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The rising cost of living and shrinking savings are forcing millions of Americans to retire abroad. Last year, Social Security Administration data showed that about 450,000 people were receiving benefits outside the U.S. at the end of 2021, up significantly from 307,000 in 2008.
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Retired in the Philippines for a ‘fraction’ of US costs
Earlier this month, an American dividend investor shared his retirement story on /Dividends, a community of more than 618,000 income investors on Reddit. The 41-year-old investor said he retired to the Philippines four years ago “for a fraction” of the expenses he paid back home.
“We own our estate. I have lost 20kg. Our health is great. My wife gardens, we have ten dogs, we have a rice field – three plantings a year. I work around the property and tend to the fruit-bearing trees. We travel a lot in the country. Life is good. Freedom to choose.”
Earn monthly dividend income after selling your house at home
The investor, who said he was married to a 39-year-old Filipino woman, sold his house in the US for about $175,000 and invested in two closed-end funds. According to the data provided, he earned approximately $2,700 per month in dividends from these two funds. He also had a leveraged ETF in his portfolio, which he said was primarily for “capital gains.”
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Life in the Philippines – Own country, Starlink, driver, cook and concierge
Redditors initially questioned the investor about his choice of risky ETFs and the sustainability of his retirement plan. However, he sounded confident and spoke about the quality of life in the Philippines.
“We own more than 10,000 m² of land, fenced. We use Starlink. We have two (2) vehicles. We have a staff of three (3) people: a live-in driver, cook and caretaker. I have been through a bear market already. If living this way is stupid, then I’m here. We can compare annually if you want.
He also told investors that his pension model was not suitable for everyone and that he was aware of the risks.
“I understand that my situation is different and that there is a lot to be said about closed-end funds and what is good and what is not. This setup has worked for me and may not work for you. I have no plans to change it. “
‘Freedom to do what we want’
During the discussion, the investor shared even more insights into his decision to retire abroad:
“We now have the freedom to do what we want. My wife does a lot of gardening, our child has current parents instead of overworked parents. We may not have everything the US has to offer, but what we have given up is small in comparison with what we’ve done.” have won.”
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Let’s take a look at the ETFs in 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 corporate bonds and debt instruments from various countries. FCO pays out a dividend yield of approximately 14% and is paid out monthly. Over the past year, the fund is down about 4.8%.
The American investor who retired in the Philippines said he owned 19,739 shares of FCO and earned about $1,381 per month from this investment.
“FCO has been paying the same monthly dividend for over 20 years,” he said when asked about the reasons behind investing in this fund.
According to the latest quarterly report on the fund’s website, it returned 0.72% on a net asset value (NAV) basis for the three months ended July 31, underperforming the 4.26% return of its mixed 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 approximately 16% and pays a monthly dividend.
The 41-year-old retired American investor living in the Philippines said he owned 6,015 shares of PDI and received approximately $1,326 per month in dividends from this investment.
PIMCO Dynamic Fund typically invests approximately 25% of its total assets in privately issued mortgage-related securities and 40% of its total assets in securities of issuers affiliated with emerging market countries.
In its latest quarterly commentary, the fund’s management said PDI performed well thanks to its exposure to corporate credit, emerging market debt and residential mortgages. The fund’s asset classes returned 4.93% in the third quarter as risk assets recovered following the Federal Reserve’s 50 basis point rate cut.
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ProShares UltraPro QQQ
The American investor who retired in the Philippines said he owned about 1,818 shares of ProShares UltraPro QQQ (NASDAQ:TQQQ), which he said was valued at $130,000 at the time of his post. So far this year, TQQQ is up 60%.
“I use TQQQ for capital gains and the other for a living. I reinvest some of my dividends every month,” he said.
The investor received a lot of criticism for his TQQQ investment, as Redditors questioned the logic of investing in a risky fund during retirement. QQQ is a leveraged ETF equivalent to three times the daily performance of the Nasdaq-100 Index, making it volatile and risky.
Here’s how the investor explained his investments:
“You have no idea how many of my previous colleagues have made similar comments. Yet they still work and I don’t. The dividend income is not intended to increase in value much. It’s for the dividends. FCO has paid the same monthly dividend. you have been able to build up a budget from this for more than 20 years. I’ve heard the arguments that leveraged stocks are only used for day trading tools. Check the stats on ROI versus SPY or something like that and have been for years.”
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While Realty Income is undoubtedly a solid choice for investors looking for consistent monthly dividend income, it’s important to remember that publicly traded stocks are subject to market volatility. For those looking to diversify their income streams and potentially reduce exposure to market fluctuations, real estate investing through platforms like Arrivald is worth considering.
Arrivald allows individuals to invest in rental property shares for as little as $100, providing the opportunity for monthly rental income and long-term appreciation without the hassle of a landlord. With more than $1 million in dividends paid last quarter and a growing portfolio of properties across markets, Arrivald offers an attractive alternative for investors looking to build a diversified real estate portfolio.
This article 41-year-old retired American lives in the Philippines on dividends with family shares in a stock portfolio: ‘Life is good. Freedom To Choose” originally appeared on Benzinga.com
