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Strategies & Market Trends : Young and Older Folk Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: SoCalGal who wrote (7778)	8/9/2024 12:29:26 PM
From: chowder	2 Recommendations Recommended By misscbd Tam3262 Respond to of 22059

Re: I don't think a 5 percent yield will be enough. That's what I was assuming, thus my suggestions would support a higher yielding portfolio until your financial situation adjusted.

To: SoCalGal who wrote (7778)	8/9/2024 12:40:09 PM
From: chowder	7 Recommendations Recommended By Menominee MinionMom&MarineWife misscbd SeeksQuality SoCalGal and 2 more members Read Replies (2) \| Respond to of 22059

The Older Folk Portfolio has a 7.05% yield. It's generating a good level of income. A similar approach puts your future income needs in effect almost immediately, and then once the income objective is achieved, the excess dividends can then go towards growthier type assets. You do give up capital growth for now, but it comes down to whether the income objective has priority "at this time" or not. I not only used this income first approach on the Older Folk Portfolio, but my personal portfolio as well. I can de-risk the portfolio if I wish and can now go for more quality, or I can keep it as it is and still go for more quality since the income need is more than satisfied. I don't know if this is right for you or not, but you did ask for my thoughts and I explained how I approached that income first situation for myself and others. Message 34664725

To: SoCalGal who wrote (7778)	8/9/2024 1:27:11 PM
From: SeeksQuality	4 Recommendations Recommended By MinionMom&MarineWife SoCalGal Steve Mac Waitress Respond to of 22059

Ouch, those are harder numbers to work with, as Social Security replaces a lower proportion of income in the upper ranges than it does in the lower ranges (as your numbers illustrate). I would definitely target a margin of income safety, i.e. $200k rather than $150k. A higher-yield portfolio doesn't have sufficient growth to permit additional trims for "unexpected" expenses of that magnitude, so you have to allow enough margin of safety to cover them. This suggests the following plans: (1) Restructure for a 8.7% yield to generate that $200k income. Personally, that would be a non-starter for me. Even using CEFs, even giving up any hope of keeping up with inflation, if this number gets past 8% then I believe you have a high probability of running short. (2) Aim for an 8.0% yield, or $184k income, and try to make that work. It is at least a small margin of safety, but not enough to cover major repairs, weddings, or high health care costs. (3) Set aside $60k as a "bridge" and target a 7.5% yield with the remainder, for $172k of income plus $30k, first from the bridge and later from Social Security. This would give you $200k of cash flow to work with, a number that I like a whole lot better than $184k, plus any continuing earnings from your SBI. You could use any excess cash flow to "derisk" the portfolio, either building in a little growth or increasing the margin of safety on the income. I still believe the "bridge" concept makes sense, and while I can't say that I love the idea of pulling 7.5% from a portfolio, I like it MUCH better than trying to draw 8.7%. I see anything past 8% as a quick road to ruin. That 7.5% draw ought to last long enough to get you past the immediate needs until you can downsize (at which point the picture improves dramatically) or get the inheritance. I also believe that with this portfolio structure you want to aim for a margin of safety. My portfolio has a certain margin of safety from the ability to sell low-yield growth assets to either fund one-off expenses or increase the portfolio income. When you are targeting a higher yield point, that isn't on the table. Would strongly advise talking to a financial planner to see if they have any ideas? I think the above numbers are workable, they just don't have a large margin of safety. My advice here is worth exactly what you paid for it. Congrats on surviving cancer, and wish you all the best with that ongoing battle!