Could the total return folks clarify something for me please? Do you reinvest your dividends and CG in your taxable accounts and then afterwards sell the shares that you need to for your living expenses? I've been trying to wrap my head around that and having a great deal of difficulty.
Here's what I plan to do.
Reinvest all dividends and sell annually to rebalance.
So lets say I'm 60/40 vti/bnd... Hypothetically to make it simple
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On Jan 1st or whenever I look at my spending balance. My planned annual spend is 120k...
So lets say in the last year I spent 100 and inflation adjusts it to 125k.
That means I'd need 105k to get back to "full" for next year's budget.
Let's say the portfolio drifted to 65/35... Then I would sell VTI to get that 105k.
If that gets me to 63/37, then I'd sell an addition 3% (at the same time) and reinvest it into bnd.
Let's say the drift is only 61/39 and selling 1% only gets me to 80k.. then I'd sell equally from both beyond that to get to 60/40 again.
Does that make sense?
I thought about doing dividends and if I did that I'd divert the dividends into my "spending" account and use that. If it runs short then I'd sell to rebalance... If it's too much I'd plow it back in at the rebalance period.
The reason I decided to not plan on doing this is that because of my personality it'll tempt me to fiddle with asset allocation too much
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