, maintenance and insurance; however, I am still nervous/anxious/leery of taking the house purchase plunge for what will be my “forever home”.
54 years old and at $5,000 a month dividends. I reinvest still as I’m working currently. One day, I’ll transition to part time work and supplement my income with dividends
You left out one major consideration of having a dividend portfolio. T%hat is the favorable tax treatment of qualified dividends. In your example, a couple with $24K per year in dividends and 48K per year in social security, their income would make $9,400 of their social security taxable. However, at the $72K gross income the tax rate for the $24K of dividends would be 0%. Thus the total taxable income for the couple would be $9,400. In 2023 assuming the couple are both 65 or older the standard deduction is $30,700, so the couple would pay no federal income tax. Similarly if the same couple took $24K out of their 401K, IRA of from pension income, their taxable income would be $9,400+$24,000 = $33,400. After the standard deduction they would owe tax on $2,700 or $270 in 2023. This become a significant factor as income increases. If their income was $90K, taxable income would be $41,400 if the money came from a 401K etc. and the tax owed would be $1,070. If that same money came from dividends the taxable SS would increase to $24.7K with the dividends still taxed at 0% giving taxable income of $24,7K, which is still less than the standard deduction so no tax would be payable. That couple could have a gross income up to about $108K before any of their dividend income would be taxable, where the tax saving due to dividend income would be about $6,500 at $108K total income. If your dividend portfolio is paying say 3.25%, the tax saving is the equivalent of about $200K in your dividend portfolio. Note this is just the federal tax situation. Obviously state taxes also need to be considered.
This just illustrates that any retirement financial plan must include tax planning.
Nice info thanks
My current plan would be to utilize the Roth IRA/ Roth 401k function and then you won’t have any income either.
Yeah, Todd. I've seen a few of James' videos. He glosses over some of the more salient points, regularly. I believe his videos are just to generate the RUclips revenue for his family. If he were to give all his knowledge and advice in a single, coherent video, then I'm sure it would be phenomenal. Unfortunately, it would also be several hours long and RUclips wouldn't pay him anymore (having only a single video). But I agree, I do wish he would at least make reference to some critically-important, related topics.
You've made some good points. Thanks for this information.
Amazing that a CFP speaks about dividends in a positive way... unless youre way into retirement... Love dividends and the snowball effect... Thanks for the great video.... Very well done.... Great information....
Hate to say it, but I wouldn't count on a spouse for the funding of any of your retirement.
Then you need to find a better spouse haha. I'm retired at 24 and it's because of my wife. Doing things alone takes twice as long.....
@@Sylvester4571 retired at 24, sure you did!
I agree, never rely on anyone but yourself.
@@nightskylights4501he meant 14…😊
This video is not correctly titled. It's about living off dividends AND other streams of income. Fact is you do need a few million to actually live off dividends . 😮
really? your picking on his video? you dont have a fraction of the knowledge he has..
Between 2-3 million.
Most CFP don't talk about dividend stocks. This is great to hear from CFP
They are terrible
For dividends living, you need minimum a 300k portfolio with 8% div yield to get 24k yearly or 2k monthly dividends. Thats the bare minimum with highest paying stable dividends etfs like jepq.
I use growth stocks to add to my dividends. Im 40 and once I get to a certain level on my growth stocks, Ill take some profits and add to my dividend stocks. Then Ill look for more growth stocks and add to those with some profits.
This is what I do my G 👊👊😎...we in it ride or die for life lol
Liked and subbed ! Very simple and informative !
Excellent video. I am a passive income investor, which means in retirement, I can avoid sequence of return risk and leave a legacy to my family. But I recognize it isn’t the only approach. Others have their merits.
I’m living the dream with dividends almost $25,000 a year
that would be enough for me
Until it’s yanked from you. You’re at the mercy of a corporate board. That’s sounds scary.
@@helloitsmehbIf he has enough to earn $25k/year in dividends, he likely has enough to draw down on his balance to meet his needs, should the dividends disappear. I'd rather have my dividends disappear than not invest because of fear.
you and me dream different
@@helloitsmehb same thing with anything in life: diversify
Awesome stuff and spot on. So good, I subscribed.
