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$300,000 is ALL YOU NEED to live off dividends FOREVER (Actual funds & amounts revealed!) — Transcript

by Investing Simplified - Professor G · 3,390 words · 497 segments · language en · Watch on YouTube

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0:00You don't need a million dollars or more
0:02saved or invested to live off of
0:04dividends forever. I have clients living
0:06off $500,000 very easily. Some are even
0:09living off of as much as $300,000.
0:12In this video, I'm going to break down
0:13the exact portfolios with percentages
0:15and even ticker symbols for you to
0:17research further so you can understand
0:19and build the best portfolio for you.
0:21I'm a university professor, but more
0:23importantly, I've worked with thousands
0:25of clients and I've helped them build
0:27the best strategy to be able to finally
0:29quit the rat race and live comfortably
0:31off passive income way earlier than the
0:33traditional retirement age of 65. This
0:36video isn't opinion, it's actual data
0:39from people who are actually doing it
0:41and living amazing. My name is Nolan
0:43Goehring, the students call me Professor
0:45G, and I made this channel to make
0:47investing simplified. Remember that all
0:49investing carries risk, so do your own
0:51research. This is not financial advice
0:53and I'm not a financial advisor. There's
0:55four main categories that you need to
0:57understand and then after that, I'll
0:59give you the exact breakdowns on exactly
1:01what they're doing. I'm also going to
1:03show you how you'd set it up if you have
1:05$1 million plus versus $500,000 or just
1:08$300,000.
1:10So, you could set your goals on the
1:11style that fits you best. The four
1:14categories will give you differing
1:15levels of cash flow, but with differing
1:18levels of risk as well. It'd be a
1:19terrible idea to take your entire nest
1:22egg and just throw it all into something
1:24that's very, very high risk just because
1:26it's promising a super high dividend.
1:29And usually in something like that,
1:30there's some fine print showing that
1:32they could pull that dividend at any
1:34moment, which is going to put your
1:35hard-earned nest egg at risk. If
1:37something seems too good to be true, it
1:39probably is. Now, on the flip side, on
1:42the other hand, a very solid dividend
1:44stock that's a dividend king, meaning
1:47that it has increased its dividend
1:49consistently for at least 50 years,
1:51would be one like Coca-Cola, which has
1:53increased its dividend every year for
1:55the past 64 years. If you have $300,000
1:58in your portfolio and you want to live
2:00off passive income, Coca-Cola has a very
2:03solid 2.8% dividend yield. On $300,000,
2:07you'd be earning $8,400
2:10per year or $700 per month. I don't
2:13think that's going to cut it. But,
2:15here's the secret. You don't have to go
2:17all or nothing. It's not purely black or
2:20white. I have many clients that I work
2:23with and we put together a specific plan
2:25tailored specifically to their goals,
2:27their risk tolerance, and their total
2:29amount of capital to invest. The perfect
2:32portfolio for you is totally different
2:34than somebody else, which is why I work
2:36one-on-one with people when they're
2:38ready. And the link is down in the
2:39description to schedule a Zoom link with
2:41me today if you're interested. But,
2:43let's jump right in. So, I'll start with
2:45the safest asset and just know that you
2:47do need to understand all different four
2:49categories because what you do at first
2:52might be different than what you do down
2:53the road. So, it's important to know
2:55each and every one of them and how they
2:57work in the portfolio cuz things do
2:59change, especially as different life
3:01stages are hit. So, first would be cash
3:03and cash equivalents. For this, you
3:05could use things like a high-yield
3:07savings account, money market account,
3:09T-bills, or bonds. Right now in early
3:112026, you could generally see about 3.3
3:14to 3.5% rates on this and some CDs and
3:17bonds higher like in the low fours. This
3:20category is for safety and stability. If
3:23you plan to live off of dividends
3:24literally forever, you do need some
3:27absolute stability in the portfolio just
3:30in case the entire stock market drops
3:31like crazy, you're going to want
3:33something that's outside of the stock
3:34market that's just going to keep you
3:36safe, especially through that period.
