Personal Wealth Management / Expert Commentary
What Are the Best Ways to Generate Income in Retirement? Ken Fisher Answers
In this video, Ken Fisher addresses retirement investors’ common desire to generate income from their portfolios and why folks may approach this incorrectly.
Transcript
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often people want to generate
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uh what they think of as yield from
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their investments
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and uh there's a age-old
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uh saying that people have had since
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before i was ever born over 70 years ago
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that i'll spend my income but i won't
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spend or invade my principal
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now in reality i understand why they
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would say that
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if you do things correctly it's actually
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better to think in a different way and
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that better way
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is to think about what's your total
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return
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over time how much of that total return
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including appreciation and
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dividend or interest income however that
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comes to you
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you're prepared to spend
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and then when you look at your portfolio
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and you
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think are your investments in total
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regardless of how you think of them
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and you think of that total return
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minimize the kinds of components
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that generate taxable effects for you
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like big dividend payers or big interest
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payers hard to find a big interest payer
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these days
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uh and instead
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take that component that's a small piece
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of your total return
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and spend it out of your principle
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because whatever is actually
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already yours unless you're incurring a
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capital gain
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to get it has no tax effect at all and
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you get a tax savings this is what i've
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always called a homegrown dividend
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the home grown dividend that you take
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from your principal
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and things not appreciated has
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no tax impact and therefore you come out
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tax ahead
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uh if you have for example
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um instead of paying
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putting yourself into fat dividend
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yielding
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stocks that may not have appreciation
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you put yourself into things with higher
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total return
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and you take a little piece of that uh
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over time
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to generate the homegrown cash
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flow you need you really should think of
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it as cash flow
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not as principal or income and in that
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regard i encourage you
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to try to pursue a policy of higher
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total return
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lower taxable effect via homegrown
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dividends thanks
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you
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