03-03-2021, 01:33 AM
Indeed a great thread.
I've been thinking about this a bit lately, and I came to the conclusion that while I absolutely cannot reduce the portfolio value with withdrawals (too long of a retirement time... hopefully), with a 10% average dividend growth for the portfolio, and inflation being around 2% (average), I should be able to comfortably sell 2% or 3% of my portfolio every year. (in addition to withdrawing the dividends)
The dividend growth would account for the inflation and the tiny reduction in share count, so even while selling 2% yearly from my portfolio my buying power from dividend income should still increase slightly on average.
And the additional 2% of total portfolio value would be quite a handsome addition to my budget... my portfolio currently yields around 3.5% so that would increase my income by over 50%, with the downside of limiting buying power growth.
This is my strategy for potentially withdrawing tiny amounts annually without completely compromising inflation adjusted dividend growth. It works in theory, as long as my holdings keep bumping up the dividend and inflation doesn't skyrocket.
I've been thinking about this a bit lately, and I came to the conclusion that while I absolutely cannot reduce the portfolio value with withdrawals (too long of a retirement time... hopefully), with a 10% average dividend growth for the portfolio, and inflation being around 2% (average), I should be able to comfortably sell 2% or 3% of my portfolio every year. (in addition to withdrawing the dividends)
The dividend growth would account for the inflation and the tiny reduction in share count, so even while selling 2% yearly from my portfolio my buying power from dividend income should still increase slightly on average.
And the additional 2% of total portfolio value would be quite a handsome addition to my budget... my portfolio currently yields around 3.5% so that would increase my income by over 50%, with the downside of limiting buying power growth.
This is my strategy for potentially withdrawing tiny amounts annually without completely compromising inflation adjusted dividend growth. It works in theory, as long as my holdings keep bumping up the dividend and inflation doesn't skyrocket.