3:38You do also earn dividends or interest
3:41here, so it's not just safety and
3:43stability. So, there's a lot of reasons
3:45why to have at least a small portion of
3:47this off to the side. And number two
3:49would be those strong, solid, blue-chip
3:51dividend-paying stocks like Coca-Cola
3:54that I was talking about from before,
3:56but then also even better would just be
3:58a solid dividend ETF. Very important
4:00that this is one paying qualified
4:02dividends and that it's less volatile
4:05than something like the S&P 500. We want
4:07this part to not only give you a nice
4:09solid little dividend there, but also
4:11give you that hedge against any of those
4:14high-flying technology growth type ETFs
4:17and stocks because those are going to
4:19crash like crazy when you do see a
4:21downturn. A dividend ETF, something like
4:23an SCHD or something, is going to keep
4:25your portfolio pretty strong even in the
4:28event of a recession or something of
4:29that nature. If it's classified as a
4:31qualified dividend, then you're going to
4:33get taxed at long-term capital gains
4:35rate, which is very important to
4:37understand. This will usually be around
4:3915% for most, which is very low for
4:42investment income, but some of my
4:43clients actually get taxed at 0%. Now,
4:46on the flip side, if it's classified as
4:47ordinary dividend, it means it'll be
4:49taxed at your income level. So, if
4:51you're a high earner and already have a
4:5330% income tax, your dividends will be
4:56taxed at 30% or higher if it pushes you
4:59to a high income bracket. If you're
5:01investing in an IRA or some type of
5:03retirement account that's tax-deferred
5:05or non-tax because it's post-tax like a
5:07Roth IRA, then you don't have to worry
5:09about which one's qualified versus
5:11ordinary, but if you're talking about a
5:13brokerage account, a taxable brokerage,
5:16then you do need to definitely pay
5:17attention to this. Like I said, my
5:19favorite option here would be a very
5:21solid qualified dividend ETF, something
5:24like an SCHD that has a dividend of
5:26about 3.8%
5:28also VYM that has a dividend of 2.3%.
5:32Both of these have solid value style
5:34companies in the ETF to keep the
5:36portfolio safer and less volatile while
5:38giving out a nice cash yield. Obviously,
5:41these dividends aren't crazy high, so
5:43let's talk about adding some superpower
5:45to the portfolio here. Next would be one
5:47of my favorite tools when talking about
5:49passive income, but a lot of people mess
5:51this part up specifically, covered call
5:53ETFs. And now, not all covered call ETFs
5:57are built the same, and not all covered
5:59call ETFs should be something you even
6:00consider for your portfolio. So, a
6:02covered call ETF works like this. The
6:04ETF holds a portfolio of stocks like the
6:07S&P 500 or the NASDAQ 100. It then sells
6:10call options on those holdings to
6:12generate income. The premiums collected
6:15are distributed to investors often as
6:17monthly dividends. Remember, this part
6:20is huge. You need to understand how that
6:22dividend or dispersion is being taxed.
6:25From before, it's going to be classified
6:28as a qualified dividend or as an
6:29ordinary dividend, and those are two
6:31huge different things to understand.
6:34Another thing to look out for is return
6:35of capital. So, in covered call ETFs
6:38like SPYI, QQQI, QYLD,
6:42JEPI, BTCI, part of the monthly
6:45distribution might be classified as
6:47return of capital. ROC is not income or
6:51profit. It's essentially giving you back
6:53a portion of your original investment.
6:55It reduces your cost basis, which means
6:57the amount that you paid for the ETF.
6:59So, later when you go to sell, that's
7:01where you'd pay the heavier tax bill.
7:03So, be aware of that. So, one covered
7:05call ETF that's actually pretty awesome
7:07and it's newer. It's from Neos. It's
7:09called IAUi.
