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Online Share Trading

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Penny for yout thoughts

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louisg
Super Contributor
I would like to know your thoughts on what percentage of my portfolio I would be able to safely draw each year (monthly in arrears)to live off. My investment goal is capital appreciation of 10% above inflation PLUS 5% dividend over the long term. I'm guessing at about 8%- 10% withdrawal (5% dividend plus 3-5% capital) per year. Assume that I do not have any other income. Any thoughts would be appreciated. Thanx
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24 REPLIES 24
louisg
Super Contributor
Sorry, that was penny for YOUR thoughts.
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john_1
Super Contributor
Stuggling to answer as we don't know your age, how much you currently have and how much you need to live. I do think that your goal should be to never touch the capital, live on div's only. That way your capital has a chance of outliving you.
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Not applicable
why would you want your capital to outlive you...u watch to much Summit Tv mate
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john_1
Super Contributor
Its called gene preservation... I have children that I hope will out live me and If I can create wealth that can compound through their life time I will have dine well.
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SimonPB
Valued Contributor
well chartist, unless you have a time of death 9which requires a crystal ball) - how do you plan to ensure you run out of money the same day you run out of life ?
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Not applicable
no...all it requires is a good exit plan....
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john_1
Super Contributor
And your exit plan is?
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SimonPB
Valued Contributor
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pirates
Contributor
our charty boy making a fool of himself again,naughty boy go back to your cot and draw charts
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john_1
Super Contributor
hey Catain hook, you are new about here, So before you try very hard to make enemies. Why don't you at least introduce yourself. Let us know a little bit about your investment style and you results. Do you like cheese curls or doughnuts?
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louisg
Super Contributor
John although all your questions are valid ones, I'm trying to figure out the model in percentage terms only. I don't feel that discussing this in absolute rand terms would be appropriate on this forum. Anyway the income needed to live off would be relative to ones own lifestyle. My goal IS to exclusively live off the dividends. I'm messing around with the figures to see how I could safely/conservatively bring the date forward by a year or two. One option includes initially selling a portion of my existing portfolio and buying interest bearing shares such as property and/or preference shares (dividends) in the short term for a year or two to enjoy the higher initial yields. Once my dividends were high enough I would probably want to sell the property/preference shares and invest the proceeds back into dividend yielding company shares to ensure maximum capital growth. But now that I think about it, it's probably a good idea to keep my income stream diversified at the expense of capital growth. By my estimate I initially need about 10% dividend/income yield, and then reducing this to 6% as the real compounding effect takes place. What do you think?
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doomsdayza
Super Contributor
LouisG, If you can, attend a Charles Hattingh "Store of Wealth Builder" course. It'll solve those retiremant questions / problems for you. www.mafiabuzz.co.za Relatively inexpensive and well worth it IMO.
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louisg
Super Contributor
Thanx for the input but that kind of website gives me the grilllls(Afrikaans prenunciation).
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doomsdayza
Super Contributor
It's not a scam or such like. He's a CA(SA) & CFA. He's done detailed retirement models as well as full FA company valuations. But use it or don't use it. He's well known in the industry and gives courses to all the big corporates. Ciao
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louisg
Super Contributor
Not for me, but thanx anyhow.
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john_1
Super Contributor
LouisG the simple answer is you have to try get as much as you can in the shortest possible time. Then live as simply as possible. The other answer is to chase dividends using Instalments. Implats and amplats are great examples as they have finals and interims at diffrent times so you sell after the finals and swap to the other and then back again.
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louisg
Super Contributor
The problem with that strategy, is that you expose yourself to possibly large short term losses(I guess one could also get lucky and enjoy large short term gains). I prefer not to time the market, rather let time in the market iron that out for me. Also 2 shares would be way too risky for me. I was thinking of a diversified portfolio of 15-20 high quality, high dividend yielding shares with good growth prospects. My goal of financial independence is looming and I need to start my next investing phase. Do you think that one should/could exclusively rely on dividends or would you recommend other income streams. ie, bonds (private and public), property trusts and debentures for the long term. Short term/emergency finds (say 1-2% of capital)can remain in the money market.
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john_1
Super Contributor
I meant with a portion of your funds from a seprate account in a cc so its not 'you" trading, then you simple swap all capital gains for div's as you go, and you can roll an instalment without triggering a tax event as you are not selling
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louisg
Super Contributor
John how sure are you that a roll-over does NOT trigger a tax event? I ask because in another topic ("A tax question" by you)Shaun Siddall is of the opinion that it would be of an income nature and NOT capital. Are there references from the Tax Act that you could refer me to?
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