Need $240k to get $1k/month income.

[rkser]

Curious how the $240k needs to be invested ?
In Stocks & Bonds ?
Asset Allocation ??

Any thoughts …,

 

[imjustawarrior]

$1k/mo for how long?

That is a 5% withdrawal rate. A 60/40 AA for 30 years at 4% withdrawal rate is the starting point.

 

[OldShooter]

If this is immediate income your only choices are on the fixed income side. Equity is too risky. I am not a FI guy, but clever people here have identified a number of options. Treasuries might be good because they are not taxed at the state level, saving you a few bucks if you have a state income tax to worry about. Also search here for "MYGA" and "HYSA" to find threads with these and other options. Spoiler: You are asking for 5% (pretax, I assume) and I think you will find that to be a stretch. Good luck.

 

[rkser]

I just read about this $240k- 1k/mo some where,
I did not know it is supposed to be all fixed income.
A dumb question, sorry

Thanks

 

[ShokWaveRider]

$240k 5y 5.25% A+ Rated MYGA with 10% withdrawal allowance paid monthly will generate $1,050 a month.

$240k 5y 5.6% A Rated MYGA with 10% withdrawal allowance paid monthly will generate $1,120 a month.

If you can front yourself for a year and collect the money in lump annually you can probably get a little more.

Today's Best Multi-Year Guaranteed Annuities (MYGAs) — ImmediateAnnuities.com

Multi-Year Guaranteed Annuities (MYGAs) - What they are and how they work, plus use the online Multi-Year Guaranteed Annuity Rate Table to get Instant Annuity Rates.

www.immediateannuities.com

 

[OldShooter]

I just read about this $240k- 1k/mo some where,
I did not know it is supposed to be all fixed income.
A dumb question, sorry

Thanks

No dumb questions. No "supposed to be" -- every situation is different.

Volatility is the reason that near-in money needs are best funded with conservative money, not volatile money:

The issue is that if you are in equities and the first years are downers, then the money you spend in those years is gone -- never to benefit from future good years. This drives your return down. Search on "Sequence of Returns Risk."

 

[Al18]

Are federal and state taxes included in the $1000 per month spending?

 

[scrabbler1]

I have just over $500k in a specific bond fund which has been paying about $2k a month for the last year or so, thanks to interest rates higher these days than a few years ago. The $2k a month pays most of my bills. The $500k is about half of my taxable account, and the taxable account is about half my total portfolio, with the rollover IRA still untouched (and growing) even though I became old enough to tap into it 2 years ago. I do not collect SS or my frozen company pension yet.

 

[tflannery]

If you click their profile, it says they live in Florida.

 

[Koolau]

Curious how the $240k needs to be invested ?
In Stocks & Bonds ?
Asset Allocation ??

Any thoughts …,

Curious if you are considering this as a retirement strategy? How would it fit in with other sources of income?

 

[COcheesehead]

I can get you $1500/month, tax free.

 

[mebden]

I can get you $1500/month, tax free.

How you going to get that COcheesehead I'd like to know

 

[COcheesehead]

Any combination of NMCO, VKI, NAD, NZF, NVG. I own them all in a taxable account.

 

[mebden]

Any combination of NMCO, VKI, NAD, NZF, NVG. I own them all in a taxable account.

Yes but you forgot the most important part how much money is needed in each fund to get that tax free money of $1500?

 

[COcheesehead]

Yes but you forgot the most important part how much money is needed in each fund to get that tax free money of $1500?

You didn’t even look at these because you would have known they all yield pretty close +/- 7.5%.

 

[mebden]

You didn’t even look at these because you would have known they all yield pretty close +/- 7.5%.

Yes I looked at them they remind me of penny stocks which can make money or loose it all as they all are under $15

 

[COcheesehead]

Yes I looked at them they remind me of penny stocks which can make money or loose it all as they all are under $15

Tell me you don’t understand closed end funds without telling me you don’t understand closed end funds. The NAV is inconsequential. The dividend drives the return and the fund’s ability to generate that dividend. You are confusing financial instruments. Fixed income vs equity. Smart’n up.

