Are You Cannibalizing Your Assets?
If you currently receive monthly distributions from an equities portfolio or fund through an automatic withdrawal plan, chances are you're doing just that! By today's standards 4% annual distributions seems to be the limit for sustainability of a portfolio. The dividend yield on the SP500 is 1% leaving a 3% annual cash shortfall. That shortfall is made up through monthly share liquidations regardless of performance. Look at it this way, automatic withdrawal plans liquidate