Great video with great explanation James.
I look for dividend "aristocrats" and I prefer monthly dividends though quarterly is ok. Right now I have $20,000 in stocks and it projects to $1,253 in annual dividends. I'm aiming for $1,000/month in dividend income.
So you need about $240,000 invested seems like
@@Enmanuel_V6 Yeah but how many have it?
@@donaldlyons17 Don’t forget the snowball effect. With enough time you won’t have to invest $240,000 to have a portfolio worth $240,000.
Don’t forget the snowball effect. With enough time you won’t have to invest $240,000 to have a portfolio worth $240,000.
@@donaldlyons17 I won’t listen to a simp like you
Isn't Simon Property Group a REIT (Real Estate Investment Trust)? Dividend from a REIT is taxed as ordinary income instead of being taxed as qualified dividends at a lower rate. There are also other tax implications associated with investing in a REIT.
Proctor & Gamble is another good one...
I would think that a major benefit of dividend investing is that calculating portfolio size needed is not relevant. We don't care about the value of the portfolio. We care about the sustainable income it pays. As you invest you can gradually see the income rise as you invest more and pull the retirement trigger when it's high enough regardless of the market sentiment.
Calculating the portfolio size needed is very relevant.
- How else do you know how much to contribute?
@@miked412 by calculating how much additional income the contributions produce and estimating how that income rises. the capital value will fluctuate up and down over time so the amount of income new additions give you varies. so capital value being high with a market yielding 2% is no worse for retirement than the same portfolio at a different timepoint where the capital value is half and so the yield is 4%. so long as the yield is sustainable in real terms the capital value being half does not matter. its the same income stream at a different moment of low market sentiment vs high market sentiment.
@@miked412Dividends are a $ amount per share per quarter or whatever interval the stock pays out. As long as you don’t sell any shares, you’ll receive the same dividend every period. The when the company raises the dividend, you get a raise.
I disagree, you don’t want your capital to disappear in order to pay for distributions. My preference is high yields with relatively lower risk. In other words, I don’t want to use covered call ETFs, for example.
@@wcg66 yes. that's why i was careful to say... "We care about the sustainable income it pays" key word being "sustainable". that normally means not too high yield traps. if the income stream proves sustainable and increasing i think the capital value will follow in the fullness of time but no need to delay retirement simply because the market is at a low eb. it's cyclical so it is bound to have it's low and high moments. i actually think you do agree with me if you focus on the word "sustainable" that i used. your approach sound a lot like what i meant when i used that word.
I keep an investment journal and the main item I record almost daily is my projected annual dividends, not my stock valuation. Then when the market goes haywire, I just look at my investment journal and appreciate how much my dividends have increased.
When the market goes haywire that’s when dividends are yanked from investors. It just happened 4 years ago. Were you not watching?
Great video! Thanks for the clear explanation of dividends payouts. Many forget to include other income like social security into the total amount.
You need to focus on type of dividend payment and how it it taxed VIP not all dividends hit the 10% mark and some are taxed at your income rate
What about income funds do they work the same such as vanguard windsor admiral fund? Is it the same benefit just a basket of stocks vs individual stocks?
Thank you for your common sense approach to retirement saving and investing. The big companies have long given horrible advice in this area.
Very informational.
Thank you for the high dividend ETF suggestion. I'm not big on individual stock purchases for myself since I bought at the high and sold at the low several times in my 20's.
Like me you panic sold....not good.....panic selling and excessive trading will get nobody anywhere😢 the last 2 years I have sold nothing...stay the course the market is a marathon not a sprint...
@@Jack51971 She could have bought and sold once or twice, though; not excessively.
Fantastic video! Thank you.
Great video. Very clear.
good information!
Another awesome video!
Our advisor has us invested to earn dividends, withdrawing $5,800/month. We are not withdrawing all we earn monthly. Add to that $4,600/month in SS and we’re doing just fine. You hit the nail on the head.
