What if my investments paid me dividend-style income?
Living off investment income means a portfolio paying out instead of compounding. Two numbers decide whether that works: the value of the portfolio and the yield you assume on it. What is left after tax has to cover enough of the spending to matter, and what stays invested grows more slowly from then on.
What the income depends on
- The portfolio value and the yield you assume on it, which is your figure rather than a given.
- Whether the income is reinvested or paid out, and the month that switch happens.
- The share of your monthly spending the payout would actually cover.
- The tax treatment you apply to it, and what is left once that is taken off.
- The growth left in the portfolio once income is distributed rather than compounded.
Reinvest against pay out
Keep the portfolio, time horizon, and spending the same. In one copy, returns remain invested; in the other, they are paid out from a chosen month. The comparison then shows how the payout affects long-term portfolio value and how much monthly cash it provides.
Then lower the assumed yield and look again. Payouts are decided by companies and funds, not by plans, and they are cut in exactly the years you would least want them cut. If the spending only works at the higher yield, what you have is a plan that needs a good year rather than an income.
Questions worth testing
- What share of monthly spending does the payout cover after the tax you applied?
- How much long-run value does the plan give up by not reinvesting?
- Does the plan still work if the assumed yield is a third lower?
- What covers the rest of the spending in the years the payout falls short?
How to read the result
The yield and the tax are figures you enter — Worthifi does not calculate tax on investment income, applies no withholding, exemption or holding-period rule, and does not know your situation; a tax adviser does. Payouts are not guaranteed and can be reduced or stopped. Nothing here promises an income. This is a planning illustration, not investment or tax advice.
How it works in the app
Switch a bucket's planned change to “Reinvest / pay out income” and choose “Pay out as income” — its interest becomes monthly spendable cash instead of compounding. See it show up in passive cashflow.
- Open Investments → Edit portfolio.
- On a bucket, add a “Reinvest / pay out income” change and choose “Pay out as income”.
- Check the payout in your passive cashflow.
Model this yourself