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Old 11-01-2019, 03:45 PM   #21
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Originally Posted by pb4uski View Post
Sorry bud, you're wrong. Go back to the OP... the $1,600 came another post but the OP is only looking to generate $10-12k a year from a $315k IRA. ....
Yes, I was responding to Running_Man's post (which I quoted in that post, and follows here)...

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Originally Posted by Running_Man View Post
Duff and Phelps closed end fund DNP which is in the energy and utility sector with stocks bonds and MLP's will at present have a monthly distribution of $1,600 on your investment of $315,000, which would allow you to take $1,000 per month and reinvest the additional $600 per month into something more diversifying or perhaps buying an additional 45 shares per month of DNP (raising your net shares by about 2.3% per year). ....
OK, he also offered that you could perhaps reinvest those divs back into DNP. I just went with showing what happens if you take $1,600, inflation adjusted from DNP versus the broad indexes.

Any way you slice it, I'm just not a fan of sector investing (which DNP is), as it goes against diversification, which I believe is a very important aspect of investing (not speculating).

-ERD50
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Old 11-01-2019, 10:14 PM   #22
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....

Start the analysis in October 1987 and DNP portfolio today is at 1.2 million about 50% ahead of the VFINX portfolios. But nobody should ever expect a portfolio to hold on for 6% inflation adjusted over long term, but even in your scenario DNP did not fail until Year 34 from 1985 to 2018

https://www.portfoliovisualizer.com/...100&total3=100
I just grabbed all the history that was available, I didn't select any specific time frame.

So OK, DNP did better starting at OCT 1987. But the 'funny' thing is, if I move that start point by just one single month, from OCT 1987 to NOV 1987, the tables turn, and DNP is now down about $380,000 to $1,168,00 with higher std dev than either of the other portfolios. So the results can be quite sensitive to start-end dates.

And the 10 year analysis has DNP just slight ahead of 75/25, but with higher std dev. And if I tweak the AA to get closer to (but still above) DNP performance, the AA portfolio still had lower std dev than DNP.

All I'm saying is, I don't see an reason to think that DNP will provide anything over and above what a reasonable AA of broad index funds will produce. So why add sector and management risk?

-ERD50
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Old 11-04-2019, 08:55 AM   #23
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As usual, I am not MIA ... I am reading with great interest, trying to digest, thinking about what questions I have.

My question was meant as a general question--it doesn't mean I'd be opposed to bringing in MORE income from those funds, for sure!

I truly appreciate each and every response and private message that's been written. Keep talking--I'm learning!

The thing about how dividend income inside an IRA is taxed at a different rate than outside an IRA is completely new to me, so extra thanks to the person who posted that info.

Sometimes it's scary to post on these boards because it seems people assume that if you don't know as much as other posters, you're an idiot. Isn't that why we're here--to learn, and to help others?

FYI, I was raised with 5 siblings on a tiny farm in VT, where my father worked 2 jobs and milked 13 cows in order to support us. Having the amount of money I've been lucky/smart enough to put aside during my career in high tech is new to our family. My mom just stuck her money in a low-rate savings account after my father died and is living in fear of the day it's all gone. I want to "do it differently"--but sometimes it's quite terrifying when you don't know about all the tax laws, the income limits you have to manage, etc etc etc.

Thus why I'm still working ...
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Old 11-04-2019, 09:31 AM   #24
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As usual, I am not MIA ... I am reading with great interest, trying to digest, thinking about what questions I have.

My question was meant as a general question--it doesn't mean I'd be opposed to bringing in MORE income from those funds, for sure!

I truly appreciate each and every response and private message that's been written. Keep talking--I'm learning!

The thing about how dividend income inside an IRA is taxed at a different rate than outside an IRA is completely new to me, so extra thanks to the person who posted that info.

Sometimes it's scary to post on these boards because it seems people assume that if you don't know as much as other posters, you're an idiot. Isn't that why we're here--to learn, and to help others?