Now... all you have to do is get rid of your advisor.
Which stock may I ask?
Would you mind passing on your advisors contact information?
Lying scammer!
Just started buying SCHD. Just accumulating several shares a month. One day I think my daughter will have a great little chunk to generate her passive income.
That is awesome!
I’d recommend making a trust and having that trust own that account so you can ensure your daughter doesn’t accidentally blow that money and you won’t have to worry about certain probate taxes. I’d definitely work on teaching your child the foundation so when the time comes she can grow it and live on it to pass it on to the next generation the way you are doing.
Thank you, this is an excellent video and appreciate the explanation!
Glad you enjoyed it!
Thank you. Good info,
Great breakdown!
I'm just the opposite. I invest for total return and ignore what portion of that return is dividends versus capital gains. As long as I spend less than total return, portfolio values increase. Dividend investing is enormously popular among retirees. And people tend to do better when they are emotionally comfortable with an investment strategy. But I have always made more money from capital gains, so I don't understand ignoring what I consider the most important investment results. Dividends are an important component of total return, but they show up in my accounts whether I look at them or not. Of course, dividend investors get to keep capital gains whether they ignore them or not. But not if they chase yield, buying stocks like T or GE in 2000.
Thank you for explaining this. I just hope that there is still social security in 15 years.
If not there will be millions of people on the streets. It will have to be there
Then don't vote for the Republicans they've been trying to kill it since its Inception
If the Government can pull 130 billion out of thin air to give to Ukraine, they can toss billions into Social Security to repay what they have "borrowed" over the decades
@@helloitsmehbnah I don't know about millions of people but if I pay into that program my whole life and get nothing.....I won't be on the street I'll be in prison lol
I inherited a small IRA. I refocused the account to provide some growth and enough dividends to cover my RMD.
Do you have to pay taxes when you inherit the ira?
Very helpful information! Thanks a lot for making this video!
Epic video and breakdown 👍🏼🙏🏽🙌🏼🏆keep giving us more useful dividend videos!! Your the bomb 💣
Great video!
I'm glad you added the comment about investing in more the just dividends, James. A 3-4% return from stocks, given all the risks, is terrible.
The dividend stocks he mentioned can be expect to return another 5% to 10% in capital appreciation along with increasing the dividend amount by 5% to 10% per year.
What? Tell me what investment is guaranteed ( not to crash and burn). I’ve been through a few crashes and there isn’t time left for those who are close to retirement or already retired if there is a crash. Solid dividend companies are a good bet. You can keep your Apple stocks. They make millions and give nothing to their investors.
Ty
S &P 500 index funds have returned over 11% per year long term. As long as you don’t take out more than your gains, you should be fine.
We’re taking out as we please for traveling and gifting. Locked in safely 500K No debt, SS income, have plenty and as much as we started with
That's the average tho. If the market tanks right before you retire you'll be selling low and never make that money back. The numbers show that an average stock portfolio runs out of money in ten years if you retire right when there's a crash. It works out much better if you retire when the market goes up for several years first.
yikes! you missed the whole point! how much do you need in the index fund to live on is what we are discussing here.
Nice insights
I look for dividend "aristocrats" and other smaller individual stocks. set a goal of how many shares i want in each and let it reinvest since its better than zero income at retirement.
Wonderful!
¡Excelente! Gracias. 😁🇵🇷
Between my (partial) work pension and social security, I hope to have about 400k from other investments. I hope to take that and generate 24k.
Nice job 👍
#JEPI and #PSEC are some of the best for dividends.
A glaring omission is not talking at all about how dividends are taxed and comparing them to 401K and long-term capital gains.
brilliant point, David.
Great video, since I have become a dividend investor the entire investment game has changed. Less volatility and more buying opportunities that actually have delivered gains for me to reach my goal much quicker despite popular belief..
Until it’s taken away. You’re at the mercy of a board
This a good video but your scenario also depends on the stability of social security. I do believe SS will be there in some form going forward but the future payouts that are promised today maybe only 70=80%, or they'll have to raise the age to start collecting or raise FICA taxes. All three options are not popular.
