📊 How much money do I need to invest to live off dividends?
Intro
Many investors dream of ditching their 9-to-5 job to live entirely off passive income from dividends. It sounds amazing on paper, but you need to run the exact math to see if it is actually feasible for your current portfolio. High dividend companies distribute their profits instead of reinvesting them. This historical pattern leads to lower total growth compared to broad market index funds.
🎯 Timeline & Goals
Enter your target annual passive income and timeline to see if you have enough capital to transition to a dividend income strategy right now.
The amount of capital required is often staggering. As Nav puts it, if you have to hit a $75,000 of gross income in dividends, you will have to invest $6.7 million in a broad market fund.
📈 Yield Assumptions
Compare the required portfolio sizes across different strategies. Broad market ETFs like VOO yield around 1.1%. High dividend ETFs like SCHD yield roughly 3.8%. You can also chase individual stocks paying 6%.
However, reaching for yield introduces severe concentration risk. As Grow with Nav notes, paying almost 6% dividend, you will still need over a million dollars invested. Plus you have exposure to one stock, so you are not very well diversified.
🔗 See Also
Based on content by Nav on Grow with Nav (YouTube).
Original: Growth vs Dividend Investing — The Truth About Passive Income 😏
📊 Results
VOO Capital Needed
SCHD Capital Needed
High-Yield Needed
SCHD Shortfall
Bottom Line
Focus on total return
Calculator updated by heyfinfam (v26.8.6) · View history
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