FYI, I was raised with 5 siblings on a tiny farm in VT, where my father worked 2 jobs and milked 13 cows in order to support us. Having the amount of money I've been lucky/smart enough to put aside during my career in high tech is new to our family. My mom just stuck her money in a low-rate savings account after my father died and is living in fear of the day it's all gone. I want to "do it differently"--but sometimes it's quite terrifying when you don't know about all the tax laws, the income limits you have to manage, etc etc etc.

Thus why I'm still working ...
If you're looking to learn, this is a good place to start: https://www.bogleheads.org/wiki/Bogl...g_start-up_kit
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Old 11-04-2019, 09:38 AM   #25
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.... The thing about how dividend income inside an IRA is taxed at a different rate than outside an IRA is completely new to me, so extra thanks to the person who posted that info. ...
To be clearer, look at the general case, it's not just "dividend income".

All withdrawals from a traditional IRA are taxed as regular income (at the Fed level, State taxes vary by State). There are no taxes on any income or gains that occur inside the IRA. Only the withdrawals are taxed. And when you make that withdrawal, it makes no difference if that money was increased or decreased by divs, int, or changes in price (up or down), of the holdings.

-ERD50
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Old 11-04-2019, 08:21 PM   #26
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The thing about how dividend income inside an IRA is taxed at a different rate than outside an IRA is completely new to me, ...
Actually, dividend income inside an IRA is not taxed at all.

The thing that is taxed is withdrawals from the IRA.
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Old 11-04-2019, 09:08 PM   #27
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Actually, dividend income inside an IRA is not taxed at all.

The thing that is taxed is withdrawals from the IRA.
I think it would be more precise to say that dividend income inside a traditional IRA is not taxed until it is withdrawn.... but it is ultimately taxed, just not until withdtrawn.

And you have to specify traditional IRA because dividends in a Roth IRA are not taxed at all.
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Old 11-08-2019, 04:40 PM   #28
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If you are comfortable with all your eggs in one basket, consider a blue chip stock. AT&T has consistently paid $0.50/share/quarter ($0.51/share/quarter this year). With today's close of $39.38, $315K would buy about 7998 shares. 7998 x $2.04/year = $16,315.92 in dividends.

You need to look at more than the "funds" and work out the risk/benefit in your situation. $16K/year versus $8K/year might be worth a bit of risk.

Perhaps look at some other relatively stable stocks?
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Old 11-08-2019, 04:50 PM   #29
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If you are comfortable with all your eggs in one basket, consider a blue chip stock. AT&T has consistently paid $0.50/share/quarter ($0.51/share/quarter this year). With today's close of $39.38, $315K would buy about 7998 shares. 7998 x $2.04/year = $16,315.92 in dividends.

You need to look at more than the "funds" and work out the risk/benefit in your situation. $16K/year versus $8K/year might be worth a bit of risk.

Perhaps look at some other relatively stable stocks?
GE and Citigroup were once blue chip stocks. I've owned both and got slammed by both when they cut their dividends. It's awful advice, IMO, to put all your eggs in one basket, because when that basket breaks, you've got nothing.
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Old 11-08-2019, 05:04 PM   #30
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If you are comfortable with all your eggs in one basket, consider a blue chip stock. ...
We should stop right there - no one in their right mind should be "comfortable" with all their money in a single stock, "blue chip", or otherwise. In other words, that is bad, terrible, awful advice. But considering your caveat, it applies to no one, so it isn't advice at all.


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If you are comfortable with all your eggs in one basket, consider a blue chip stock. AT&T has consistently paid $0.50/share/quarter ($0.51/share/quarter this year). With today's close of $39.38, $315K would buy about 7998 shares. 7998 x $2.04/year = $16,315.92 in dividends. ...
In the past 20 years, blue-chip AT&T was a terrible investment. Here is the total return of "T" (Port #2 in RED), compared to a 100% S&P index (Port #1 in BLUE) , and a 70/30 S&P and Total Bond (Port# 3 in YELLOW). T under-performs and has higher volatility. It stinks up the place.

