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Old 04-25-2014, 06:02 AM
 
Location: Saint Johns, FL
1,192 posts, read 942,423 times
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Kelly, I don't believe you have answered the key question (in my mind). Is the annual income produced by your investments without selling anything generating $24,000? So basically do the dividends or bond payments add up to $24,000?

If they do, you are ok and can just withdraw the earnings and not touch the principle.

But if you have to sell some of the investments to reach your $24,000, I would say you don't have enough.
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Old 04-25-2014, 06:20 AM
 
10,817 posts, read 8,063,256 times
Reputation: 17025
Quote:
Originally Posted by Newporttom View Post
Kelly, I don't believe you have answered the key question (in my mind). Is the annual income produced by your investments without selling anything generating $24,000? So basically do the dividends or bond payments add up to $24,000?

If they do, you are ok and can just withdraw the earnings and not touch the principle.

But if you have to sell some of the investments to reach your $24,000, I would say you don't have enough.
Yes - if she plans to cash in assets and depend upon appreciation to offset the withdrawals, that's a non-starter imo.
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Old 04-25-2014, 10:05 AM
 
8,080 posts, read 13,462,215 times
Reputation: 10322
Quote:
Originally Posted by Newporttom View Post
Kelly, I don't believe you have answered the key question (in my mind). Is the annual income produced by your investments without selling anything generating $24,000? So basically do the dividends or bond payments add up to $24,000?

If they do, you are ok and can just withdraw the earnings and not touch the principle.

But if you have to sell some of the investments to reach your $24,000, I would say you don't have enough.
My investments are not set up that way with dividends. I have a moderately aggressive portfolio and each year will have different returns...Some years there are losses even....
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Old 04-25-2014, 10:26 PM
 
Location: Saint Johns, FL
1,192 posts, read 942,423 times
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Then I wouldn't do it. (and I would switch my investments so they start earning income)
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Old 04-25-2014, 11:27 PM
 
8,080 posts, read 13,462,215 times
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Quote:
Originally Posted by Newporttom View Post
Then I wouldn't do it. (and I would switch my investments so they start earning income)
They earn interest ...works for me ...
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Old 04-26-2014, 02:46 AM
 
71,559 posts, read 71,730,589 times
Reputation: 49156
Quote:
Originally Posted by Newporttom View Post
Kelly, I don't believe you have answered the key question (in my mind). Is the annual income produced by your investments without selling anything generating $24,000? So basically do the dividends or bond payments add up to $24,000?

If they do, you are ok and can just withdraw the earnings and not touch the principle.

But if you have to sell some of the investments to reach your $24,000, I would say you don't have enough.
another fallacy:

in effect you are selling when a dividend is paid out. a stock is no different than a mutual fund . when a dividend is paid out each quarter and not reinvested the stock price is reduced by the amount of the dividend . it is the exchange rules and is done automatically by exchange computers.

it is no different than you selling a piece off except there is no commission and the company is doing it for you. if they do it you get cash and your remaining shares get set back to a lower price , if you do it you get cash and your remaining shares are less shares but without a price set back. it equals the same thing..

a dividend is NOT like bank interest where it is simply added on to principal. for every pay out there is a share price reduction to match..

there is noooo difference between a stock that has a total return of 9% made up of 2% dividend and 6% growth vs 9% growth as an example.

http://finra.complinet.com/en/displa...t=split#r12208

Last edited by mathjak107; 04-26-2014 at 03:50 AM..
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Old 04-26-2014, 04:12 AM
 
Location: Vermont
1,018 posts, read 1,420,586 times
Reputation: 1994
To not overly complicate things, here's my advice. Using 4% as a GUIDE, if that is just enough to live on then, no, you shouldn't quit. I'd rather work a few years more and KNOW I'd never have to work again than be forced back to work because of financial reasons.
The other option is to take a year off and test drive your plan. If you're comfortable with it financially and mentally, then by all means, carry on.
Mathjak's posts are really good information if you choose to dig that deep. They've been an eye opener for me and greatly aided in my own planning. However, and this is no slight to you Mathjak, most people read them and their eyes start to glaze over. It's way more involved than they want to be. Kind of like having your car mechanic explain in great detail the problems with your car. Gearheads listen attentively while everyone else is thinking "just fix the damn car". The point is, if you're not willing to get that involved with your finances, then many times it's worth it to hire someone who is.

Cheers!
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Old 04-26-2014, 04:15 AM
 
71,559 posts, read 71,730,589 times
Reputation: 49156
thanks, the truth is this stuff is so much more complex and filled with so much mis-understanding that it really is hard to simplify it down to a point where it is easily understood..

which shows you more often than not most folks have little understanding of it and should not be trying to plan something as important and complex as their retirement based on what they think they know.

they should be either seeking help or learning more . just based on the mis-understanding folks have had about what the 4% rule they speak of represents should be reason enough not to run with believing your own bull-sh%t as it is called.

folks want the best lawyers , the best doctors but when it comes to their own financial future and planning they rather run on mis-information and myth rather than spend a dime or the time to actually get help or learn.

today one needs nothing more than to just watch a good show like consuelo mac or read some of the work from DR WADE PFAU, BILL BERNSTEIN OR MICHAEL KITCES to have a very good understanding of what is what and how to at least start out at the gate with odds on your side.
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Old 04-26-2014, 06:42 AM
 
6,313 posts, read 5,055,910 times
Reputation: 12820
Quote:
Originally Posted by harpoonalt View Post
To not overly complicate things, here's my advice. Using 4% as a GUIDE, if that is just enough to live on then, no, you shouldn't quit. I'd rather work a few years more and KNOW I'd never have to work again than be forced back to work because of financial reasons.
The other option is to take a year off and test drive your plan. If you're comfortable with it financially and mentally, then by all means, carry on.
Mathjak's posts are really good information if you choose to dig that deep. They've been an eye opener for me and greatly aided in my own planning. However, and this is no slight to you Mathjak, most people read them and their eyes start to glaze over. It's way more involved than they want to be. Kind of like having your car mechanic explain in great detail the problems with your car. Gearheads listen attentively while everyone else is thinking "just fix the damn car". The point is, if you're not willing to get that involved with your finances, then many times it's worth it to hire someone who is.

Cheers!
The one year test drive is a good idea.
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