Compound Working Capital with Income Investing

| Working capital is the money that makes money for you. In Retirement portfolios, shares would have to be sold to access cash. But in Dividend portfolios, you preserve your shares, but just churn out cash indefinitely!

Did you know that when you retire, you are required to take at least 4% of your portfolio value as retirement income per year? Yes, this is called a Required Minimum Distribution, or RMD. And, did you know there are life expectancy tables to help you calculate how much above 4% you can afford to take based on what’s left of your portfolio? Sad, really, to think that you are standing on an iceberg, but that you have to chip away at it for sustenance, all the while reducing the very thing holding your head above water!

That scenario is typical of most retirement portfolios whose goal is share Growth. You buy shares of strong companies and hope that their share value balloons over your lifetime, only to sell OFF those shares when you stop receiving a salary. I, personally find that extremely scary, because your sole survival depends on selling off bits of your portfolio for cash.