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 investorsโ€™ common desire to generate income from their portfolios and why folks may approach this incorrectly.

Transcript

0:01
often people want to generate
0:03
uh what they think of as yield from
0:06
their investments
0:07
and uh there's a age-old
0:11
uh saying that people have had since
0:14
before i was ever born over 70 years ago
0:18
that i'll spend my income but i won't
0:22
spend or invade my principal
0:25
now in reality i understand why they
0:28
would say that
0:30
if you do things correctly it's actually
0:33
better to think in a different way and
0:36
that better way
0:37
is to think about what's your total
0:40
return
0:42
over time how much of that total return
0:47
including appreciation and
0:51
dividend or interest income however that
0:53
comes to you
0:55
you're prepared to spend
0:58
and then when you look at your portfolio
1:01
and you
1:02
think are your investments in total
1:04
regardless of how you think of them
1:07
and you think of that total return
1:10
minimize the kinds of components
1:14
that generate taxable effects for you
1:18
like big dividend payers or big interest
1:21
payers hard to find a big interest payer
1:23
these days
1:24
uh and instead
1:28
take that component that's a small piece
1:31
of your total return
1:33
and spend it out of your principle
1:37
because whatever is actually
1:40
already yours unless you're incurring a
1:43
capital gain
1:44
to get it has no tax effect at all and
1:46
you get a tax savings this is what i've
1:48
always called a homegrown dividend
1:51
the home grown dividend that you take
1:53
from your principal
1:54
and things not appreciated has
1:57
no tax impact and therefore you come out
2:00
tax ahead
2:01
uh if you have for example
2:05
um instead of paying
2:09
putting yourself into fat dividend
2:11
yielding
2:12
stocks that may not have appreciation
2:15
you put yourself into things with higher
2:16
total return
2:18
and you take a little piece of that uh
2:20
over time
2:22
to generate the homegrown cash
2:25
flow you need you really should think of
2:27
it as cash flow
2:29
not as principal or income and in that
2:32
regard i encourage you
2:34
to try to pursue a policy of higher
2:36
total return
2:39
lower taxable effect via homegrown
2:43
dividends thanks
3:05
you

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