Transcript
Hello, everybody, welcome to Monday. This is pre recorded. I’m on a short vacation. I will be back on Thursday, I wanted to take this chance to answer some questions that clients have been asking, one of which is what’s the best way to generate income during my retirement. And so the method that we are using this was called Systematic Withdrawals. And I’ve been using this for the last 34 years. And it’s worked really, really well. And matter of fact, Cam Neri who I merged with in 2005, use this for the last 40 years with the same results.
And so what you do is you create a very balanced, very diversified portfolio of stocks and bonds, using broad market indexes and targeted indexes. And you’re trying to achieve the best rate of return you can for the risk that you’re taking. And then you put 5% of the money in the money market amongst this total portfolio, and set up a systematic withdraw that goes right into your checking account to support your your lifestyle. At some point in time, usually every six to 12 months or so the money will run down that’s in the money market, and we rebalance and replenish the money market. And rebalancing is a really powerful component of this, because it makes us sell a little bits and pieces of what’s high at that time, which is exactly what you want to do.
And the other ways that people have been doing income are interesting. I’ve done lots of plans, I’ve seen these, number one is they find lots of individual bonds to live off of that income. And number two is they buy stocks that have high dividends. I think systematic withdrawal are better than both of those mainly because of the balance, the balance is critical. We don’t know where the markets are going to go. We don’t know, you know, the bond market falls apart. And the stock market falls apart. Dividend stocks are one segment of the stock market, often low growth stocks, high dividends, but low growth and we need growth. And so I think systematic withdrawal is the way to go. We have found that it works really, really well. And so that would be my answer to that question. So thank you very much for listening today and I look forward to talking to you tomorrow. Thank you.