08-24-2019, 11:19 AM
(08-24-2019, 08:27 AM)fenders53 Wrote: I think I understand what you are up to. I am currently funding my cash buffer with dividends and conservative option premiums. My buffer is actually sitting in very short-term bonds as I don't need it until about 2022. I want to practice and see if I can maintain stability. I intend to fund it for two full years of draws before I attempt to completely stop working. This would gives me two years to react if my future income is going to decrease. I have other pensions so the dividend draw only determines if I live larger or not. I don't want to be forced to sell shares until later on in retirement.
Yes, now we are talking the same language. My cash buffer is actually seriously over funded at this moment but I'm planning on bringing it down to 2-3 years of expenses by investing the excess into the market slowly, or very aggressively if we do see a proper correction.
But this thread is really all about that stability of the cash buffer that you mentioned. About finding a way to calculate the withdrawal rate so that it matches your incoming cash flows, keeping that cash buffer at it's desired size through dividend raises, failed trades, sporadic lump sums etc. This 12-month trailing average cash flow is still work in progress but it certainly looks to be more promising than anything else I've found.
Btw I'd like to point out that, for the moment, I'm not taking the total value of my investments into account in any way as selling is not something I'm planning on doing anytime soon. I'm just focusing on the cash flows from my investments.