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Why dividends in retirement and not sell stock?

edited 30 November -1 at 1:00AM in Savings & Investments
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  • edited 17 June 2019 at 2:16PM
    bostonerimusbostonerimus Forumite
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    edited 17 June 2019 at 2:16PM
    I haven't really changed my investment strategy after retirement as I figure the best way for me to produce returns from my portfolio is by growth and that means a high equity allocation. I can do that without much worry because I have other income sources from rent and a DB pension. I think you need to guarantee an certain income floor in retirement and that can come from state pension, annuities and high quality bonds etc. Twenty years before I retired I bought a rental property with the idea that it would provide retirement income and I took a government job in the latter part of my career because of the excellent retirement benefits it offered.
    Misanthrope in search of similar for mutual loathing
  • JohnRoJohnRo Forumite
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    Audaxer wrote: »
    I am hoping with annual rebalancing that
    this level of income will be sustainable over the long term without having to sell capital for income, but maybe that is being too optimistic?

    It's not optomistic, it's a perfectly reasonable expectation.

    As long as the portfolio has a great many regionally diverse components and you're able to add external contributions that inflate the income base you can forecast reliabilty and with a fair degree of certainty what income you'll be receiving at points in the future.

    The reason I chose to put a little effort into cobbling together a reliable IT equity income generating portfolio is that it allows some degree of financial certainty and forward planning far into the future, without fretting about market volatility.

    I don't think it's saying anything but the obvious that it's far more difficult to plan ahead and achieve that with a growth strategy that relies much more on income from either ongoing or final sale of capital gain.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • ThrugelmirThrugelmir Forumite
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    I haven't really my investment strategy after retirement as I figure the best way for me to produce returns from my portfolio is by growth and that means a high equity allocation.

    In reality there's been little choice. As Central Banks have bought up fixed interest stocks driving yields endlessly lower. High equity allocation shoulders a higher level of risk. While equity prices have risen, underlying company performance hasn't grown at the same rate across the board.
    “Chances are if you buy what everyone is buying you will do so only after it is already overpriced." - Sir John Templeton
  • cogitocogito Forumite
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    JohnRo wrote: »
    As long as the portfolio has a great many regionally diverse components and you're able to add external contributions that inflate the income base you can forecast reliabilty and with a fair degree of certainty what income you'll be receiving at points in the future.

    What do you mean by 'regionally diverse components'?
  • JohnRoJohnRo Forumite
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    In my particular case it mean income oriented investment trusts containing equity from around the world.

    That could also apply to bond exposure but doesn't in my case to any degree worth mentioning.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
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