I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


Click to email CW8888 or Email ID : jacobng1@gmail.com



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Monday 14 October 2019

Can Dividend Investing Support AVERAGE Retirees Over Decades Of Inflation In Their Retirement Lifetime?


Uncle8888 has serious doubt as AVERAGE retiree; he can just depend on dividend investing to support his lifetime household expenses with yearly inflation.

Certainly; he needs more than just dividend investing strategy to be sustainable!

So you believe when you build an investment portfolio to generate the required dividend income to support your household expenses you can FIRE or retire?

Sure?

In long-term investing, your account size really matters - CW8888





8 comments:

  1. Ask Trainer at next dividend investing seminar to FIRE how?

    ReplyDelete
    Replies
    1. He will tell you leverage up & buy Reits! LOL!

      OK, we have the data to work out a possible local investor doing regular STI investing over the last 20 years. Singapore stocks are well known as being relatively high-yielding for a developed country.

      Based on MSCI, the total CAGR for Singapore large blue chips since Jan 1999 to Sep 2019 (20.75 years) is 7%. This is possible only if you re-invest your cash dividends.

      Let's say our fictional investor started in Jan 1999, and was able to RSP $6,000 every quarter into an STI index fund or ETF. He collects the cash dividends & re-invests in the next quarter RSP (this is important).

      By Sep 2019, his portfolio will hit just over $1.1M

      The current TTM dividend yield of STI ETF is 3.9%. Hence he's now getting about $43K per year or average $3.5+K per month.

      A simple but DISCIPLINED dividend investing to RETIRE is possible, but is NOT EARLY. Most likely the average investor will need to conscientiously invest even longer, say over 30 years, to have a safer & more sustainable retirement.

      Most people will koon & eyes glazed over if you tell them need 30 years of hard work & slogging & yes sir/no sir to boss. Hahaha!!!

      Delete
    2. This comment has been removed by the author.

      Delete
    3. Just a rough estimate....

      Invest $2K every month for 20 years = 480K capital
      Total shares accumulated = 207,350
      Average cost is about $2.30
      Market value (Sep 2019) = $646K


      Dividend $0.12 per share
      Total dividend for 2019 = $24.9K

      --------------

      In summary,

      Capital invested $480 over 20 years
      paper gain $166K (646 - 480)
      yearly dividend ~ $24.9K

      ----------

      Pro:

      1. Perpetual dividend ~5% on cost
      2. Potential capital gain
      3. Sleep well
      4. Legacy for next generation


      Con:
      1. Large investment base ($480k)
      2. Extreme patient and ride thru crisis

      Delete
  2. Can our yearly dividends grow at rate of inflation or more year on year during our retirement without the capability of more capital injection?

    ReplyDelete
  3. Luckily Singapore's general inflation has been very low for the past 20 years, roughly 1.7% or 1.8%. Next 20 years? Who knows?? LOL!

    But unluckily, Singapore doesn't really have many companies that consistently increase dividends for many years. Especially during recessions. The current STI ETF dividend yield is almost at an annual high in its history going back to 2008. In 2010, its div yield hit a low of 1.9%.

    The best way to overcome is to ensure the dividends at the start of your retirement is much more than your expenses. Extra dividends saved up to act as cash shield, or re-invested to (hopefully) further increase future dividends.

    Hence going back to the 30 years to build up a big enough portfolio, which is bad news for "average" investors wanting to FIRE ASAP ... but without wanting to take the years of hardships & risks in honing their investing kungfu.

    ReplyDelete
  4. Average savers who want to FIRE in their 30s and 40s better think harder and deeper to beat decades of inflation ahead of them. May have to accumulate few degrees north of million dollar of investment portfolio

    ReplyDelete
  5. Economical rice for two vege and steam fish or cod fillet easily cost 4+ to 7+ depending on location of stall.

    ReplyDelete

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