Diversify, that is an extremely important rule.

http://bit.ly/2O6Mfij << short link to portfolio analyzer

-ERD50
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Old 11-08-2019, 05:05 PM   #31
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I'd like to have the IRA generate a passive income of $10k-$12k/year.

Is it possible to generate that kind of an income by putting the entire balance of $315K into a single income-producing mutual fund?



I have and like Vanguards Wellesley (Conservative ROTH IRA Mutual Fund) with approx. $210,000 and in 2018, it generated

4 quarterly dividends of
$1,200 March, $1,400 June, $1,400 Sept. and $1,700 Dec.
Plus Long term Capitol gains of $7,300

But those numbers can move around a bit.

The Previous year, 2017 there were $200 and $2,000 Short / Long CG
but the quarterly dividends were pretty close to 2018.

My more moderate fund, Wellington is similar, but dividends are a bit less, by a couple hundred, but I only have about 120K there, so halve those numbers.
I reinvest everything, but pay taxes on the Wellington Distributions, coz it's just my taxable mutual fund.
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Old 11-08-2019, 05:25 PM   #32
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I am tracking this thread because I am leaving megacorp (they don't even buy a retirement cake anymore) in January. I turn 59.5 in February and need to drive income until we collect social security at maybe age 64-66.

Two funds that I hold and find compelling at PONAX - a mutli-sector bund fund - and PFANX - which holds preferred securities and pays a quarterly distribution. I hold about 12% of our assets in PONAX and just a small position in PFANX, for now. I intend to make use of these two and a core bond fund like USIBX to drive income. These might be worth a look for the original poster.
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Three stocks to combine dividends and potential appreciation
Old 11-08-2019, 05:40 PM   #33
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Three stocks to combine dividends and potential appreciation

In my opinion, three stocks to look at:
-T (AT&T; is known for dividends)
-O (Realty Income Corp; provides monthly, 12 dividends/year)
-MSFT (Microsoft; 1 of 2 AAA rated stocks. Lowest dividend of these three but much stronger price increase ability)
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Old 11-08-2019, 05:51 PM   #34
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Originally Posted by ERD50 View Post
We should stop right there - no one in their right mind should be "comfortable" with all their money in a single stock, "blue chip", or otherwise. In other words, that is bad, terrible, awful advice. But considering your caveat, it applies to no one, so it isn't advice at all.




In the past 20 years, blue-chip AT&T was a terrible investment. Here is the total return of "T" (Port #2 in RED), compared to a 100% S&P index (Port #1 in BLUE) , and a 70/30 S&P and Total Bond (Port# 3 in YELLOW). T under-performs and has higher volatility. It stinks up the place.

Diversify, that is an extremely important rule.

http://bit.ly/2O6Mfij << short link to portfolio analyzer

-ERD50
which ATT? I assume after the baby bells were spun off.
how was the spin off lucent handled? Or are you just plotting the baby bell the was spun off in the 80's and later after the tech bust it bought ATT and took the name and ticker back.

GE and Westinghouse would be some good examples of why to diversify.
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Old 11-08-2019, 07:03 PM   #35
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To echo Running Man--with a twist--I have a brokerage account (after tax) with about 125K that throws off about 6000/year in dividends. There are 10 funds, 8 of them closed end funds. But as an after tax account, 3 of the funds are municipal bond Closed ends, which obviously wouldn't be appropriate in a 401k/IRA (two of them I bought 6 years ago after Meredith Whitney's book on doom in munis came out and they are up about 65% including the 4.5% yearly in yield they throw off).

One is Vanguard Total World stock ETF and another is the S&P High Dividend closed end.

But it is possible to achieve diversification in closed ends and also get a higher yield (due to leverage). The downside is that if you have to sell shares when the market is down, the leverage will bite you and some/many closed ends pay a yield that they do not earn, so the long-term value gets eaten by the boosted pay out (essential Return on Capital). And obviously taking out the yield rather than reinvesting will affect your returns; nothing is free.

