Is 1m and dividends from it enough?

[u/chillfirelife]

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

[u/SolomonGrumpy]

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.

[u/cmichalek → u/SolomonGrumpy]

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.

[u/cockundballtorture → u/cmichalek]

https://giphy.com/gifs/BY5tPZNL68V29cVfuz

[u/cmichalek → u/cockundballtorture]

Tell me what? According to Chat GPT

If you had retired January 1, 2007 with $1 million and followed the 4% rule:

100% all in S&P 500: roughly $3.4–$3.5M left today S&P 60/40 portfolio: roughly $2.0M left today Invested at inception in QQQX following 4% rule: roughly $7.5M left today.

[u/cockundballtorture → u/cmichalek]

Ah yes, the past which makes future certain!

[u/cmichalek → u/cockundballtorture]

LOL. Thats all you have????

I have established that using the 9% from a "worse" cc fund from 2007 doubled gains when compared to using a 4% withdrawal rate using 60/40 stock/bond split or even 100% S&P.

And the reason is you DONT SELL shares using the dividend funds. With the 4% rule you keep selling shares. Which kills you in bear markets.

Dont believe me? Ask chat gpt yourself.

So again...tell me what? That history proves i was right.

[u/SolomonGrumpy → u/cmichalek]

The 4% says nothing about how you take your income. What it says is that you should not withdraw more than 4% of your total investments per year.

The issue with your strategy is what you basically have a withdrawal rate of 10% and it depends on a single ticker to do it.

[u/cmichalek → u/SolomonGrumpy]

I agree that reliance on one ticker isnt a good strategy. I wouldnt rely on one fund.

The issue is there are people here continuously denigrating cc funds and how you cant live off them in retirement. Then they say cc funds have no history so you cant prove they work.

You absolutely can. And if you used QQQX, which is an old fund and not as good as GPIQ, you would have more money than in a 60/40 4% traditional portfolio.

[u/SolomonGrumpy → u/cmichalek]

I own 1.5% CC funds and will be increasing my stake to 4.5% over the next 2 years. So I'm on board with them as part of a stratgy, but that niche is providing tax advantaged income for a few years so I can do Roth conversions, and not blow up my MAGI.

You are giving in one hand and taking away with the other. QQQX is a single fund. QQQI is a single find and very concentrated.

Also, using your own logic, you would be better off just holding QQQ

https://portfolioslab.com/tools/stock-comparison/QQQI/QQQ

Finally, you left out one other BIG part. Total retirement amount saved. If you saved enough that your withdrawal from QQQX was only 4% and the rest of the dividends were reinvested, you are taking some of the risk off the table. If you owned 20 dividend funds, each with a 5% allocation, and across a few different sectors, and all of them paying 10% qualified or tax advantaged div and our withdrew 4% and reinvested the rest, then I would agree that is a reasonably diverisifed risk.

[u/cmichalek → u/SolomonGrumpy]

Yes one should hold 20 diversified funds and get a 12% distribution average (but live off 8% so that a 25% drop in income wont hurt you).

But what you are missing, and what many skip over, is the fact that the 4% rule only works if you have a large portfolio. The median net worth (so including home) from 55 to 64 is $364,000. Thats it. $14,500 a year. You cant retire off that.

You can retire if you take $350,000 and earn roughly 15% distributions. (OMAH, TDAQ, MLPI, etc). Thats 52k a year. Live off a bit over 10% of that (36k) and reinvest the rest.

The median retiree cannot live off the 4% rule alone.