7:11And this one has an underlying asset of
7:13gold, which is quite stable long-term,
7:16which I like a lot. But, look at that
7:18dividend yield. 12.52%
7:21is pretty awesome. But, if you look here
7:23at the fund description, it says that up
7:24to 90% of the distribution is considered
7:27ROC. So, to give you a better idea here,
7:30you have to get this. Here's an
7:31oversimplified example for you. You buy
7:34100 shares of a certain covered call ETF
7:36at $80 each. So, that's an $8,000 cost
7:40basis. You get a $4 per share ROC
7:43distribution, so $400 total. Your new
7:46cost basis now is 7,600
7:50or $76 per share. When you eventually
7:53sell, you'll owe capital gains tax on
7:56the extra $400 since you already got it
7:58back tax-deferred. Basically, return of
8:00capital from covered call ETFs is
8:03tax-deferred cash flow now, but bigger
8:05capital gains bill later. In general
8:07though, we're trying to find anything
8:09that defers that tax or makes it so that
8:11it doesn't have a tax or it's very, very
8:13low tax. So, finding things with
8:15qualified dividends or even ROC is much
8:18better than just ordinary income. Some
8:21great covered call ETFs in this category
8:23that I've liked recently are SPYI, QQQI,
8:26QYLD, BTCI, and that new ETF called IAU.
8:31In general, I do like these funds a lot,
8:33but make sure and do your research to
8:35understand them better. And number four,
8:37this last category is super intriguing.
8:39I get this question at least once a week
8:41these days, but I want you to be careful
8:43because it is still very speculative. I
8:46believe it's extra risky, but it's
8:48actually looks like it's pretty safe. It
8:50looks like a no-brainer. So, let's
8:52unpack it a little bit more. I will say
8:54that if it turns out to do even half of
8:57what it's supposed to do, this is going
8:59to make people be able to retire 10
9:01years earlier quite easy. Let's talk
9:04about it. This one's very attractive
9:05right now because it gives off an 11.5%
9:08dividend basically, and it's seemingly
9:10just like a high-yield savings account
9:12where the cash stays the same, but it
9:14just gives this huge interest or
9:16dividend. But, hold on. STRC is a
9:19perpetual preferred stock issued by
9:22Strategy Inc. It pays monthly dividends
9:25like I said, about 11.5%
9:27annualized. The dividend rate resets
9:29monthly to keep the price near that $100
9:32par. There's no maturity date. It sits
9:35above common stock, below debt in the
9:38capital stack. Capital raised is largely
9:40used to buy Bitcoin in that company.
9:42Think of it as a hybrid between like a
9:44high yield bond and an equity. But it's
9:46all engineered around Bitcoin, which is
9:49where I'd say that it's a bit risky,
9:51it's a bit speculative, and it's
9:52definitely volatile. At least the
9:54underlying asset is very volatile. The
9:57problem that I'm seeing right now though
9:58is that it seems too good to be true,
10:00but the thing is is people are putting
10:0125, 30% of their entire net worth or
10:04portfolio into this to earn that easy
10:0611.5%
10:08dividend, and they're acting like it's
10:10just free money with no risk. So, when
10:12does STRC make sense? Basically, makes
10:15sense if you want a high monthly income,
10:17you understand and accept that it has
10:19that Bitcoin exposure, and you treat it
10:21as a risk asset, not cash. It doesn't
10:24make sense for you if you think it's a
10:26bond replacement, and you need
10:28guaranteed income, and you definitely
10:31shouldn't even jump into it if you don't
10:32understand crypto cycles. Strategy is
10:35basically a company that buys a bunch of
10:37Bitcoin, and eventually they want to use
10:39it somewhat like a bank to a certain
10:41extent. We'll see what happens down the
10:42road. But for right now, if everything's
10:45tied to Bitcoin, and they're giving out
10:47a huge dividend based on hoping that
10:49Bitcoin continues to rise, if Bitcoin
10:52drops for a long period of time, and now
10:54they have a negative on their balance
10:55sheet or something, it's going to be
10:56tough for them to also then pay out
10:59interest to us as investors. So, you
11:02just have to understand that there could
11:03be a lot of volatility here, and
11:05nothing's guaranteed. The yield is
11:07variable, not fixed. That 11.5% or
11:10whatever is not guaranteed. And like I
11:12said before, it's not a true stable
11:14asset like a cash or T-bills. Here's the
11:17thing though that gives me some pause.
