Retirement Income Portfolio at end of September

Three months ago, at the end of June, I posted a quickly assembled million dollar retirement portfolio with the goal of realizing an income of $40,000 annually at the outset. 

It was quite a success in its first few weeks but lately it has been losing money at a very fast rate. It is ending the month of Sept. down $32,244.54.

Am I panicked? No. The market is volatile. There are no surprises here. Heck, in a correcting market one would expect to see a loss of $100,000 or more. And if a bear market were to appear, a loss of double that would be reasonable: $200,000.

As I have no reason to sell, the losses are all on paper. On the other hand, the dividend income is real and on October first I will be withdrawing $3,333.33 just as a retired senior would. This will leave more than $2300 towards the November payment.

You might not agree but in my estimation this portfolio is a success. To see the complete portfolio, click this LINK.

Why do I invest in the market?

With the market looking as if it could lose another one percent in value today, it is a good time to examine why I invest. It is not complicated. One, I need income to live in retirement and two I would like my personal worth to increase in value over time.

To illustrate what happens to a retirement portfolio over time, I created and posted a portfolio based on my investment beliefs. In the few months it has existed, it has lost almost $22,500. Ouch!

That my seem like a lot, and it is, the loss is not the whole story. At one time, this portfolio was up a little more than $50,000. That means one could argue that this portfolio is down about $75,000 from its recent highs. Looked at like this, it kinda takes your breath away, right?

On the other hand, we are taking a full four percent out of this fund annually in twelve monthly payments of $3,333.33. So, even though the portfolio may be shrinking in value, it is still able to meet the demands for monthly cash payments. In the real world a portfolio like the one posted would have only lost value on paper. Paper losses have a way of disappearing over time.

So, the example of a retirement portfolio posted in late June is meeting one of my two goals. It is delivering monthly income. As for delivering capital gain, the voting is still out. As the market tends to grow more than it shrinks, it grows approximately 65-70% of the time, if we continue to hold, eventually we should come out on top. This period of racking up loses should come to an end shortly.

Stay tuned to see how this unfolds.

Retirement Portfolio Dips Into Red

How easy is it to generate a steady income from a fully-investment retirement portfolio? Well, if you follow this blog, soon we will both know as I have posted my own take at creating such a portfolio.

It has been a bumpy ride. I was up more than $50,000 at one point but I have an updated balance this week which is slightly in the red. Ouch! But, it is not as bad as it looks. I believe I will be able to withdraw a full $3,333.33 at the beginning of this and every month, emulating the withdrawals that must be made in retirement.

So, how much am I down? Approximately $10,000 or one percent. This is hardly worth concern. Come back in a week to get updated. The portfolio might be in the black by then. One can only hope. Cheers!

My retirement portfolio is holding in there

It is halfway through September and the portfolio I posted showing how easy it is to design a successful retirement portfolio was up $17,889.73 at the close.

I should note that I removed $3,333.33 at the first of September. If this were an actual income portfolio in its first year, it would have had to stand up to the stress of having four percent of its value deducted spread out over 12 monthly withdrawals.

Click on My latest crack at a "Retirement Portfolio" to see the entire portfolio. Come back at the end of the month for an update.

A Retirement Portfolio Designed for Dividends

How hard can it be to design a good stock portfolio capable of pumping out four percent in dividend income annually? Back in late June, June 25th to be exact, I did jut that. I designed what I hoped would be a portfolio up to the task and I posted it for all to see. Now, to sit back and see it praised or criticized depending on its performance.

I started my portfolio with an initial one million dollars. From personal experience, I believe this is a reasonable starting value. I will do more work on this in the coming months. If I have to lower the initial value of my example portfolio, I will.

I am withdrawing four percent in the first year: $40,000 annually or $3,333.33 at the start of every month. I made my first withdrawal in August. I let the first month, July, slip by as I wanted to build up a little cash before entering the withdraw stage. I filled the portfolio in June, I did not try to time the market, and so dividends began accumulating immediately.

Today, September 5, 2023, the retirement income portfolio is worth $1,008,083.36 after the withdrawal of $6,666.66 in two months (August and September). At this rate, at the end of 12 months, I will have withdrawn a full four percent in cash and the portfolio will have enjoyed a capital gain of 4.85%. Nice. Will this really come to pass. We will see.

To see the portfolio in its entirety, please click:

My latest crack at a "Retirement Portfolio"

Retirement portfolio monthly payment coming Tuesday

One can find literally dozens of investment suggestions on the Internet. Many of these are from very fine sources. Many of these I have followed. I found that many of these posts shared a lot when it came to the investment advice offered. I decided I might be able to do as well as the legion of online experts I was following.

I designed a million dollar portfolio for a retiring senior and immediately put my ideas into action. Why immediately? Because one should not try to time the market, right?

Come back this Tuesday and I will reveal how my imaginary portfolio is performing. I have withdrawn one monthly payment of $3333 already and come Tuesday I will remove a second monthly payment of $3333.

See you Tuesday. Have a good holiday weekend. Cheers!

Another reason for investing in dividend-paying stocks

TD WebBroker has a page called Market News. I like to check it every morning. Today, I found the following:

"Dividend stocks are a better investment than income properties": BMO economist

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Continuing a theme from earlier this month, BMO senior economist Robert Kavcic compares the yield from fixed income and dividend stocks to an income property,

“The economics of real estate investment get tough on a relative basis given that investors can secure a better yield in dividend stocks, or sit tight in risk-free cash/government bonds. The comparison to dividend stocks is an especially interesting one because both offer long-term capital appreciation potential, and both will see their payouts grow over time at least in-line with inflation. But, dividend investors also benefit from a much lower tax burden; they have access to instant and partial liquidity; and face minimal transaction costs. At the same time, payout risk is generally low compared to rental laws that are tilted heavily in favour of the tenant, along with inefficient backlogs at the Landlord and Tenant Board. Real estate investment should command a risk premium (which it historically has), but current pricing does not offer one” "

I am reposted the above because I am a dividend investor. Many folk see problems with dividend investing and in some cases I agree with them and their criticisms. But I am an older, retired gentleman. In my position, dividends are far more important than they were some decades ago. The steady and increasing income flow keeps the financial wolf from my door. 

I feel somewhat vindicated after reading the Scott Barlow post.