Older people vote in much higher percentages than younger people. That makes it more likely that either FICA taxes will be raised or the retirement age will be raised (again) than a decrease in benefits. Raising the cap on income so that higher incomes pay FICA taxes is another way to go.
This analysis is good. But people should never forget about the "T" word. I refer, if course, to Taxes, both Federal and, as applicable, State and Local Taxes. For Federal Taxes, some dividends may be qualified, meaning that lower rates may apply, similar to capital gains rates. But certain dividends may be considered to be ordinary income, which are typically higher rates. State and Local Tax rates, when they apply, are typically on a percentage basis, sometimes with different brackets, depending on the dollar amount of dividends generated. So, while sound diversification of income-producing stocks should be done to reduce risks, each person has to take his/her individual tax situation into account so that the proper rates can be applied and determined (or estimated) for each stock investment. And while many States don't tax Social Security benefits, if your dividend income is sufficiently high, as much as 85% of your Social Security benefits could be subject to Taxation, depending on your personal Federal tax bracket. So, don't automatically assume that all your Social Security benefits are yours to keep. [Although there's been talk of eliminating the perncious Taxation of Social Security benefits (basically a tax on the SS taxes you've paid in), Congress will just keep kicking the SS can down the road until forced to implement changes.]
SCHD is a great dividend ETF, with its popularity I wonder if vanguard and black rock will come out with etfs that track index’s like the DJ US 100
spyd?
I don't understand the formula desired-annual-income / percentage-of-revenue-paid-aa-dividends
Shouldn't the revenue of the company be included in the formula to know how much will actually be distributed?
Great video, very informative.
Thank you Sandy
great content
Thank you!
How would someone do a search on just qualified dividends? Maybe specifically ETF's.
i pity the fools who have never heard of google
At current market current prices and so on i would need around 4-500.000 $ to almost match my salary of today.
And in Sweden we have pension and such so for me building a dividend portfolio is to bring more value to life .
A few years before retiering i can work 4 days a week instead of 5 and such
Glad it was helpful!
Instead of stocks, is it possible to do this by investing in dividend-paying index funds and ETFs?
0:08 u have and mba and a cfp what dose cfp stands for. is cfa better or cfp?
Certified Financial Palnner
Diversification is key, a mix of interest, dividends, rent and even royalty would be good for a passive income portfolio.
let me guess. you are not a landlord.
Great advice - again!
I am invested in 147 different dividend paying companies ,all I got say is diversify
149 now
Glad it was helpful!
Wow that is way too many. Zero chance you can keep track of all those stocks. Zero chance you have an efficient portfolio. Monte Carlo analysts has shown about 30 stocks is all you need for a diversified portfolio anything more is a waste of time. Also you can get the exact same benefit with about 10 etf dividend funds with far less risk than having 150 individual stocks.
I am 74. How I wish I had this financial advise presented so clearly years ago. My husband and I stumbled through investing and did a fair job but we could be so much better off if we had someone that presented this so clearly to our younger selves.
advice
I've got an average 50$ a month in spending money. How do I turn that into the 300+k a month in stocks I'd need?
I invest vymi, vym and vnq
Not individual stocks. ETFs that have 10% monthly dividends are out there.
I just need 2k a month in Div. with Social Security of 2.5k.
With the way things are moving ,I think I need to see a video on “how to survive amidst the present recession “.I mean everything in shambles
Surprisingly I heard people still make over a 100k within a few months ,and i’d like to know how and if it’s still possible in these times or am I being lazy
Lazy 🤑
Be careful about REITs and other real-estate based funds as they are highly sensitive to interest rates. Equities may be volatile, but if you go for a dividend aristocrat, even though the yield is not as juicy, you will be in more consistent passive income building situation
5600 DIV from TSLY in June, I am loving this ETF. Just 200,000 in TSLY will give you 12,270 shares at 0.81 shares is 9,939 a month. You could easily retire off of TSLY and yes the div will change each month but if you believe in Tesla going up then TSLY DIV will also go up! I am retired and all i care about is dividends!
