How to Get Income from a Fund that Doesn’t Pay An Income Automatically.

I am back with some income series video podcasts.

Some years ago, I did up a post to explain how you could get income from a fund that does not distribute income automatically. Read the post here: How to Get Passive Income From Non-Dividend Paying Funds.

If you have no idea how that works, I bring you through an actual fund, the Dimensional Global Core Equity fund, in this video:

The Global Core Equity has both the accumulating and distributing classes, so the fund is conducive to explaining some stuff.

The key reason why selling units ourselves is better is that we want the following:

1. Consistency in income.
2. We are best to know how much we need instead of the fund manager.
3. Income inflation-adjusted for our needs.
4. We know how long we need the income to last.

Fund managers give way too little when they are just passing on the dividend payout and way too much if they use the dividend as bait to get you invested.

Yet, I think it is important for us to mention that not everyone has a good plan for how much we should sell so that we don’t run out of money prematurely.

But this problem is not an excuse to prefer just taking dividends as income instead of selling units. If you don’t have a good plan, and don’t know what is overspending, you would eventually run into problems on a dividend investing method as well.

We also go through a few different historical return periods that are longer.

That allows us to see some of the things people fear: The units you own dwindling down.

But it also allows you to see that as the NAV per unit goes up, each unit is also worth more. Going through an example with the crazy small cap value index is probably more extreme but… it should drive the point across.

Let me know if you have further questions.
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