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

To: chowder who wrote (7786)	8/9/2024 1:59:12 PM
From: SeeksQuality	3 Recommendations Recommended By chowder Markbn Tam3262 Read Replies (2) \| Respond to of 22060

I like that structure. Not that I really like aiming for a yield of 7%+, but... SCHD yields 3.5% and has averaged 10%+ dividend growth. If you put 40% of the portfolio into that, and 60% of the portfolio into stuff yielding 10%, then you are right on that 7.5% yield point. Not sure how much growth that gets? The high-yield side of the portfolio will have a tendency to shrink over time. SCHD generates some growth, but probably not enough to keep pace. My guess is that it would become necessary to trim from the SCHD side to build the high yield side, unless the margin of safety on the income generates enough extra to do that. HOWEVER, growth isn't the purpose here. The goal is to have enough space to meet the income needs to survive until the proceeds from the downsizing and inheritance kick in. And at that point the picture ought to become much easier. Having 40% of the portfolio in SCHD (or something similar) gives you a lot of space to "trade up" yield as needed.

To: chowder who wrote (7786)	8/9/2024 4:53:17 PM
From: SeeksQuality	2 Recommendations Recommended By chowder Tam3262 Read Replies (1) \| Respond to of 22060

Playing with the numbers, I think Chowder's initial suggestion of a 7.05% yield (like the OFP) can be made to work? The $162k income isn't really enough given the income range. In fact it almost certainly would end up being insufficient, EXCEPT that there is likely to be some continuing income for at least a couple more years, with Social Security potentially kicking in after that, for a total of ~$190k of ongoing income. Set aside the "bridge" or not, it doesn't really change how the numbers work out. Before I wasn't thinking about this clearly. The risk of aiming for a lower yield point is that you might also need to sell off some assets, and that is a bad habit to get into with an income strategy like this. The benefit is that the lower yield point -- identical to the OFP -- ought to be significantly less risky. Half a percentage point may not seem like a lot, but if you are balancing 3.5% yields and 10% yields on the two halves of the portfolio, it is the difference between 40% in SCHD (or something similar) and 45% in SCHD. Extra breathing room for future adjustments. I keep reminding me that this is a short-term portfolio until the additional assets are available and the need (as a percentage of assets) is reduced. That simple fact makes inflation less of a concern (since inflation really only gets ugly when you look at time periods of 10+ years) and makes slow attrition less of an issue (since falling 1% or 2% behind per year isn't that big a deal over shorter time periods). Both inflation and principal erosion are a killer when planning for a 30-year retirement.