Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Rising costs of living and shrinking savings force tens of millions of Americans to think about retiring overseas. Last yr, data from the Social Security Administration showed that about 450,000 people received advantages outside the U.S. as of the top of 2021, significantly up from 307,000 in 2008.
Don’t Miss:
Retired within the Philippines For a ‘Fraction’ of U.S. Costs
Earlier this month, an American dividend investor shared his retirement story on /Dividends, a community of over 618,000 income investors on Reddit. The investor, 41, said he retired within the Philippines 4 years ago “for a fraction” of the prices he was paying back home.
“We own our property. I lost 40 lbs. Our health is great. My wife gardens, we have now 10 dogs, we have now a rice field – 3 plantings a yr. I work across the property tending the fruit-bearing trees. We travel in-country rather a lot. Life is nice. Freedom to decide on.”
Earning Monthly Dividend Income After Selling House Back Home
The investor, who said he was married to a 39-year-old Filipino woman, sold his house within the U.S. for about $175,000 and invested in two closed-ended funds. In keeping with the information provided, he was earning about $2,700 a month in dividends from these two funds. He also had a leveraged ETF in his portfolio, which he said was mostly for “capital gains.”
Life within the Philippines – Own Land, Starlink, Driver, Cook and Caretaker
Redditors initially grilled the investor on his selection of dangerous ETFs and the sustainability of his retirement plan. Nevertheless, he sounded self-assured and spoke in regards to the quality of life within the Philippines.
“We own over 10,000 sqm of land, gated. We use Starlink. We own two (2) vehicles. Now we have a staff of three (3) people – live-in driver, cook and caregiver. I’ve been through a bear market already. If living this manner is dumb, then here I’m. We will compare annually should you want.”
He also told investors that his retirement model wasn’t for everybody and that he was aware of the risks.
“I understand my situation is different and there’s rather a lot to be said about closed-end funds and what is true and what will not be. This setup has worked for me and will not be just right for you. I haven’t any plans to vary it.”
‘Freedom To Do As We Please’
The investor shared some more insights into his decision to retire overseas through the discussion:
“We now have the liberty to do as we please. My wife does numerous gardening, our child has present parents as a substitute of overworked ones. We may not have all the pieces the USA offers, but what we gave up is small as compared to what we have now gained.”
Let’s take a take a look at the ETFs within the investor’s portfolio.
Aberdeen Global Income Fund
Abrdn Global Income Fund Inc (FCO) generates income by investing in fixed-income securities. The fund’s portfolio includes government and company bonds and debt instruments from various countries. FCO pays a dividend yield of about 14% and is paid monthly. Over the past yr, the fund has been down about 4.8%.
The American investor who retired within the Philippines said he owned 19,739 shares of FCO and earned roughly $1,381 per thirty days from this investment.
“FCO has been paying the identical monthly dividend for over 20 years,” he said when asked in regards to the rationale behind investing on this fund.
In keeping with the newest quarterly report on the fund’s website, it returned 0.72% on a net asset value (NAV) basis for the three months ending July 31, underperforming the 4.26% return of its blended benchmark.
PIMCO Dynamic Income Fund
PIMCO Dynamic Income Fund (NYSE:PDI) is a high-yield fixed-income fund that invests in debt securities, including mortgage-backed securities and bonds from developed and emerging markets. PDI yields about 16% and pays monthly dividends.
The 41-year-old retired American investor living within the Philippines said he owned 6,015 shares of PDI and picked up about $1,326 a month in dividends from this investment.
PIMCO Dynamic Fund normally invests about 25% of its total assets in privately issued mortgage-related securities and 40% of its total assets in securities of issuers linked to emerging market countries.
In its latest quarterly commentary, the fund’s management said PDI performed well because of its exposure to corporate credit, emerging markets debt and residential mortgage credit. The fund’s asset classes returned 4.93% within the third quarter because risk assets rallied after the Federal Reserve’s 50-bps rate cut.
The American investor who retired within the Philippines said he had about 1,818 shares of ProShares UltraPro QQQ (NASDAQ:TQQQ), which, in line with him, were valued at $130,000 on the time of his post. Up to now this yr, TQQQ is up 60%.
“I’m using TQQQ for capital gains and the others for a living. I reinvest a portion of my dividends every month,” he said.
The investor received quite a lot of flak for his TQQQ investment, as Redditors questioned the logic of investing in a dangerous fund during retirement. QQQ is a leveraged ETF that corresponds to 3x the every day performance of the Nasdaq-100 Index, making it volatile and dangerous.
Here is how the investor explained his investments:
“You will have no idea how lots of my previous coworkers made similar comments. Yet they still work and I don’t. The dividend income will not be designed to extend in value much. It’s for the dividends. FCO has been paying the identical monthly dividend for over 20 years. You possibly can construct a budget off that. I even have heard the arguments that 3x leveraged stocks are only used for day trading tools. Check the stats on ROI vs. SPY or something similar. I sell calls against TQQQ. It really works and has for years.”
While Realty Income is undoubtedly a solid selection for investors looking for consistent monthly dividend income, it is vital to keep in mind that publicly traded stocks are subject to market volatility. For those seeking to diversify their income streams and potentially reduce exposure to market fluctuations, real estate investing through platforms like Arrived is price considering.