A Little Victory - A Big Feel Good

02 Nov 2018 10:49

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2 years ago I was offered a choice of cashing out my pension or begin receiving a monthly check for the rest of my life that would never increase.

When I received the final offer in the mail I was shocked at how small the amounts were after working for 29 years at the same company. The buyout was 30% less than I had hoped for and the monthly check option of $1,000 summed upped annually, equated to 5.6% of the buyout balance. This didn’t exactly seem like a fantastic option and I knew I could match and eventually beat that return with just dividend & interest income. Like any good investor I ran the numbers, developed an investment strategy and back tested the strategy using Portfolio Visualizer and even did a Monte Carlo analysis. Sure enough everything I ran had a greater than 90% success rate so I decided to take the lump sum payout and invest the money in dividend growth equities, real estate, bonds, and preferred stocks.

It took 14 months to invest all the funds which was completed with my last REIT purchase at the start of February. Within this first year of investing I only received 4% dividend income. Now completing my second year I can report the yield on cost has jumped to 6.49%!

As of the end of October I have now matched the equivalent of total monthly pension payouts and any dividend increases from here on forward will exceed the originally offered monthly payout. This happened 6 months earlier than I had originally calculated and believe it was due to the larger than normal dividend increases received from the Trump tax plan. With 9 years left to go until retirement it will be awesome to see where this will go!

I am sure when my company eliminated the pension there were corporate managers patting themselves on the back and calculating how much of an annual bonus they should get for screwing their workers. Exceeding the original crappy offer payout is meaningless to them but to me it is retribution and feels like a win for the little guy.


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