08-24-2019, 03:55 AM
I was never talking about worrying which month a stock pays a dividend, rather I was wondering what sort of a strategy people are using in order to distribute it more or less evenly throughout the year. If you are a simple buy and hold type of a person, then your quarterly income is pretty stable. But as I said, I have negative months (from bad trades) as well as some months where I'm making over 100% more than the month before, so it was necessary to find a system that balances it and also adjusts for changes in my earnings.
A simple cash buffer and "withdraw X per month" is the most simple solution (and indeed very close to what this is) but you need a way to determine X. If you just stick to X being one figure, then it will quickly lose touch with reality and you will find your cash buffer either increasing or decreasing. When your money is coming from a salary, it's normal for X to be the same for every single month because you are earning the same amount of cash each month. But when it's investments then every time I buy or sell something; every time a company raises or lowers their dividend; every time the interest rate on the cash buffer changes; every time I make a trade... the old X becomes out dated.
This trailing 12-month average is basically a more or less automated way to keep X in line with what I am actually earning right now. And it does not involve guessing anything about the future. (because I'm not good at that) It automatically balances out the highs and lows and automatically ensures that my cash buffer remains at a stable level.
While at first this might seem like making things overly complicated, in reality all that I need to do is change 2 numbers in my spreadsheet once per month and everything stays up to date.
A simple cash buffer and "withdraw X per month" is the most simple solution (and indeed very close to what this is) but you need a way to determine X. If you just stick to X being one figure, then it will quickly lose touch with reality and you will find your cash buffer either increasing or decreasing. When your money is coming from a salary, it's normal for X to be the same for every single month because you are earning the same amount of cash each month. But when it's investments then every time I buy or sell something; every time a company raises or lowers their dividend; every time the interest rate on the cash buffer changes; every time I make a trade... the old X becomes out dated.
This trailing 12-month average is basically a more or less automated way to keep X in line with what I am actually earning right now. And it does not involve guessing anything about the future. (because I'm not good at that) It automatically balances out the highs and lows and automatically ensures that my cash buffer remains at a stable level.
While at first this might seem like making things overly complicated, in reality all that I need to do is change 2 numbers in my spreadsheet once per month and everything stays up to date.