Approach On Generated Dividends And Expenses

In my previous post, I mentioned about the investment portfolio. Today, I will focus on the expenses in which the generated dividend from the portfolio will cover. One can consider reducing the expenses (if desired by one) so that there is less need for the investment portfolio to generate the said dividend to cover the expense. It’s actually the chicken and egg philosophy. All circumstances depend one another. I realise that the number in which I monitor the performance of my investment portfolio has reduced significantly as I proceed to enjoy my life to my extent. I focus on doing the things of my best interests and do not bother on the investment portfolio. I look at the investment once a month. This is the way in which I feel that life should be in the way. The main purpose of the FI is to enable one to enjoy life and think of improving the life happiness without the worry of the investment portfolio being deleted before the end of the life. I create a buffer of the projected dividend (on an annual basis) and set my expenses for the whole year. An example will be as such.

If my projected dividend is $40,000 per year, I will allocate $30,000 of expense accordingly. The buffer of $10,000 will act as potential emergency expenses during the course of the year. I use the generated dividend of the previous year to set the expense for the current year, taking into consideration of the buffer.

The above gist is to be flexible in the approach. The generated dividend for the current year may be different from the previous year. If the generated dividend drops, I will adjust down the expense. If the generated dividend increases, I have the option of adjusting up the expense. However, I usually do not do so. I will mostly maintain the existing expense accordingly.


Author: firewtk

A middle-age Singaporean currently having a minimalist and simple lifestyle. I am not longer in full-time employment with effect from 1 May 2019. I try my very best to write one post per day on this blog. The purpose is to share my prevailing thoughts to interested readers. It is up to the interested readers to decide whether they want to take action in embarking on the FIRE journey. I do not gain anything from this blog and it is solely for sharing hopefully for the benefits of all interested reader. WTK

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