Need to generate income

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Topic Author
canada65
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Need to generate income

Post by canada65 »

Hello everyone, I am new here but am invested in vanguard funds for years. I am 53 and have about 210,000 in funds and a few stocks. I have been on disability for 8 years now and have come to the point where i need to generate maximum income from my portfolio. Any thoughts would be appreciated. I know i could buy stock in ATT for example and generate 12000 a year in dividends but obviously that isn't a good idea to be in one stock. I also can't find a cfp in my area that will help me with my issue because of my age and what i am trying to do. Thanks again for any suggestions.
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Sandtrap
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Re: Need to generate income

Post by Sandtrap »

It does not sound like you can afford lose of principal in the pursuit of greater returns.

You may or may not be a candidate for an SPIA. (do not consider any other type)
Check some quotes here:
Immediate Annuity Calculator
https://www.immediateannuities.com/a/an ... gJwuvD_BwE

j
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mega317
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Re: Need to generate income

Post by mega317 »

Welcome to the forum.

If you tried to print every thread that addresses some form of this question the paper generated probably wouldn't fit in your house, which is to say there are strong, differing opinions. However the fact will remain that you can only squeeze so much out of a fixed dollar amount. And you are right about holding one stock. Or even, IMO, a larger number of hand-picked stocks.

I recommend you define for us and for yourself exactly what you need, and then we might be able to help you get there. $12k per year from 210k isn't plausible indefinitely, for example. But maybe you only need it until you take social security?
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

The disability I’m on is from social security. I’m not trying to generate 12000 a year in income that was just an example. But I’d like to try and get as much as I can per month while still having some growth involved. I won’t consider an annuity because then that money is gone forever. I thought I might get some ideas on funds to buy that generate the most yield and income. Thanks for the response.
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JoeRetire
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Re: Need to generate income

Post by JoeRetire »

canada65 wrote: Sat Jul 14, 2018 8:26 pmI also can't find a cfp in my area that will help me with my issue because of my age and what i am trying to do.
What does that mean? What does your age have to do with anything?

Does it mean that you can't find a CFP? Does it mean that you can find CFPs, but they aren't telling you what you want to hear?
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Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

Yes, I have contacted cfp in my area and I get the same answer. What I’m trying to achieve at my age isn’t possible so they say and I’m told we can’t help you.
averagedude
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Re: Need to generate income

Post by averagedude »

I think it is best to focus on total return instead of income. Wold you rather have an investment with a total return of 4 percent paying out 3 percent in income or an investment with a total return of 6 percent paying out 2 percent in income? I think a three fund portfolio is way better than trying to find a stock or fund that pays out a large yield.
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

I’ve looked at vanguard managed payout fund and their reits and other funds not sure which way to go. I’ve thought about contacting vanguard personal advisor to hear their thoughts
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dwickenh
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Re: Need to generate income

Post by dwickenh »

canada65 wrote: Sun Jul 15, 2018 7:05 am I’ve looked at vanguard managed payout fund and their reits and other funds not sure which way to go. I’ve thought about contacting vanguard personal advisor to hear their thoughts
Vanguard has a very good income fund called Wellesley Income Fund. It has very low expenses, good management, and a great track record.

Past returns do not foretell the future, but this is a solid choice for some growth and income. It is conservative at 35-40% stocks and the rest

in corporate bonds. You could do the same with a mix of Total stock market and Total bond market, but the income may not be quite as high.

Good luck with your selection. Seek free advice from reliable sources(Vanguard and Bogleheads) as you don't need to give away 1% to an adviser

for this decision,
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

That’s why I’m on here, hoping for some good free ideas. Thanks for yours.
Gill
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Re: Need to generate income

Post by Gill »

I would rethink your aversion to an SPIA for at least part of your portfolio.
Gill
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Youngblood
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Re: Need to generate income

Post by Youngblood »

Gill wrote: Sun Jul 15, 2018 7:55 am I would rethink your aversion to an SPIA for at least part of your portfolio.
Gill
I agree with the above suggestion.


+1
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Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

I have looked into immediate annuity. At my age I’d have to give them my entire portfolio to receive around 600 a month. I’m not sure that is a good idea but I’m willing to check it out again
21&lewis
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Re: Need to generate income

Post by 21&lewis »

Does your social security cover all of your needs? If not, what additional amount of $ is required to meet this threshold? You might consider a SPIA for this needed amount and invest the rest based on your risk tolerance.

