Dream Dividend Life: How Much Do You Need to Live on Passive Income?! — Tokyo Institute of General Research —
Hello everyone.
We are the Tokyo Institute of Comprehensive Research staff team!
Wouldn’t it be great to live on dividends without working?
Whether you’re sleeping, playing games, or abroad, the money will work for you automatically.
We will explore how much you would need to realize such a dream!
Income Gain and Capital Gain
First, let’s confirm the two types of profits you can earn from stocks.
Income gain... Revenue obtained simply by owning assets
Capital gain... Revenue obtained by selling assets
In other words, in stocks, the profit you earn when the stock price rises and you sell is capital gain, while dividends paid periodically for holding the stock for half a year or a year are income gains.
If you can receive a lot of income gains in dividends, you can achieve a dividend lifestyle!
[Reference]
How much dividend is needed to live without working?
To achieve a dividend lifestyle,
Dividends ≧ Expenditure
must be the case.
Ministry of Internal Affairs and Communications Statistics Bureau “Household Economy Survey” shows that household consumption expenditure (for two or more people) is about 300,000 yen per month.
Therefore, you would need dividends of at least 3.6 million yen per year, i.e., 300,000 yen per month.
Consider dividend yield
Next, let’s think about dividend yield.
According to Morningstar, the expected dividend yield for the Tokyo Stock Exchange First Section is2.29%as of April 3, 2019.
Dividend yield varies greatly by stock.
Let’s look at the top dividend-yielding stocks.
| 1st | Suzuden | 8.37% |
| 2nd | Matsui Securities | 8.28% |
| 3rd | Berite | 8.16% |
Remarkably, the top three stockshave dividend yields above 8%.
Bank deposits earn only about 0.01%, while you can receive 8% elsewhere.
If you had invested 1,000,000 yen, 80,000 yen would automatically come in each year.
Howeverhigh dividend yields can be a trap, so caution is required.
Let’s consider an example.
A company with a stock price of 1,000 yen and a dividend of 50 yen has a dividend yield of 5%.
If this company’s stock price plummets to 500 yen,
the dividend yield becomes 10%.
What do you think?
A company with a 5% yield increases its yield due to a stock price drop.
Thus, buying shares of a company whose dividend yield is 10% due to a stock price drop does not necessarily guarantee good returns;poor earnings can cause further stock price declines or dividend cuts.
Therefore,excessively high dividend-yielding stocks are dangerous.
With that in mind,high-dividend-yield stocks with stable earningsare best choices.
A realistic, attainable dividend yield isabout 4%.
So, with a 4% dividend yield, how much cash would you need to live on dividends?
How much money do you need to realize a dividend lifestyle?
Finally, let’s look at the amount required to achieve the dream dividend lifestyle.
You might think all dividends are freely usable, but that isn’t the case in reality.
Because taxes apply.
Dividend tax rate20.315% applies.
So let’s calculate with taxes in mind.
As noted earlier, dividends exceeding expenditures are OK.
Let the money needed to realize a dividend lifestyle be X.
X×0.04×(1-0.20315)≧3,600,000
X≧112,944,719
about 113,000,000 yenwould let you live on dividends!
As expected, you need a substantial amount of passive income to live on your own.
Summary
We’ve looked at how much money is needed to realize a dividend lifestyle; what did you think?
To realize a dividend lifestyle, about 113,000,000 yen is required.
People with a large amount of cash may consider trying it.
Conversely, those who want to grow their principal may not be suited for it.
If you want to know which type you areTrading Psychological Testis recommended.
That’s all for today.
See you again!
【Related】
----------------------------------------
For those who want to learn professional investors’ views and actuallycut lossesmethods, or to study investment theories,
the following blogs update daily with professional insights and investment theories!
Please check them out!
↓↓↓
For more detailed explanations and articles on other investments, see here!
Also, our representative contemplates the market from a unique perspective!
Please take a closer look here! ☟
overseen by Tokyo Institute of Comprehensive Research Institute
【Tokyo Institute of Comprehensive Research Institute Investment Psychology Test】We are conducting it.
We read your personality and introduce investment services suited to you!
----------------------------------------
At Tokyo Institute of Comprehensive Research Institute, dailyLINE@ posts useful information！（*^^*）
For those who want to catch real-time information quickly, we highly recommend it!
Save the image below,LINE to Friends and thenQR code read it, then select the image from your album to register easily!
Please register now!
Questions and consultations are free! Feel free to contact us!
If you are adding from a friend search, go here →【@billiontouch】