11:18Right now, we are in a place where
11:21Bitcoin's dropped about 50% of its
11:23value, and STRC is still paying out at
11:26that 11.5%.
11:28So, it does give me just a a bit of hope
11:30here because if we had just been at the
11:33top of Bitcoin and that's when they're
11:35paying out that type of percentage, I
11:37would say, "All right, let's just see
11:38what happens when it drops." Well, when
11:40something drops 50% and they're still
11:42paying at that pretty high dividend
11:43there, that just gives me some hope and
11:45we'll see what actually happens here. I
11:47personally do not have any of my money
11:49in this yet, but I do have a lot of
11:50clients that have tried it and are
11:52trying it and we're just watching and
11:54proceeding with caution. So, I'll
11:56definitely be watching this one for
11:57sure. So, let me show you some actual
12:00portfolios, some ideas of what you could
12:02do based on how much capital you have or
12:04based on how much capital you hope to
12:06have eventually. So, obviously right now
12:08I'm not able to actually specify or talk
12:11specifically and uniquely to you and so
12:14I'm going to generalize based off of
12:16actual numbers in the United States. I'm
12:18going to base it off of the average of
12:20what most in the United States, the
12:22average person in the United States is
12:24going to need in retirement. Generally,
12:26they need 80% of their normal household
12:29income. The median household income is
12:3183,000. So, 83,000 * 80% = 66,400.
12:38I'm also assuming that you'll have
12:39social security or a pension or
12:41something of the average amount near
12:44$2,000 per month or $24,000 per year.
12:48So, the target from this portfolio is to
12:49generate close to $42,000 per year. So,
12:53let's go with that first one, $300,000.
12:56Now, if that's what you have in total as
12:58your nest egg and you want to live off
12:59passive income forever, there's no easy
13:01way to say this. It's basically going to
13:03take a lot of risk. I don't necessarily
13:06think that I would ever encourage
13:07someone to do this at this level
13:09currently at what the type of products
13:11that we have now, only because the risk
13:13is so high and we're talking about you
13:16wanting to sustain this and live off of
13:18this forever, but if you're like,
13:20"That's what I have and I want to just
13:22try it." then I'll show you how I'd do
13:23it. You'd basically need to pick a
13:25couple of covered call ETFs that are
13:27paying out at a pretty high dividend
13:29level. And for this, we're looking for
13:31something like I said that has a high
13:32dividend, but isn't incredibly risky. It
13:35isn't stupid. You have to be careful and
13:37never invest in those yield max or yield
13:39trap type ETFs. If it's giving over a
13:4130% dividend, it's just too good to be
13:44true and that nav erosion's going to be
13:46too crazy. So, let's talk about one that
13:48is possibly a little bit higher of risk,
13:51but not too crazy that it's going to be
13:53unsustainable. And for me, that would be
13:55QQQI with a 14.32%
13:59yearly dividend. So, that'd be the bulk
14:01of the portfolio at 60%. 60% of 300,000
14:04is 180,000.
14:06So, the dividend on this part would be
14:08$25,776.
14:11Then I'd do one covered call ETF that's
14:13more risky and one that's less risky.
14:16The more risky would be BTCI, which has
14:19a 27.8%
14:21dividend. I'd go 20% in BTCI, giving you
14:25yearly of $16,680.
14:28The least risky of the three would be
14:30SPII with a dividend yield of 12.24%.
14:34So, with the 20% left, that would give
14:37you a dividend of $7,344.
14:40Per year, this gives you a dividend
14:42above the 42,000 we were looking for for
14:44a total of $49,800.
