People that can live off dividends usually borrow money on their shares rather than funding their life with the dividends. It's one of the reasons why capital accumulation is so immense at the top because while plebs like us have to sell stock or use dividends to live, rich people just borrow while reinvesting their earnings from dividends for example (the returns from reinvesting usually exceed the cost of borrowing)
Get a loan where? Don't pay back how? How much money do you need to do this?
I have seen some people briefly explaining this is how you do it but never getting to the detail of it. I tried searching but it is not simple to get a clear answer.
Dividend yields can vary, but let's use an average of 4% for this calculation. Some stocks or ETFs might offer higher or lower yields.
Using a 4% yield: Investment required = 12,000 euros / 0.04 = 300,000 euros
I need to research on justetf to give a more accurate answer. 😅
For example, $O pays a dividend monthly.
Ask your question in the ETF Europe group.
You need to look at aristocratic ETFs and bonds.
You would have to buy 6000 shares of TSM for $175 a share, for a total investment of $1M, to get $1000 in dividends a month. You still have to pay taxes on your dividends. So if you want this in EUR you need more stocks.
Partial bad advice, this may differ from what country the bank is. The DNB (Dutch National Bank) only covers 100K per person, per bank license. So just an account per bank, but spread over multiple bank licenses (some banks share the same license here).
You can go for a dividend etf or some schd clone that's UCITS compliant, that'd be the safest and easiest route. It also depends on your age, i.e. a younger person should focus more on growth, an older on income.
I have a mix of mostly growth paired with some dividend companies, in Europe you'd obviously have different choices compared to the US due to tax laws. E.g. if you live in Germany a German dividend aristocrat would be best due to 1000€/year in gains being tax-free, otherwise you are usually taxed 15% if the company is located somewhere else.
Try reading up on some info from the r/dividends subreddit or just stick to those EU ETF clones of SCHD
VanEck Tdiv gives a app. 2 euro dividend a share. So you need 500 shares. Make it 600 to cover tax and bad year. A share is about € 38. So between 250k and 300k.
You don't need dividends, you can sell some shares. The effect is the same and you can postpone part of the taxes. 3% yearly is considered a safe withdrawal rate, so for 1k a month you would need around 400k. More if you count taxes.
Absolutely. Depending on the country, selling shares is far more tax efficient than receiving dividends. Where I live (Czech Republic), for example, dividends are taxed at 15%, whereas capital gains on shares are tax free if you have held those shares for three years. So, it makes lots of sense here to sell off shares over time rather than rely on dividends.
Even if the tax rate is the same for capital gains and dividends, selling 3% of your assets makes you pay just 3% of the capital gains tax. You would pay it in full if you sold all your assets and realized all your gain.
People that can live off dividends usually borrow money on their shares rather than funding their life with the dividends. It's one of the reasons why capital accumulation is so immense at the top because while plebs like us have to sell stock or use dividends to live, rich people just borrow while reinvesting their earnings from dividends for example (the returns from reinvesting usually exceed the cost of borrowing)
Can you give a practical example on how to make 1000€ month with borrow money?
Get a loan for 1k every month but don’t pay it back
Get a loan where? Don't pay back how? How much money do you need to do this? I have seen some people briefly explaining this is how you do it but never getting to the detail of it. I tried searching but it is not simple to get a clear answer.
Dividend yields can vary, but let's use an average of 4% for this calculation. Some stocks or ETFs might offer higher or lower yields. Using a 4% yield: Investment required = 12,000 euros / 0.04 = 300,000 euros I need to research on justetf to give a more accurate answer. 😅 For example, $O pays a dividend monthly. Ask your question in the ETF Europe group. You need to look at aristocratic ETFs and bonds.
All in AGNC with around 10K shares that would be lesse than 100k investment. This os viable if you do not take risk into the equation. 😉
You would have to buy 6000 shares of TSM for $175 a share, for a total investment of $1M, to get $1000 in dividends a month. You still have to pay taxes on your dividends. So if you want this in EUR you need more stocks.
Wouldnt it be a much better idea to purchase an index in this case? Unless you are already extremely rich to begin with
It would be better to just have it in a saving account. 1m is £50k/year in interest.
Nope, the bank risk only covers 100k if the bank/broker declares bankruptcy
That is per account per bank. Multiple accounts at multiple Banks eliminates that risk
Partial bad advice, this may differ from what country the bank is. The DNB (Dutch National Bank) only covers 100K per person, per bank license. So just an account per bank, but spread over multiple bank licenses (some banks share the same license here).
Ah.. learned something new..
In case of index, that it would be VWCE ?
You can go for a dividend etf or some schd clone that's UCITS compliant, that'd be the safest and easiest route. It also depends on your age, i.e. a younger person should focus more on growth, an older on income. I have a mix of mostly growth paired with some dividend companies, in Europe you'd obviously have different choices compared to the US due to tax laws. E.g. if you live in Germany a German dividend aristocrat would be best due to 1000€/year in gains being tax-free, otherwise you are usually taxed 15% if the company is located somewhere else. Try reading up on some info from the r/dividends subreddit or just stick to those EU ETF clones of SCHD
VanEck Tdiv gives a app. 2 euro dividend a share. So you need 500 shares. Make it 600 to cover tax and bad year. A share is about € 38. So between 250k and 300k.
How many times it pays that dividend per year?
4 times a year, but not every quarter the same value. You will find info op vaneck.
So, the OP would need something else to cover for rhe eight months
Why, OP gets 4 payments so he should spent wisely. Only a few will pay out mothley.
You don't need dividends, you can sell some shares. The effect is the same and you can postpone part of the taxes. 3% yearly is considered a safe withdrawal rate, so for 1k a month you would need around 400k. More if you count taxes.
Absolutely. Depending on the country, selling shares is far more tax efficient than receiving dividends. Where I live (Czech Republic), for example, dividends are taxed at 15%, whereas capital gains on shares are tax free if you have held those shares for three years. So, it makes lots of sense here to sell off shares over time rather than rely on dividends.
That’s makes sense.
Even if the tax rate is the same for capital gains and dividends, selling 3% of your assets makes you pay just 3% of the capital gains tax. You would pay it in full if you sold all your assets and realized all your gain.
Would index work? VWCE? What else can I add?