Million Dollar Portfolio Yields $77,400 annually

What if I sold everything in my Million Dollar Portfolio Demo? Why would I do that? Two reasons: One, it now has more than a quarter of a million dollars in unrealized gains. And two, the dividend income is now below 3% when calculated on the most recent values. Fisher Investments Canada will be saying, "Told you so!"

This brings us to my latest brain wave: Sell everything in order to let it all ride on ZPAY. If this sounds risky, if this sounds more akin to gambling than investing, it may well be just that: risky and a bit of a gamble.

I created a new demo portfolio based on selling my Million Dollar Portfolio, paying all the associated costs and buying 40,314 units of the BMO ZPAY exchange traded fund. This action cost me hundreds of dollars in fees but I think it may be a wise if risky move. Why? My gut tells me that in a downturn, ZPAY will not lose more than a quarter of a million. If my gut is right, my original principal is safe.

ZPAY yields 6.31% annually or $1.92/unit annually or 16-cents/unit monthly. That gives an income of $77,402.88 annually. At the moment, I am removing $3330 every month to emulate the money that a retiree would expect to realize in order to help cover  his or her monthly expenses in retirement.

Here is how I see this gambit playing out at the moment. ZPAY yields $6450.24 monthly. $3330 is removed from this amount to pay bills in retirement. The remainder, $3120.24, is used to buy some good, dividend paying stock like BCE. After 12 months I have more than $37,400 in stock. (With such a large portfolio, it might be possible to work out a reduced trading fee. I'd certainly contact TD WebBroker and have a chat with a supervisor.)

Why would I even contemplate making such an extreme move? Equities reward an investor with more capital gains then ZPAY and spreading the risk is never a bad idea and owning a mess of stocks and ETFs certainly spreads out the risk. Yet, on the other side, ZPAY is not just one investment but a mix. This is par for the course when it comes to ETFs. ZPAY may not be quite as single-minded a play as it appears. And ZPAY will make the 4% withdrawal easy.

I will try to never remove less than $3330 per month and, if the portfolio increases in value, I will recalculate the withdrawal every January if necessary and increase the withdrawal rate back up to 4%.

• June 22, 2021 -- $1,227,172.71 after paying all the buy/sell associated fees (Almost immediately after I made my purchase, my ZPAY demo investment dropped several thousand dollars. Ouch!)
• June 26, 2021 -- $1,224,350.73. Despite making $1209.42 today I am still down thousands in just days.
• June 28, 2012 -- $1,227,575.95. This is after withdrawing the July $3,330 payment.
  

Oh, the original portfolio is still intact and functioning for comparison.