I am putting excess withdrawals in this account from my 401k with a goal of eventually achieving 12-15k in distributions/year, then (in a few years) will start placing excess 401k/403b withdrawals in Roths. Most of the muni closed end distributions are not taxed, which is nice. In a 401k/IRA however they would be taxed as income, which defeats the purpose so obviously I would look at high yield or bond closed ends rather than muni closed ends.

I bought PDI in Feb after last year's correction (timing was almost perfect, but I can't take credit) and it is throwing off a +8% yield and is up about 19% total, although given the high premium now, I won't buy it next year in January. Some of its sister funds are at a much lower premium, so I might sell it and buy them.

The closed end world is tricky, to be sure.
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Old 11-08-2019, 09:34 PM   #36
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I have and like Vanguards Wellesley ....
That is a great recommendation for the OP... a conservative income fund... put the entire $315k in Wellesley with dividends and capital gains distributions reinvested and set up an automatic redemption of $1,000/month to your checking account.... set it and forget it other than to periodically increase the monthly amount for inflation.

According to Portfolio Visualizer, if you had done this 10 years ago that $315k, even after withdrawals adjusted for inflation, would be worth $677k at the end of October.

https://www.portfoliovisualizer.com/...ocation1_1=100
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Old 11-09-2019, 05:33 AM   #37
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The thing about how dividend income inside an IRA is taxed at a different rate than outside an IRA is completely new to me, so extra thanks to the person who posted that info.
It's more accurate to think of everything in the IRA now as something which will be Taxed at your tax rate when you receive the money. That means your withdrawals could end up being taxed at several rates, depending on other income you happen to receive in a given year.

This assumes the dollars you contributed we're within contribution limitations when you made them.
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Old 11-09-2019, 06:26 AM   #38
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Interesting. Thoughts on Pimco Income, PIMIX?

If I you compare it to VAN Wellesley that same time period it comes out on top. Or better yet if you include the 08/09 recession, so a 2007-2019 range the performance gap is even greater.

https://www.portfoliovisualizer.com/...ocation2_2=100

I am a huge fan of Vanguard products but have been struggling on the PIMIX fund when I stumbled on its performance - how much should I allocate, etc.. interestingly there seem to be few mentions of it or fans from what I can tell. Not sure why.


Quote:
Originally Posted by pb4uski View Post
That is a great recommendation for the OP... a conservative income fund... put the entire $315k in Wellesley with dividends and capital gains distributions reinvested and set up an automatic redemption of $1,000/month to your checking account.... set it and forget it other than to periodically increase the monthly amount for inflation.

According to Portfolio Visualizer, if you had done this 10 years ago that $315k, even after withdrawals adjusted for inflation, would be worth $677k at the end of October.

https://www.portfoliovisualizer.com/...ocation1_1=100
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Old 11-09-2019, 06:30 AM   #39
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I've had good luck investing in some of the Dividend Aristocrats. The Dividend Aristocrats are comprised of 57 of the S&P 500 stocks with 25+ years of consecutive dividend increases. The list is updated yearly and changes are very infrequent.


These stocks are priced high. You may want to wait a few months to see if they drop.
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Old 11-09-2019, 06:38 AM   #40
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Originally Posted by The HalfBreed View Post
I have and like Vanguards Wellesley (Conservative ROTH IRA Mutual Fund) with approx. $210,000 and in 2018, it generated

4 quarterly dividends of
$1,200 March, $1,400 June, $1,400 Sept. and $1,700 Dec.
Plus Long term Capitol gains of $7,300

But those numbers can move around a bit.

The Previous year, 2017 there were $200 and $2,000 Short / Long CG
but the quarterly dividends were pretty close to 2018.

My more moderate fund, Wellington is similar, but dividends are a bit less, by a couple hundred, but I only have about 120K there, so halve those numbers.
I reinvest everything, but pay taxes on the Wellington Distributions, coz it's just my taxable mutual fund.

My mother's story is very similar regarding Wellesley. She had never invested in the markets until 4 years ago after my dad's passing. Now, ever quarterly payout she is as happy as ever with what this fund has done to help her. I tell her if anything "bad" happens to me, stay the course with this fund. I think the OP could do much worst.
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