Read? Retirement Income for Life??? (7)
Reaching Financial Freedom
A piece of common wisdom we often read from financial or investment bloggers that reaching the edge of financial freedom is when our passive income from investment portfolio exceeds our living expenses.
Sure or not???
Can a portfolio full of high yield dividend stocks guarantee you a secure and sustainable future cash flow to overcome inflationary impact in your future living expenses?
In another word, is passive income from stocks a reliable source of income against future inflation?
No. Right?
Dividends from stocks are non-inflation proof. It can never be inflation adjusted by itself and that is why we must avoid this potential pitfall of relying on investment portfolio over-weighting in high yield dividend income stocks of high dividend payout ratio.
We must also be fully aware that all major categories of stocks will come in and out favour across market and economic cycles e.g. in low interest rate environment, leveraged returns like S-REITs will be in favour by yield hungry seeking investors. Most of us like to believe that we are really smart enough to exit when the time is nearer; but then wondering how come we are sitting on handful of high paper losses stocks coming from the last Bull market?
To secure a sustainable retirement income for life, we have to switch our investing mind to think in term of cash flow instead of passive income.
Read what Uncle8888 wrote in Mar 2011 when the Bull was running wild. Like now???
Passive Income?
Add-on for your sustainable retirement income for life
Secure and sustainable retirement income for life = Cash Flow
Cash Flow = Passive Income + Asset Drawn-down + Growth Investment Portfolio
The model will look like this:
Posts
No comments:
Post a Comment