ETF Living off ETFs

Hey peoples

Living off shares and ETFs seem to be a popular means of retiring early.

I’m curious to know the logistics of actually making this happen. I’ve been looking at the returns of a Vanguard ETF (VSG) and the historical returns per year are great.

I’m 23 at the moment and would like to be in a position where I’m earning sufficient passive income by 35.

Does anyone live off their dividends from shares and etfs? What does this look like?

 

I don't but wouldn't it be very simple?

What is the post tax income you desire?

What number of shares do you require to get that income?

 

Post tax, I’d be content with $100k.

Idk specifics. I was hoping someone who does it could give me a practical example

 

etf – I Live Off Dividends There you go. Seems to be made for you.

 

If you want $100,000 post tax you would need to earn a gross income of $140,000 approx.

What share are you talking about? VGS?
current share price is 82.55
they seem to pay a very low dividend and no franking

 

I know nothing about ''ETFS'' but a lot within this site do,and only a small amount about long term held banking xxxx equities but the problem several i know faced once Covid hit the markets is it's very hard to have insurance against ''Blow-Up's'' and still get anxiety free sleep at night because a few that i have held for a long long time payed no div's at all after Covid and the ones that did was less then half of the prior payment so your 100k can go below 50k very quickly..

That's ok if you have property rental incomes to back it up which we do but from those investing in EFT'S alone from what i read within this site don't and the defined axiomatic framework..

 

Mostly I'm curious why the sudden itchy fever around FIRE for the under 30 crowd??. All these FIRE gurus who have done nothing with their lives and no plans but to do nothing and waste even more life. In truth, they end up working like dogs on blogs to fund their 'retirement' until the market crashes and then???
I'm boring. I like houses, shares, super, constantly travelling and living and working in different countries, doing too many masters degrees and always starting a new life and career every 7 years or so.
I'm with people like my family, the Buffets of this world and the Gates. Money has zero to do with what is good for a human being. So over this nonsense. What a sad waste of a life.

 

Listed Investment Companies (LICs) Q4 2018 [LIC & LIT]

Not sure about just pure ETFs .. but on the LIC and ETF thread, many are living off dividends already. My end goal is also to live off dividends. I have a mix of IPs and LICs+ETFs now.

It's good that you are starting at such a young age and thinking about investing. Because you have a longer runway than those who start late.

 

It’s not about income.

It’s about capital & income. For $100k passive you need anything from $2-5m unencumbered depending on what you determine to be an acceptable withdrawal rate. This is a huge subject and not about ETFs per se.

Personally 2.5-2.75% seems about right, but variable depending on circumstances.

 

Also look into stocks like SOL and BKW that have a consistent track record of growing their dividends.

General aim should be to find and build a collection of holdings where the dividend growth consistently outpaces inflation. For example SOL:




I'm building a stable of dividend stocks and LICs in my super. I can't access it for a decade. Plan is for the income from dividends in my super to provide income I need in retirement.

My super won't get me to early retirement. I have a PPOR mortgage and need a capital base for retirement so I'm using an aggressive strategy via diversified speculative microcaps to grow my capital base to achieve an early retirement. Basically 4-8 speculative holdings where I am aiming to achieve 5x, 10x, 20x, 50x return on capital (depending on the stock). That's companies growing from say $5M to $10M market cap to ASX300. Requires very careful stock selection, intense research/analysis on company fundamentals, growth potential, strategy, market, management, etc. I invest. I don't actively trade. At the right time will re-weight my portfolio to cash, dividend stocks whilst still maintaining some of the growth holdings.

 

Perhaps a little off topic to the original question but perhaps you might try educating yourself a little about the topic prior to making judgements about other people "wasting" their lives.

See "constantly travelling and living and working in different countries" sounds to me like a nightmare. I like a bit of travel and to see the world but I'm a home body and love being at home just as much. And studying to tick of Masters degree after Masters degree would bore me to tears!

But you do you and I'll not judge it to be a waste of your life.

So why the interest in houses, shares, super? Perhaps because having the money gives you the option and capability to do what is really important to you?

Sort of like those in the FIRE crowd wanting to spend their time doing what is important to them rather than working at some job they don't truly love just so they don't "waste" their life.

 

23 a life time of work and good investments. By retirement age if you can have $100k net income (equivalent) you will have done well.

To do it in 12 years. Mmm import South American "products"?

 

I can put you in touch with someone. She's local, too (or she was): https://www.smh.com.au/national/i-n...y-speaks-out-in-colombia-20200417-p54kvh.html

 

Short term - yes, such risk in the stock market.




Long term - buffett's profile - Long Bets



A picture paints a thousand words .. decision is yours.

 

note to self: keep investing in shares. Live till 100. clean up big time. Booh yah!

 

Bare minimum to get to bare minimum you’d need to save $100k pa and compound at 7% post tax to get to $2.014m and then run an dangerously high (in my view) withdrawal rate of 5% to get the 100k.

Saving 150k with above assumptions withdrawal rate 3.3% for 100k pa...or you are home and hosed at 200k pa savings rate, 12 years @ 7% post tax requiring 2.5% withdrawal rate for 100k. Extremely few 23 year olds could achieve this.

 

I hope most hold adequate cash or fixed interest buffer. For me, that is 5 years of “full fat” expenses in cash, TDs and Investment grade bonds.

 

I assume you know maths and power of compounding ... otherwise this is a pointless comment and useless.

Anyhow, to the original poster, continue learning. Hopefully the off answers have not put you off this forum as there is much to learn here.

 

The Falcon,thanks for that ..Maybe a bit more then five years in cash as our expenses yearly are not that high.. Everything property wise is unencumbered has been for over 10 years just rates water insurances and as I no longer self manage plus maintenance costs so it's all just pure income after tax,and I've never had a problem paying tax ..
Equities wise as there is over 15 different holdings ,plus all the others small caps that will either pay off or end up in bin ..
I remember back when you ask me a long time ago why I bought into Kogan and I explained back then why I bought into that holding and has done well ..
Thanks again and good luck..