 

[Koolau]

I don't claim to even understand these issues, but don't you need to track the value of the underlying investment as well as the "income" (dividend)? You might make 7.5% on your initial investment but if the underlying investment value drops to half what you paid, I don't see how that is a win.

That's why I'm not a fan of dividend harvesting or even paying a lot of attention to dividends. I think increasing dividends might indicate a healthy stock some times. But basing my income on dividends just isn't my thing - though I know some folks here do it that way. I'm just asking questions 'cause I really don't know the answers. Not being critical.

 

[VanWinkle]

You didn’t even look at these because you would have known they all yield pretty close +/- 7.5%.

I'm looking at the first one, and it has losses 3 out of the last five years totaling a 40% loss. If you are getting a 7.5% yield, do you just ignore the loss of principle and hope it comes back? It seems that it is not a conservative investment, but has the volatility of the stock market. I do not own any of the closed end funds, but find them interesting.

 

[corn18]

Do you need $1000 of spending power or just $1000? Big difference over a long period of time.

 

[aja8888]

I don't claim to even understand these issues, but don't you need to track the value of the underlying investment as well as the "income" (dividend)? You might make 7.5% on your initial investment but if the underlying investment value drops to half what you paid, I don't see how that is a win.

That's why I'm not a fan of dividend harvesting or even paying a lot of attention to dividends. I think increasing dividends might indicate a healthy stock some times. But basing my income on dividends just isn't my thing - though I know some folks here do it that way. I'm just asking questions 'cause I really don't know the answers. Not being critical.

Closed end funds are bets on junk and low rated financial instruments. They pay a high dividend because they are high risk. They can sell at a discount to NAV and are interest rate sensitive. People buy them for the income stream. If you sell, you can lose principal. Holding a basket of these reduces your risk (somewhat).

 

[street]

Interesting topic and NO dumb questions we all learn from all questions.

 

[mebden]

Tell me you don’t understand closed end funds without telling me you don’t understand closed end funds. The NAV is inconsequential. The dividend drives the return and the fund’s ability to generate that dividend. You are confusing financial instruments. Fixed income vs equity. Smart’n up.

And I was just asking questions about them never said I knew anything about them and just curious what they were, but I think I'll stay with my Stocks and ETF's and I must be somewhat smart I'm here LOL

 

[COcheesehead]

I started investing in the closed end muni funds when rates flatten out so I have not experienced the NAV erosion. I also trade between the five I hold in order to take advantage of market inefficiencies. They are awesome income generators, but they should be held just for that, income. They do not all contain junk as alluded to by another poster. The higher income comes from the use of leverage. They may contain unrated bonds, but the managers use in house research to buy which is many levels higher than say Moodys. If you don’t understand them, don’t buy them, but also don’t post erroneous information or compare them to penny stocks of all things.
I also invest in taxable closed end funds. They have been some of my best performers YTD. PDO, PDI. They don’t all sell at discounts as posted earlier. Some sell at premiums due to the dividend. Do your research and post on your experience or facts. To post other wise is a disservice to the community.

 

[aja8888]

I started investing in the closed end muni funds when rates flatten out so I have not experienced the NAV erosion. I also trade between the five I hold in order to take advantage of market inefficiencies. They are awesome income generators, but they should be held just for that, income. They do not all contain junk as alluded to by another poster. The higher income comes from the use of leverage. They may contain unrated bonds, but the managers use in house research to buy which is many levels higher than say Moodys. If you don’t understand them, don’t buy them, but also don’t post erroneous information or compare them to penny stocks of all things.
I also invest in taxable closed end funds. They have been some of my best performers YTD. PDO, PDI. They don’t all sell at discounts as posted earlier. Some sell at premiums due to the dividend. Do your research and post on your experience or facts. To post other wise is a disservice to the community.

Unrated bonds mac well be junk rated if they were sent for rating. I understand CEF's and I think they are great for income, but come with more risks because of the high yields.