Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
so in an extended downturn i assume you would withdraw from the pie proportionately keeping your exact allocations ? trying not to sell equities by selling other components would change your allocations across the board , yes ?
I no longer sell bonds to buy equities, only rebalance from equities into bonds. So, in a downturn, equities are way below their allocation anyway so there is no "trying to not sell equities", it just works out that bonds are over-allocated so that is what gets sold to generate a withdrawal.
Mathjak wrote: "keep in mind any dividends you get can also be duplicated with better tax efficiency from a total portfolio that receives little in dividends just by selling off a bit of gains .
I don't understand what that means. Can you explain it more simply?
Let us suppose that you wanted 4% to live on first year. So you buy 100k in stock.
You could buy any of the highest yielding dow stocks and get 4% in income. If you are taxed you will be taxed on 4k.
If that stock went up at least 4% you will have 100k left a 4 k dividend and a tax bill on 4k
But if you had a non dividend payer stock go up you could sell off a portion and you are taxed only on your gain which may not be as much as that 4k div which is taxed in its
entirety.
Let us suppose that you wanted 4% to live on first year. So you buy 100k in stock.
You could buy any of the highest yielding dow stocks and get 4% in income. If you are taxed you will be taxed on 4k.
If that stock went up at least 4% you will have 100k left a 4 k dividend and a tax bill on 4k
But if you had a non dividend payer stock go up you could sell off a portion and you are taxed only on your gain which may not be as much as that 4k div which is taxed in its
entirety.
That is clear as mud!. LOL It might be easier if you explained what stocks or bonds from the highest yielding Dow stocks and what stocks/bonds once purchased is taxed in its entirety.
I thought and this is how I imagined it that if the money was in the bank or brokerage account you would only be paying taxes on the increase or dividend. If it is in a designated retirement account (IRA/401k/403b and others) the only time tax is administered is when you withdraw from it.
I know that if you have funds in municipal bonds and government treasuries taxes are assessed at a lower rate if at all.
Taxes are a personal deal. Some may pay zero taxes in a brokerage account. Some may pay zero taxes in a roth .
Others will defer taxes and pay regular income tax rates while others may pay capital gain rates which run from 15-24% .
So taxes are a mixed bag . But if you are going to be taxed in a brokerage account, a dividend is taxed on the full amount. If i pull the same dollars out of a non dividend paying portfolio from that brokerage account i only get taxed on the gain portion not the full amount of what i took.
Assuming the same total return on both investments creating your own dividend vs them doing it for you can be more tax efficient for this reason
Last edited by mathjak107; 04-26-2017 at 04:11 AM..
Taxes are a personal deal. Some may pay zero taxes in a brokerage account. Some may pay zero taxes in a roth .
Others will defer taxes and pay regular income tax rates while others may pay capital gain rates which run from 15-24% .
So taxes are a mixed bag . But if you are going to be taxed in a brokerage account, a dividend is taxed on the full amount. If i pull the same dollars out of a non dividend paying portfolio from that brokerage account i only get taxed on the gain portion not the full amount of what i took.
Assuming the same total return on both investments creating your own dividend vs them doing it for you can be more tax efficient for this reason
thank you. That is much clearer. Sometimes it is difficult to explain technical terms to non-technical minds.
Please count this ( ) as your rep point because I don't want to waste it on something you had to explain twice.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) as your rep point because I don't want to waste it on something you had to explain twice. 