Don’t forget Tesla is mainly a car company and it’s stock is falling, as you know. I worry it’s a ‘value’ trap like ATT or GE. BEST OF LUCK.
What about REIT's?
Random question, where do you get your shirts from?
random? i am pretty sure you asked that on purpose and for a reason
One thing my advisor pointed out to me was to factor in inflation. So if I want 5k/mo in today's value, what will that be when I want to retire? Same for my bills. It was annoyingly helpful.
Good point. The calculation should be based on how much you’ll need at retirement.
@@RootFP i figured out on how much money I need and how many stocks dividends companies I need to get I want to make $20k a month so I would need to invest in 12 monthly stocks dividends companies invest enough to make $750.00 in each 12 monthly stocks dividends companies now to make extra $11k to make up the $20k a month I need to invest in four different quarterly stocks dividends companies to make $2,750.00 so four times that amount is $11k quarterly four times a year so $9k plus $11k =$20k a month 50% monthly and 50% quarterly but for me cheap stocks dividends companies shares is the only way to go so that is $152k a year that's enough money for me
Wouldn’t the dividends rise with inflation, the stock value rises?
Great points. I’m trying to talk my daughter and her husband into investing in. Roth IRA before investing into a regular taxed account even for her emergency fund . For tax purposes because they can take initial money out penalty free and may not need it anyway. I’m my mind I’m thinking take advantage of tax breaks for as much as possible. Then open a regular taxed account. Am I right or wrong in my thinking please ?
You are correct! Get any matching 401k and HSA funds through work first. Then both need to max out their own Roth.
And try their best to never touch their Roth. The long term advantages are huge. It makes tax planning in retirement so much easier.
When you retire if your stocks held in a Roth produce dividends, they are or not taxed?
yes
If they are in a Roth, they are not taxed.
Svol 16%, Jepq 9.5% ….don’t need much to get 24k
I like these 2 etf. They pay monthly and see for about mid 50s. Jepq. Jepi. 10%
You need to take into account the impact of inflation. You calculated the size of a portfolio needed to generate 24,000 per year with a hypothetical 3.5% yield. In your first year, you would be close to being correct but if inflation was running at 7% in ten years you would need about double that amount to generate the same purchasing power.
Dividends have historically increased at a faster pace than inflation. It’s no guarantee for the future, but worth noting.
How about live off of interest? Savers are finally being rewarded. 5% CD’s and treasury bills with no risk of principle. 6% corporate bonds that are highly rated. TIPS at 2% plus inflation. 42/58 allocation. Interest from fixed income + dividends from stock allocation > expenses = a great nights sleep.
Yes, all well and good but what you have not covered is what happens when the stock go down. If you are reliant on this in order to have passive income or be able to retire then it’s not ideal as the stock are so volatile it would not be something that I would rely on.
It looks like the safer route is the dividend fund. what is the most efficient way to transition your portfolio as you approach retirement? gradually or just rip off the bandaid?
gradually
Why do dividends? Seems like investing in high performing stocks, and slowly selling those down to get your income would be a greater overall return?
because you have to sell them. run to your home, fall upon your knees, and re think your life.
New to this but would like to know where and how I can invest say $20k to start with. what web site do I look into investing in stocks that pay dividends. I would like to invest enough to make $1,000 to $1500 a month since I am already 76 years old and stable I would like to make that much to call vacation or fun money. I have at least $300k cash to totally get into it once I feel comfortable. Because of age i don't need long term investments since I already have a 401K which I pull 8% out of
TY
Fidelity and do ETFs instead of regular stocks. Less risk.
Like what you said about diversity of investments. Unless you have money to burn it is hard to rely on just one thing. Maybe in this case "diversity is our strength" could really be true.
those income amounts work nice if they're net after taxes. you're gonna need more income before taxes to get those net amounts, depending on your state. Unless my math is wrong?