Do you have a budget or a sense that more is coming in than going out? I am concerned that in the OP that you "have come to the point where i need to generate maximum income from my portfolio." I am not sure if you are able to work, but you certainly can work and generate a little income while on social security disability. I think you're OK under SSI rules if you make < $1,180/month (or $1970/month if you're blind).

https://www.ssa.gov/pubs/EN-05-10095.pdf
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CyclingDuo
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Re: Need to generate income

Post by CyclingDuo »

canada65 wrote: Sun Jul 15, 2018 6:43 am The disability I’m on is from social security. I’m not trying to generate 12000 a year in income that was just an example. But I’d like to try and get as much as I can per month while still having some growth involved. I won’t consider an annuity because then that money is gone forever. I thought I might get some ideas on funds to buy that generate the most yield and income. Thanks for the response.
On a base of $210K, it would be possible to generate $12K a year of income. It would move you out of the realm of Boglehead index or fund investing and into the realm of income producing investing through dividend paying individual stocks spread out in holdings via REITs, Utilities, Telecoms, Preferred's, MLP's, etc... .

Boglehead member Bruce Miller has an excellent primer on that strategy:

https://www.goodreads.com/book/show/234 ... ncome-only

There are a lot of good contributors at SeekingAlpha.com, but George Schneider targets exactly what you mention - how to fill the gap between the income you are receiving from your SS and meet your income needs via dividends.

https://seekingalpha.com/author/george- ... r_articles
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Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

Unfortunately working isn’t a option. No my disability payment doesn’t cover everything. I wish it did.
Mike Scott
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Re: Need to generate income

Post by Mike Scott »

Do any of the retirement income funds generate enough for you?
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knpstr
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Re: Need to generate income

Post by knpstr »

canada65 wrote: Sun Jul 15, 2018 8:52 am Unfortunately working isn’t a option. No my disability payment doesn’t cover everything. I wish it did.
What is the monetary shortfall between disability and what you need?
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autopeep
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Re: Need to generate income

Post by autopeep »

It appears from your posts that you do understand the nature of fund returns. To wit: there is no difference in income generation from dividends or selling a fraction of your shares. The pursuit of a high divedend funds based on this misunderstanding puts you at risk for bad investment decisions.
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

knpstr wrote: Sun Jul 15, 2018 9:05 am
canada65 wrote: Sun Jul 15, 2018 8:52 am Unfortunately working isn’t a option. No my disability payment doesn’t cover everything. I wish it did.
What is the monetary shortfall between disability and what you need?
I’m looking at about 700 per month.
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

autopeep wrote: Sun Jul 15, 2018 9:10 am It appears from your posts that you do understand the nature of fund returns. To wit: there is no difference in income generation from dividends or selling a fraction of your shares. The pursuit of a high divedend funds based on this misunderstanding puts you at risk for bad investment decisions.
Any suggestions you can offer would be appreciated
Mike Scott
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Re: Need to generate income

Post by Mike Scott »

That's about a 4% withdrawal which should be supported by something like the three fund portfolio or a balanced fund of your choice. You might look up the discussions on McClung's Prime Harvesting techniques as well.
Dottie57
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Re: Need to generate income

Post by Dottie57 »

Youngblood wrote: Sun Jul 15, 2018 8:03 am
Gill wrote: Sun Jul 15, 2018 7:55 am I would rethink your aversion to an SPIA for at least part of your portfolio.
Gill
I agree with the above suggestion.


+1
+1
Dottie57
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Re: Need to generate income

Post by Dottie57 »

canada65 wrote: Sun Jul 15, 2018 8:11 am I have looked into immediate annuity. At my age I’d have to give them my entire portfolio to receive around 600 a month. I’m not sure that is a good idea but I’m willing to check it out again
I just ran immediateannuities.com and came up with 900 a month.
gmc4h232
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Re: Need to generate income

Post by gmc4h232 »

Any opportunity to sell small stuff on eBay? Minimal physical effort required.
autopeep
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Re: Need to generate income

Post by autopeep »

canada65 wrote: Sun Jul 15, 2018 9:22 am
autopeep wrote: Sun Jul 15, 2018 9:10 am It appears from your posts that you do understand the nature of fund returns. To wit: there is no difference in income generation from dividends or selling a fraction of your shares. The pursuit of a high divedend funds based on this misunderstanding puts you at risk for bad investment decisions.
Any suggestions you can offer would be appreciated

You have received good advice in this thread. My only suggestion is to not equate income with dividends but to rather think about withdrawal rate (a combination of dividends and selling shares)
Longtermgrowth
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Re: Need to generate income

Post by Longtermgrowth »

canada65 wrote: Sun Jul 15, 2018 9:21 am
knpstr wrote: Sun Jul 15, 2018 9:05 am
canada65 wrote: Sun Jul 15, 2018 8:52 am Unfortunately working isn’t a option. No my disability payment doesn’t cover everything. I wish it did.
What is the monetary shortfall between disability and what you need?
I’m looking at about 700 per month.
I just input monthly income of 700 for 53 year old male at https://www.immediateannuities.com, and they are quoting a premium of 155,601.

Does that 210k exclude your emergency fund? If so, I would be tempted to buy the SPIA and keep the rest of the 210k in stocks to hopefully keep up with inflation.

Still, that's giving up roughly 74% of the portfolio for a payout that inflation will erode over time...
Topic Author
canada65
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Re: Need to generate income

Post by canada65 »

Thanks to all for the ideas and info.
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