14:47Again, that would be very risky to do
14:49with your entire nest egg, so I don't
14:51necessarily encourage this, but let's
14:53jump on over to the 500,000. And now
14:55with the 500,000, that's a lot more room
14:57to work with and I do have a lot of
14:59clients that are right about at this
15:01level needing about that average that I
15:03was talking about from before and are
15:05actually doing this. For this one, I'll
15:07go from riskiest to safest. First would
15:09be that QQQI at 15% of the portfolio.
15:13So, 75,000 * 14.32%
15:16dividend = $10,740.
15:20Then 20% SPII. So, $100,000
15:23times that 12.24%
15:26dividend equals $12,240.
15:29Then that gold covered call ETF IAUUI,
15:32because gold's relatively safe as far as
15:35an underlying asset, so we could do 20%
15:37there as well. So $100,000 times 12.52%
15:42equals $12,520.
15:45Next would be even safer using SCHD, and
15:48I would have that as one of the biggest
15:50portions there at 30%. So 150,000 times
15:54that 3.8% dividend equals $5,700.
15:59So far we're at $41,200.
16:02We still have 15% left in the portfolio
16:04to go there. I'd go 5% in that STRC
16:08thing until I saw that it was a bad
16:09idea, but so far it's been pretty solid.
16:12So 25,000's getting a huge 11.5%
16:16dividend comes out to another $2,875
16:19interest per year. Now that we're over
16:21that $42,000 that we needed from before,
16:24I'd just stick that last 10% in VOO, the
16:27S&P 500, to get some growth in the
16:29portfolio long-term. Obviously, when
16:32constructing something like this, you
16:33need to understand your risk and you
16:35need to understand what type of capacity
16:37your portfolio can even hold. So make
16:39sure to do ample research and talk with
16:41a professional, of course. Now let's
16:42talk about if you have a million or
16:44more. Obviously, with $1 million, it's
16:46pretty easy to get to that $42,000,
16:49because we just did it fairly easily
16:51with $500,000.
16:53Keeping everything the same as far as
16:54percentage as what we did for the
16:56$500,000, you could easily get over
16:5980,000 in passive income yearly with
17:01this. But let's just say you want
17:03something a little bit more. You want
17:04$100,000 per year forever. You'd need to
17:07increase that risk just a bit, but it's
17:09not a crazy ask. I'd go 10% BTCI, so
17:13$100,000 times 27.8% dividend equals
17:17$27,800
17:19per year. Then 20% in QQQI, so $200,000
17:24* 14.32%
17:26dividend comes out to $28,640.
17:30I then put 30% in SPYI, so $300,000
17:35* that 12.24% dividend equals $36,720.
17:4110% in IAU, I the gold ETF. So $100,000
17:46* 12.52%
17:48equals $12,520.
17:51That already gets us to $105,680
17:55and we still have 30% left in the
17:57portfolio to work with. I'd split it
17:5950/50 and go 15% in SCHD and 15% VOO to
18:05add in some safety and stability with
18:07SCHD and some growth for the portfolio
18:09overall with VOO. Now, here's the big
18:11thing here. All these portfolios are
18:14assuming that you already have that
18:15amount of money set aside already in
18:17your nest egg. If you're still trying to
18:19grow your capital to reach that 300,000
18:22or 500,000 or $1 million plus, you don't
18:26want to move into that portfolio yet.
18:29That's what I see people do right now
18:31when they're trying to build to that and
18:32that's just a terrible idea. You're
18:34going to have so much tax drag and
18:36overall it just doesn't grow as fast as
18:39putting it in some other things. What
18:41you invest in while you're in retirement
18:44or when you stop having an income is
18:46totally different than what you invest
18:47in to get you to retirement. Watch this
18:50video here to show you exactly what to
18:52invest in now to get you to that point.
18:54And then you'll use both strategies
18:56together to get you to your financial
18:58goal so you can be financially free
18:59forever. And remember that I'm here if
19:02you want to schedule a private financial
19:03coaching session with the link down in
19:05the description below. And remember to
19:07keep investing simplified.

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