04-29-2015, 11:27 PM
(This post was last modified: 04-30-2015, 01:24 AM by Dividend Watcher.)
Paul, I'm glad I was able to help a little. I was afraid I was being a little too presumptuous.
It's not necessary to have a "nice plan" right from the start. The one I posted in one of those threads was the 3rd or 4th iteration of mine. I think you'll find that as you learn more, you'll adapt it to align with your goals and what makes sense to you. It doesn't have to look like anybody else's either. The important part is to have some idea in your mind what you want to accomplish and how you're going to get there. Actually, not in your mind. Written down seems the most psychologically effective means of reinforcing your goals and how you're going to get there; hence the "business plan" for your portfolio.
As to the mutual funds, I haven't looked at funds seriously in years so I don't know much about the ones you mentioned. I'm sure others can chime in. Often that's all you have to choose from in pensions/40k(k)s so you make do with the best choices available to you.
Let's see, $1k/month for 20 years gets you $240,000. Given a safe and reasonable 3.5% yield on your investments just on that will get you $8,400/year. But that's excluding reinvested dividends, the growth of principal and dividends and also compounding. As Billy Mays used to say, "But wait, there's more!" (As an aside, and I couldn't get it out of my head writing this, Willie Mays used to say "Say hey!" God my mind really wanders at times.)
Let's assume over those 20 years, the value (price) of those stocks increase at 6%/year on average. Add to that a 3% dividend yield which can easily be reached over a few years or judicious picks of companies. That gives about 9% return per year. Pretty conservative numbers in my opinion. Pull out the spreadsheet and use the future value (FV) function. At $12,000/year for 20 years you end up with about $613,000. If you assume you'll be getting about 3.5% yield at the end of those 20 years -- meaning you won't have to increase your risks reaching for yield -- you'll be putting $21,455/year in your pocket. Bump that up to 10% per year appreciation and a 3.75% final yield ends up with $25,762 falling into your pocket annually at the end of 20 years. So can you reach your $30k/year goal? I believe it could be highly probable and might be a realistic goal for yourself. I used some pretty conservative numbers. You can set goal posts along the way to see how you're progressing and adjust as needed.
Hope that gives you some food for thought.
(04-29-2015, 05:25 PM)stewardinlife Wrote: But before I fully draw out a nice plan, I want to clarify some of the queries you have for me.
It's not necessary to have a "nice plan" right from the start. The one I posted in one of those threads was the 3rd or 4th iteration of mine. I think you'll find that as you learn more, you'll adapt it to align with your goals and what makes sense to you. It doesn't have to look like anybody else's either. The important part is to have some idea in your mind what you want to accomplish and how you're going to get there. Actually, not in your mind. Written down seems the most psychologically effective means of reinforcing your goals and how you're going to get there; hence the "business plan" for your portfolio.
As to the mutual funds, I haven't looked at funds seriously in years so I don't know much about the ones you mentioned. I'm sure others can chime in. Often that's all you have to choose from in pensions/40k(k)s so you make do with the best choices available to you.
(04-29-2015, 05:25 PM)stewardinlife Wrote: I am wanting to see if I can generate around at least 30K in income from DGI in about 15 - 20 years. I do want to contribute 1K/month (or more as I see fit). Am I reasonable in my expectation, or totally off. Is it possible to achieve this?
Let's see, $1k/month for 20 years gets you $240,000. Given a safe and reasonable 3.5% yield on your investments just on that will get you $8,400/year. But that's excluding reinvested dividends, the growth of principal and dividends and also compounding. As Billy Mays used to say, "But wait, there's more!" (As an aside, and I couldn't get it out of my head writing this, Willie Mays used to say "Say hey!" God my mind really wanders at times.)
Let's assume over those 20 years, the value (price) of those stocks increase at 6%/year on average. Add to that a 3% dividend yield which can easily be reached over a few years or judicious picks of companies. That gives about 9% return per year. Pretty conservative numbers in my opinion. Pull out the spreadsheet and use the future value (FV) function. At $12,000/year for 20 years you end up with about $613,000. If you assume you'll be getting about 3.5% yield at the end of those 20 years -- meaning you won't have to increase your risks reaching for yield -- you'll be putting $21,455/year in your pocket. Bump that up to 10% per year appreciation and a 3.75% final yield ends up with $25,762 falling into your pocket annually at the end of 20 years. So can you reach your $30k/year goal? I believe it could be highly probable and might be a realistic goal for yourself. I used some pretty conservative numbers. You can set goal posts along the way to see how you're progressing and adjust as needed.
Hope that gives you some food for thought.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan