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01-15-2015, 07:39 AM
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#1
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Recycles dryer sheets
Join Date: Oct 2014
Posts: 57
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What is your "yield"
I'm trying to get an idea of what a reasonable "yield" is on my investment portfolio. By that I mean income (dividend & interest) over value (not yield on cost) of your overall investment portfolio (which for me excludes emergency cash and checking account balance). Last year my yield was just below 2%. That sounds reasonable to me because I am still 10 years from our FIRE goal and I am 70/30 stocks/fixed income. I have no particular focus on dividend stocks or high income investments.
In the future, I would like to get more income from our portfolio, so I'm curious what other people have been able to achieve.
Thanks in advance.
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01-15-2015, 08:06 AM
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#2
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Recycles dryer sheets
Join Date: Aug 2009
Location: Vancouver/Gulf Islands/Baja
Posts: 479
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About 6%.
__________________
Retired at 42... the world is my oyster, and I am now in the process of shucking the hell out of it.
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01-15-2015, 08:30 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,871
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Quote:
Originally Posted by phil70
I'm trying to get an idea of what a reasonable "yield" is on my investment portfolio. By that I mean income (dividend & interest) over value (not yield on cost) of your overall investment portfolio (which for me excludes emergency cash and checking account balance). Last year my yield was just below 2%. That sounds reasonable to me because I am still 10 years from our FIRE goal and I am 70/30 stocks/fixed income. I have no particular focus on dividend stocks or high income investments.
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We have a standard boglehead portfolio. Looking at divs on total market equities and intermediate bond funds, something near 2% is to be expected.
Quote:
In the future, I would like to get more income from our portfolio
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Why?
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01-15-2015, 08:32 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,339
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It would take a while to figure it out exactly but it's somewhere between 2.2-2.5%
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01-15-2015, 08:34 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Location: Seattle
Posts: 5,981
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Quote:
Originally Posted by Sea Kayaker
About 6%.
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Junk bonds?
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01-15-2015, 08:38 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,495
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Quote:
Originally Posted by aaronc879
It would take a while to figure it out exactly but it's somewhere between 2.2-2.5%
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Same answer!
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01-15-2015, 08:45 AM
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#7
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Recycles dryer sheets
Join Date: Oct 2014
Posts: 57
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Quote:
Originally Posted by mrfeh
We have a standard boglehead portfolio. Looking at divs on total market equities and intermediate bond funds, something near 2% is to be expected.
Why?
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Long story short, income should mitigate against "sequence of returns risk" in the draw down phase. If for example, I have a 3% withdrawal rate built in to my plan, and have 2% income, that reduces sequence of return problem in comparison to a portfolio that is more dependent on capital gains. Well, that's my thinking anyway.
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01-15-2015, 08:46 AM
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#8
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Recycles dryer sheets
Join Date: Oct 2014
Posts: 57
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Quote:
Originally Posted by Fermion
Junk bonds?
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Same question here. That's a lot of income!
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01-15-2015, 08:59 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,871
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Quote:
Originally Posted by phil70
Long story short, income should mitigate against "sequence of returns risk" in the draw down phase. If for example, I have a 3% withdrawal rate built in to my plan, and have 2% income, that reduces sequence of return problem in comparison to a portfolio that is more dependent on capital gains. Well, that's my thinking anyway.
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Can you explain why you think this? For equities, there is no difference between receiving a dividend of 2% and selling 2% of your shares, other than the fact that by selling shares your taxes are reduced.
For fixed income, you can reach for more yield, but that increases risk.
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01-15-2015, 09:13 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,271
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7.3%
rentals, hard money loans mostly
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01-15-2015, 09:13 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,865
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We're not including capital gains, right? I've watched this number for many years, and for me it is consistently near 2.5%.
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01-15-2015, 09:31 AM
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#12
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,157
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Somewhere between 2 and 3%
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01-15-2015, 09:40 AM
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#13
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Dryer sheet aficionado
Join Date: Apr 2010
Location: omaha
Posts: 33
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2.74% on 70/30 mix..........4 yrs into ER
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01-15-2015, 09:52 AM
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#14
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Recycles dryer sheets
Join Date: Oct 2014
Posts: 57
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Quote:
Originally Posted by mrfeh
Can you explain why you think this? For equities, there is no difference between receiving a dividend of 2% and selling 2% of your shares, other than the fact that by selling shares your taxes are reduced.
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The sequence of returns risk makes the difference. If I have to support myself by selling 3 or 4% of my portfolio every year, I am at greater risk of outliving my funds if the first few years of my retirement are like 2008 or 1929. If I am earning 3% in income, never have to sell a security, no sequence of returns risk. The market value of my income producing investments may decrease as well, but if I don't have to sell then I will do better when the market rebounds.
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01-15-2015, 10:07 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,871
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Quote:
Originally Posted by phil70
The sequence of returns risk makes the difference. If I have to support myself by selling 3 or 4% of my portfolio every year, I am at greater risk of outliving my funds if the first few years of my retirement are like 2008 or 1929. If I am earning 3% in income, never have to sell a security, no sequence of returns risk. The market value of my income producing investments may decrease as well, but if I don't have to sell then I will do better when the market rebounds.
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Not selling shares does not eliminate the sequence of returns risk.
What's the difference between owning 100 shares at $50 vs owning 50 shares at $100?
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01-15-2015, 10:17 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Texas
Posts: 3,024
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Excluding cash, my average yield is 2.9%. This is probably a bit higher than most 60/40 AAs, due to 15% real estate and 5% high-yield bonds. Also, average duration in the bond portfolio is 5.9, due to a fairly large position in LQD. The equity portfolio yields right at 2.0%.
__________________
Retired at 52 in July 2013. On to better things...
AA: 85/15 WR: 2.7% SI: 2 pensions, SS later
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01-15-2015, 10:30 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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~2.5%
__________________
Have Funds, Will Retire
...not doing anything of true substance...
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01-15-2015, 11:00 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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Quote:
Originally Posted by GrayHare
We're not including capital gains, right? I've watched this number for many years, and for me it is consistently near 2.5%.
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I think some folks don't know the difference, which is why I take the reported "yields" with a grain of salt.
__________________
Retired since summer 1999.
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01-15-2015, 12:22 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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Excluding capital gains distributions its around 3%.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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01-15-2015, 12:28 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,150
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Wow, I must be doing something wrong if others are getting 6-7.3% in yield alone. Yes I know it's possible but
Last year my total return was only 5.9% (Intl, VGELX & Short Term Bonds hurt overall). Of that 3.1% was appreciation and 2.8% yield (dividends/STCGs).
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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