Dividend from ETFs-Getting better Now

Do you know the only thing that gives me pleasure? It’s to see my dividends coming in. -John D. Rockefeller

There are a few surprises that happen to my USD denominated portfolio in 2Q 2022. As you know, I opt for VUSD and VWRD as my equities ETFs, both ETFs are distributing funds. For my bonds ETFs, I go for IGLO.

Since distributing funds give me regular dividends quarterly, I hope I will have less headache after retirement since if I can get enough dividends from my other investments, basically I can hold on to my USD portfolio forever.

I talk about the reason why I prefer distributing ETFs HERE.

My Hope

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I have a three-currency portfolio- USD denominated ETFs, SGD denominated bonds, REITs and Bank stocks and MYR-denominated banks stocks and EPF. After retirement, I hope I can survive on these investments without selling a single unit/ share of my portfolio.

As a strong believer of FIRE movement, I follow religiously the principle of 4% withdrawal rate of retirement fund yearly. After calculating how much I need every month post retirement, I am building up a portfolio value than can give me that amount of money ( dividend) post retirement .

That is the main reason why I choose for distributing ETFs rather than accumulating ETFs.

However, if I need USD 40,000 per month, instead of building up a portfolio of USD 1 million, I need a portfolio of at least USD 2 million.

Bad News for 2Q 2022

My whole USD-denominated portfolio value dropped 20% YTD, however I am happy to buy more during bear market.

Actually young investors who are in their wealth accumulating phase should be happy to see a few bear markets before retirement. Everything is on sale during market downturn, USD 3000 a few months ago only allowed me to buy 24 shares of VWRD, but now I can get 31 shares with the same amount of money. ( Unfortunately USD has appreciated against MYR about 6% or else I should have converted more MYR to USD to buy more.)

We can’t predict when the market will bottom and I don’t intend to make any forecast because as a long term investor, I invest regularly every month without looking at the chart.

I take away emotion during investing process and history has proven, by ignoring the noise from the financial world, you tend to do better than those who go in and out the market.

A Surprise for 2Q 2022

I was totally surprised that VWRD paid a dividend of USD 0.83846 this quarter and VUSD’s dividend was a handsome amount of USD0.25567.

I received more than USD 3000 in dividend. By looking at the other dividends I received from my Singapore stocks holdings, I am on my way to early retirement by 2025.

Even though VWRD has dropped more than VUSD YTD ( 19.31% vs 18.21%), buying more VWRD is still a better bet because I own more than 3700 companies around the world instead of just 500 companies from the States ( VUSD).

Besides that, VWRD pays a better dividend than VUSD.

How much is enough??

I have a simple life style, what I am getting now from my portfolio dividend is far more than enough for me and my wife for retirement. Working for the extra 3-4 years helps me to be in a better position financially for my kids’ overseas education fund.

It is quite shocking to learn from other consultants in my hospital than their kids spent almost MYR1.5 million in UK just to get an engineering degree from Imperial college.

I know how much I need for retirement, but if you were to ask me how much my kids need for their university degree from UK or USA, I have no idea but I think at least MYR 150-300k per year. Maybe it is a better idea for me to send them to Singapore to study instead.

This is the tragedy of being an Asian parent, besides working hard for our own retirement, we have to work even harder for our kid’s education fees.

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My Singapore Stocks

For 2Q, I bought more OCBC, CICT, CLCT, MIT and Ascendas REIT. I am happy every time these REITs and bank stocks fall towards their 52-week low point.

Will I buy cryptocurrency? No and never because it is a speculative asset and I don’t see any intrinsic value of this asset class.

History has shown speculative assets do not end well for retail investors; from the Tulip Mania to the South Sea Bubble. Majority of retail investors have the same thought during that moment” This time, it is different!” Trust me, it is no different, you will end up losing your life saving if you follow the FOMO mentality and go after fast ,easy and speculative investment!

Conclusion

Mr Market is bearish now and I am happy to accumulate more ETFs. I have a very simple strategy in my USD portfolio – I only buy VWRD,VUSD and IGLO. Learn how do I invest in ETFs by getting my first book HERE ( for Malaysians) and HERE ( for Singaporeans).

Remember, investing is boring, if it is not boring, you are likely just gambling away your money!

About Goh H

A Malaysian physician who loves to blog about investment, FIRE ( Financial Independence Retire Early), Health, Life, and Medicine.
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2 Comments

  1. Hi Dr, noted vusd and voo dividend declared are different ie Sep 2023 the former declared 0.2676 and the latter 1.492 (even after conversion from gbp to usd) still lower. Understood the recommemdation to buy the former for lower tax but at the end we will also get lower dividend ?

    • Dear Valueinv,
      I don’t think so. VOO has a dividend yield of 1.49% and paid $6.23 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Sep 28, 2023.VUSD dividend yield is also about 1.4%. I think both funds pay almost the same dividend, however, VOO expense ratio is 0.03% whereas VUSD is 0.07%. The witholding tax for VOO is 30% and VUSD is 15%.

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