Monthly Income Funds

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Oak&Elm
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Monthly Income Funds

Post by Oak&Elm » Sun May 03, 2015 8:31 pm

I am looking to boost my current monthly income to meet my expenses. I do not want to pull out any dollars from my taxable account and was hoping to just buy a income producing fund and leave the principal in Vanguard. Does anyone have a favorite they would like to share? I'm thinking this would be necessary for at least 7 years until I can retire and get other funds. This is a taxable account and taking on a little extra income will not hurt me with taxes.
Jeff

DSInvestor
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Re: Monthly Income Funds

Post by DSInvestor » Sun May 03, 2015 8:36 pm

If you're looking for monthly income, your only options may be bond funds. I'm not aware of any stock or balanced fund that distributes dividends monthly.

For a taxable account consider intermediate term bond funds. If you're in a low tax bracket 15% or under taxable bond funds like Vanguard Total Bond Market Index VBMFX Investor VBTLX Admiral or Intermediate Term Bond Index VBIIX Investor VBILX may be appropriate.

If you're in a high tax bracket, consider tax exempt bond funds like Vanguard Intermediate Term Tax Exempt Bond VWITX Investor VWIUX Admiral. If you're in a state with high state income tax, hold a portion in a state specific tax exempt bond fund and some in the national tax exempt bond fund.

BTW, using the dividend income to meet expenses is pulling money out of the taxable account. You're just not selling shares. Why are you reluctant to sell shares in the taxable account? If you already hold stock funds in your taxable account, it may be more tax efficient to collect those dividends (QDI) and sell shares to realize long term capital gains than to receive non-qualified dividend income from a taxable bond fund.

The vanguard index funds I mentioned have 10K minimum initial investment for Admiral shares. The tax exempt bond funds are not index funds and they have 50K minimum initial investment for admiral shares. Investor shares have 3K minimum initial investment.
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Oak&Elm
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Re: Monthly Income Funds

Post by Oak&Elm » Sun May 03, 2015 9:21 pm

Thanks DSInvestor,
I just found a fund that will work, not perfect but it's OK. SMTFX, Sit Minnesota Tax-Free Income Fund. Since I live in MN this should be 100% tax free State and Federal. Not crazy about the er% .83 but it will work.
Jeff

investor
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Re: Monthly Income Funds

Post by investor » Sun May 03, 2015 9:30 pm

one stock providing a monthly income is Realty Income; ticker symbol "O".

investor

sawhorse
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Re: Monthly Income Funds

Post by sawhorse » Sun May 03, 2015 11:09 pm

Does it have to be monthly? Would quarterly be okay?

dbr
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Re: Monthly Income Funds

Post by dbr » Mon May 04, 2015 7:30 am

The comment by dsinvestor is correct. You should not be making fund selections just to engineer the mechanics of withdrawing money. Most fund companies will arrange to send you a monthly withdrawal, as far as I know. Selling shares, a fraction of which is long term capital gain and collecting qualified dividends is more tax efficient than collecting taxable interest.

However, if your asset allocation needs justify it, then holding tax exempt bonds in the taxable account could make sense. The sense would not be because you get a monthly interest payment. If you do conclude you want a muni bond fund doesn't FIMIX have a lower ER than SMTFX. Even so paying even .4% or so to own bonds is not a great deal.

Sidney
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Re: Monthly Income Funds

Post by Sidney » Mon May 04, 2015 7:35 am

You should be able to get a reasonable TE fund for less than 25bp.
I always wanted to be a procrastinator.

dbr
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Re: Monthly Income Funds

Post by dbr » Mon May 04, 2015 7:49 am

Sidney wrote:You should be able to get a reasonable TE fund for less than 25bp.
If he is looking for MN tax fee that will be tougher. You could be right that he could look at a national TE fund and pay up the MN tax.

I guess at 7% (whatever it is) times 2.75% yield, he is adding tax cost of about 20 bps. I don't think a MN TE fund is particularly risky, though, so it is really a wash, apparently. If/when interest rates get a little higher it becomes more important to not let this cash flow engineering dictate bad tax strategy.

dognose
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Location: Arizona

Re: Monthly Income Funds

Post by dognose » Mon May 04, 2015 9:11 am

The Vanguard Managed Payout Fund makes distributions on a monthly basis. It's a quirky, equity-heavy fund, but it does pay out monthly.

trasmuss
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Re: Monthly Income Funds

Post by trasmuss » Mon May 04, 2015 9:21 am

Fidelity also has (or used to) a Minnesota muni fund.

IPer
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Re: Monthly Income Funds

Post by IPer » Mon May 04, 2015 9:48 am

Hi, you could look into these, careful about expense ratios and NAV prices:

JPS Nuveen Quality Preferred II
IIM Invesco Value Muni Income
NEA Nuveen Amt Free Muni
NUV Nuveen Value Fund
VWAHX Vanguard High Yield Tax Exempt Fund
VWITX Vanguard Intermediate Term Tax Exempt
Read the Wiki Wiki !

skepticalobserver
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Re: Monthly Income Funds

Post by skepticalobserver » Mon May 04, 2015 9:58 am

A note on NUV. It's one of the very few closed-end bond/fixed income funds that use no leverage. This is a good feature in a rising interest rate situation. Also, NUV is trading at a discount to NAV lower than it's 10 year average. http://www.cefa.com/FundSelector/FundDetail.fs?ID=2536

acejacksingh
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Re: Monthly Income Funds

Post by acejacksingh » Mon May 04, 2015 12:00 pm

VWITX is a good one and dividends will be tax free (federal).

I use it for my secondary emergency fund / vacation fund / extra cash / new car fund etc etc

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