For an easy example, let's say I want $7000 / month net, and I get $2000 / month from social security, I need $5,000 net per month more. So for the year, I get $24,000 from social security and need $60,000 in dividend income.
In my state, using those numbers, I have a pre-tax income of $80,000 - $12,679 (Federal and State taxes) = $67,321 net income after taxes, which is net $5,610.08 per month, not $7,000 / month I wanted.
To get $7,000 per month after taxes with $20,000 from social security per year, I'd need $84,000 pre-tax in dividend income = $104,000 - $19,339 (Fed & State taxes) = $84,661 annual income after taxes = $7,055.08 net income per month.
What am I missing?
Agreed tax needs to be taken into account.
Do we have to pay taxes on dividend income in retirement?
Yes. SS is taxable (up to 85%) at the federal level. SS may not be taxable at your state level. Our state does not tax SS.
What does it matter if the stocks pays out 10%-15% but the stock is tanking?
Because it's giving you a steady income stream even if the stock price goes down.
I want a balanced portfolio, with growth investments, safe investments, and also a focus on dividends to gain up to $20K monthly with minimal risk. is this your strategy sustainable?
VYM or VIG?
why not just put it all on a high income etf that's safe like SPYI?
i pity the fools who don't diversify
There is such a thing as Mutual Bond funds that pay 6% dividend monthly. Many are very boring with little to no share movement up or down. Very low share price and expense ratio.
Which?
You pay no tax on long term capital gains until a certain level. Your dividends and interests are charged as regular income EVEN IF they are reinvested. Hence I is always better to go for fast growing companies over stable high dividend companies.
Are we assuming SS will still exist when I retire?
yes
What are the quality companies that pay good dividends that are NOT subject to dropping in value when the FED decides inflation is to high and they raise rates?
Exxon Mobil Corp. (ticker: XOM)
Campbell Soup Co. (CPB)
Williams Cos. Inc. (WMB)
Coca-Cola Co. (KO)
Genuine Parts Co. (GPC)
Equinix Inc. (EQIX)
Cisco Systems Inc. (CSCO)
Texas Instruments Inc. (TXN)
Johnson & Johnson (JNJ)
you are welcome
What’s the portofolio that gives a 3% dividends, that’s already super high.
It needs to be more like 0.91% like what the s&p provides. Investing in high dividend stocks is dumb. Those stocks don’t appreciate and usually depreciate. Yeah you make more in dividends but you lose in net worth. I am turned off by high dividend stocks companies, they are trying to fill holes.
What’s the portofolio that gives a 3% dividends? why ask. you already know you don't want that
Treasury bills and I (eye) bonds need to be in the equation- backed by the USA guaranteed intrest !
Something people also forget is that if you have a million dollars for example in your portfolio and you're living off your dividends, you still have that million dollars. You could have no dividends and still make 40k a year for 25 years after retirement just by siphoning off your investments
not leaving anything to your kids, are you?
There's a major flaw with the premise of getting something from social security... if you're a millennial (1980) or younger you're probably not going to get much unless perhaps you earn a very high income and contribute quite a lot during your career or some very major reforms are successfully implemented.
Right. Because social security assumes you worked your ass off for many years, and millennials don’t do that.
this is for people who earn a very high income. this video was not made for you.
Well, its not exactly. Start deducting taxes and inflation. From the equity point of view, there is no difference between getting dividends or selling portions of ETFs you're holding in your portfolio, but there is from how this being taxed and dividends being taxed heavily, while in some countries selling portion of ETFs is 0% taxed.
i only need 500.00 a month dividend... how do i go about achieving that
Glad it was helpful!
$500 a month is $6,000 a year. Now divide $6,000 by your portfolio dividend yield (since we don’t have that info let’s say your yield is 3%) 6,000/0.03 = $200,000 dollars invested in that portfolio.
Don’t forget about the snowball effect which means you don’t have to invest $200,000 for your portfolio to be worth $200,000 but your trade off is time to get there.
@@HMJKS2000Thanks so much for the explanation.