What Are the Best Ways to Generate Income in Retirement? Ken Fisher Answers

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