Money is useless until you use it to buy something.
I hope to own zero stocks near my end of life (that includes index funds). The reason we didn’t spend all the precious cash we generated from employment was to grow those funds but with the real intention to grow them and sell them.
The motivation to write this one was reading the online arguments of the merits of dividend growth investing, pure index investing with the golden and unassailable VTSAX for the VanGuard worshipers, and dozens or safe withdrawal rate articles. The thing I haven’t seen much is a strategy for cashing out those seven digits and buying something with those assets you likely traded some of your valuable time and maybe a hunk of your soul to amass.
I got to thinking about this after I hit “publish” and don’t want to sound to cynical or negative. These are just some of the things on my mind in relation to the spend down to protect assets in old age. Besides, take it all with a grain of salt as I often eat paste and don’t know much. It’s a thought experiment.
Total Return Wins
I read these articles about passive income streams and growing dividend income year over year and it’s true those kinds of dividend growers do produce income from month to month but what happens if you’re buying shares of ZYX with a 3% yield but the share price goes down, maybe from an industry that’s a relic or some asinine management moves or just a down economy? You’ve made your regular 3% and probably DRIP reinvested the proceeds over a number of years but maybe you bought those shares at an average of 50 bucks and time went by they ended up at 40 clams, even with the dividend increasing 2% a year. Meanwhile, did you miss out on Amazon or Netflix for Facebook just because they had a zero yield? You know what the dividend is for Berkshire Hathaway shares? Zilch, nada, nihil, zero%. Would you eschew Berkshire shares for that fact and miss out on those long term returns? I’m not saying a person can’t do well with dividend investing but I would suggest to keep an open mind when looking forward and keep in mind the share price as part of total return. Even if you never plan to sell and leave seven or eight figures to your
ingrate kids or grandkids in a portfolio they can squander you would want maximize the value. Instead of waiting for that quarterly or monthly dividend payment in retirement you could just sell some shares that have hopefully appreciated. If you hate individual stocks and thing I’m a dildo for owning them you could even sell VTSAX shares and spend the proceeds.
Does anybody ever sell?
These are all personal decisions but I’ve said before I would love to kick the bucket with a zero balance, as the father of none. It was our blood and sweat and having to put up with crappy managers working crappy hours that put all those glorious numbers on the computer screen. It’s been fun watching them grow but that’s not the end game. I am hoping with good enough health and a little luck to not just need to get my jollies from looking at the digits on a screen but to get real live jollies from selling the shares and spending the cash. Those hang gliding lessons don’t come free, y’know, and I’ve had my eye on a custom Devo hat but have been waiting for the right time to pounce. If you know of any article or series that includes the end game of cashing out please point the way. Oh, I own plenty of indices lest you think I’m a hater. The portfolio is here. I just believe in keeping an open mind with this stuff. Do you know anyone who is presently selling stock investments to fund their life? I would love to hear about it. If you’re not retired, what does your end game look like?
This is what I think about “The Rules” thrown around about safe withdrawal rates in retirement Help! I am Pooping My Pants Over Safe Withdrawal Rates!