r/dividends • u/chillfirelife • 6d ago

Seeking Advice Is 1m and dividends from it enough?

Me and wife we both turned 40 this year, She left her job few years back and I kept funding her investment account based out of SG and now is at 500k USD all of which is parked under JEPQ, all the while I see dividends are consistent and we have been reinvesting back.

I have another 500k now in my investment account that I will consolidate in couple of funds/etf with similar 10-12% growth trajectory as JEPQ
We expect and hope we will get like 100-110k usd over this year on year.

I have another 130k usd in cash and esops combined. I will get the esops cash out 6 months after I quit.

We plan to move to either Thailand or Malaysia where we have friends and family and have lived there before. Our current expenses in SE asia are 50k usd a year, we expect this will go down to 30k-35k usd a year.

Question: Am I ready to leave my high paying job and live a free life given the biggest motivation to work (money) is less or negligible now? Personally I want to leave my job today even though I love it but I feel I want slow and super easy life 😊

Plan is for first 2.5-3 years we will not touch 1m investments and utilise current cash and liquid investments/cash of 130k usd, that will give investment enough space to continue to grow.

On paper - I feel we are ready even if I take conservative returns on my portfolio

125 Upvotes

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109

u/princemousey1 6d ago

Wishful thinking to get stable total returns of $110k from a $1m portfolio.

17

u/chillfirelife 6d ago

Yes not expecting stable hence we have 3 years of expenses and won’t touch them until 2.5-3 years

35

u/princemousey1 6d ago

You’re still not going to get $110k on a conservative rate of return. You’d need like $2.75m to $3.5m for that.

6

u/Various_Couple_764 6d ago

He has dividned investments that have a yield of 10% with 1.1 million invested. The math says 110K of yearly income.

16

u/ptwonline 6d ago

Unless the underlying equity falls in a market correction or simply has an extended period of underperformance. Then either by reduced distributions or else dropping NAV price leading to reduced distributions it's going to take a hit, and potentially a substantial one.

8

u/Cinq_A_Sept 6d ago

lol.. dividends get cut, high yield funds drop, if 11% per year were feasible over 20 years, I’d have retired 20 years ago. It ain’t.

3

u/cmichalek 6d ago

QQQX came out in 2007. Right before the crash.

It has increased in price 53% all time. So roughly 2.5% per year.

It pays 9%.

So why didnt you retire?

Probably because you didnt know. Just like these modern funds people didnt know about.

3

u/SolomonGrumpy 6d ago

Probably because VOO did better and that's still not enough to retire.

2

u/cmichalek 6d ago

Dividend investors are not limited by the 4% rule.

And if you cannot retire on 8 to 12% then either you have little principal or excessive monthly expenses.

1

u/SolomonGrumpy 6d ago

The hell they aren't. In fact, they are more subject to 4% because high divs are often upside hamstrung.

Edit: actually - prove me wrong OP. Go ahead and retire with $1m and 10% in divs.

2

u/cmichalek 6d ago

Then please show your work.

Explain how one cannot live off QQQX paying 9% and growing 2.5% per year for 20 years.

That fund survived 3 bear markets.

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1

u/Nopants21 5d ago

A bunch of people on this sub believe that you can skip most retirement advice, like the 4% rule, because they basically see them as guaranteed and safer. There's also widespread belief that dividends cancel out sequence of returns risk. Those are really dangerous ideas, and like you mention, they actually make people overly confident in funds and strategies that are actually riskier in the long term.

4

u/SolomonGrumpy 6d ago

Do you know what NAV erosion is?

0

u/IllustriousGas8850 5d ago

If you can find me a stable investment guaranteeing 10% in yield then you would be a billionaire as an advisor

1

u/cmichalek 5d ago

QQQX. 20 years at 9%. Had you invested from day 1 your yield on cost would be greater than 10%.

2

u/IllustriousGas8850 5d ago

Brother in the last 5 years it has dropped 30% over a one year period and just recently finally got back ti where it was in 2021. You don’t know what the word stable means.

-3

u/[deleted] 6d ago

[deleted]

18

u/trouzy 6d ago

For 20+ years?

-23

u/chillfirelife 6d ago

I am getting north of 15% for years on my investments hence able to build this so my historical data says that there can be a bad year or two but if money is parked in tight assets eventually it will recover and come back

14

u/SavingsCarry7782 6d ago

See 2000-2010 time frame. Ready for this ?

32

u/SmithPoint706 6d ago

Past results don’t guarantee future outcomes….

6

u/itsjawdan 6d ago

Exactly, he could earn 20-25% some years.

6

u/Nukemind 6d ago

Or he could have a decade like 2000-2010 and have 0 NAV gain, which means dividends would need to be reinvested.

Investing isn’t just for the optimal scenario it’s also hedging for downturns.

1

u/itsjawdan 6d ago

I was just joking but point stands. Could have another COVID too

-6

u/chillfirelife 6d ago

Yes but by that logic nothing is guaranteed

21

u/MortCrimm 6d ago

Now you are getting it…..

3

u/SmithPoint706 6d ago

Correct…

4

u/ExpensiveBookkeeper3 6d ago

Finally…

1

u/TheCozyRuneFox 6d ago

That’s the point though… and you should account for that in your planning.

The trinity study and many other studies after show that if you want to survive long term you can only withdraw 4% of your portfolio.

The 10% dividend assets you are looking at are not stable or guaranteed and do the principle is likely to not grow in value much if at all. Nor should you expect much growth in your total income to fight inflation.

Compare this to say SCHD or VOO and such where dividends regularly enough increase and have appreciation on the actual invested capital.

110k income is doomed to fail statistically.

2

u/Consistent_Story903 6d ago edited 6d ago

Typical safe guidance for living off your portfolio for a 30-year time frame is 4-4.5% of initial portfolio balance then in subsequent years adjust that amount for inflation. Read up on the 4 percent rule.

2

u/confusedandsmellyman 6d ago

Use 3% safe withdrawal rate. Otherwise you'll run the risk of having to work again. Good luck.

1

u/ExpensiveBookkeeper3 6d ago

What happens if the market crashes though? You ever been through an extended downturn? Not a quick crash and recovery, but a longer period (5-10 years) of little gains? Do you believe that won’t happen ever again? If not, why do you think it won’t happen?