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Achieving financial freedom to live abroad is possible with a $50,000 dividend portfolio through diligent saving, strategic investing, and a focus on a lower cost of living.
The video outlines a strategy for achieving financial freedom to live abroad, inspired by others who have done so through dividend portfolios. The host shares personal goals, aiming for a monthly income of $1,500 to $2,000 to support a lifestyle in Southeast Asia, a stark contrast to higher living costs in places like California. This financial independence is built through consistent savings and investments, with the target portfolio size estimated to be around $450,000 based on a 4% yield.
The host details their current dividend portfolio, valued at approximately $49,000, which they aim to grow by saving about a third of their $3,000 monthly net income. The investment strategy prioritizes dividend-paying stocks, with a focus on companies that offer predictable income and dividend growth over time, rather than solely chasing high yields. While acknowledging the existence of growth stocks, the host prefers a more conservative approach for their dividend portfolio, citing the importance of a safe withdrawal rate and the potential for dividend growth on cost basis.
The video also addresses potential challenges such as market crashes, health concerns in older age, and the desire for early retirement to pursue fulfilling activities. The host emphasizes the importance of an emergency fund, conservative stock selection (like Walmart), and maintaining retirement accounts. They project a 7-10 year timeline for achieving their financial goals, acknowledging that personal sacrifices may influence this duration. The ultimate aim is to transition from working out of necessity to working on passion projects in a preferred international location.
Yes, a $50k dividend portfolio can be a foundation for financial independence, especially when combined with a lower cost of living abroad. The key is to generate enough passive income to cover your expenses, which can be achieved through strategic dividend investing.
Living abroad on dividends involves building a dividend portfolio that generates sufficient income to cover your target monthly expenses in your chosen international location. Consistent saving, investing in stable dividend stocks, and maintaining a lower cost of living are crucial elements for success.
A good dividend portfolio for early retirement focuses on stable companies with a history of consistent dividend payments and potential for growth. The goal is to create a reliable income stream that can support your lifestyle without depleting the principal, allowing for financial freedom.
The passive income generated from a $50k dividend portfolio depends on the dividend yield of the investments. With a conservative 4% yield, you might expect around $2,000 per year, or about $167 per month. Higher yields or growth can increase this amount.
Whether a $50k dividend portfolio is enough for financial freedom depends heavily on your lifestyle and location. For a lower cost of living, like in parts of Southeast Asia, it can be a solid start, potentially covering basic expenses and allowing for a more fulfilling life.
Achieving financial freedom with dividends involves consistently saving a portion of your income, investing it in dividend-paying stocks, and allowing those investments to grow over time. Reinvesting dividends and focusing on predictable income streams are key strategies.
To generate $2,000 per month in dividend income, a portfolio of around $300,000 to $450,000 is often suggested. This is based on a conservative withdrawal rate, typically around 4%. The exact amount needed can vary significantly depending on your target location and lifestyle expenses.
For younger investors, prioritizing capital appreciation and long-term growth through growth stocks is often recommended. Once a substantial portfolio is built, transitioning funds to dividend-paying stocks can provide a stable income stream for retirement. This strategy allows for wealth accumulation early on, with a shift to income generation later.
Planning for retirement abroad involves considering potential inflation and currency fluctuations, which can impact your budget. It's wise to target a slightly higher monthly income than initially planned to ensure financial safety. Additionally, visiting your target country regularly can help you understand the local cost of living and adjust your retirement plans accordingly.
While it's possible to plan retirement without relying on Social Security, it can serve as a valuable longevity insurance. Many individuals aim to build a portfolio that covers their expenses independently. Social Security can then be a bonus or a safety net if it remains available and solvent when you reach retirement age.
To prepare for a potentially long retirement, it's advisable to plan for extended lifespans and consider the impact of inflation on your expenses. Projecting costs to double every 10-20 years can help ensure your savings are sufficient. This conservative approach accounts for unforeseen circumstances and the rising cost of living over many decades.
0:02 Hey YouTube, Alex here and in today's video, I want to introduce my dividend portfolio. For those who this is their first time on the channel, I actually lived in Southeast Asia for a couple of years and decided to come back here to the US to build my financial freedom.
0:19 This video is on that topic where I'm going to talk about my targets, my goals as far as investments to properly fund a lifestyle abroad. The goalposts may move. I may alter these in the coming years, but this is a rough estimate or a rough outline of what I've got and what I'm targeting and an estimate of how I plan to get there.
0:51 I originally got this idea from someone else. This is not an original idea, but I want to do things, but I'm going to try to recreate somebody else's journey. I want to attempt to recreate somebody else's journey to see if it can still be done.
1:11 For those who aren't familiar, got this idea from Jason. I don't know if he's still living in Thailand or not, but he did for a while and he did so off the proceeds of his dividend portfolio. He built this up over time working a normal 9-to-five job in the automotive industry.
1:30 I personally am working in government or government adjacent work and I believe that over time through diligent savings and investments that I can build up dividend income to cover my expenses abroad in such a way that the dividends grow over time to cover inflation ideally inflation and then some.
1:57 There's a certain point at which you hit escape velocity. Depending on what you're spending each month, you need differing amounts of dividend income. If somebody wants to live high on the hog in urban California, then they're going to need a lot more money versus somebody who is willing, capable, comfortable with relocating to Southeast Asia.
2:21 Even more so if they don't have to be in one of the Southeast Asian mega cities in an expat neighborhood. They don't have to own a car. They don't have to eat Western for every meal. So you could see how the spectrum of expenses could be as low as say a,000 a month or as high as 10 20 plus thousand per month.
2:47 My current target is about 1,500 per month. Although I kind of go back and forth if 1500 will be sufficient for me in more moderately priced cities or if really I ought to target 2,000. It depends on how the market grows in the coming years, how hot inflation runs in the coming years.
3:12 I may change my mind and say, you know what, my job ain't that bad. when you're working for government, you're working toward a pension, maybe I hold out for say 20 years of service and retire with a much larger pension.
3:32 It really comes down to how the journey goes. For some people, they really don't like their job. Jason did not like his job and he also had built up income from riding such that he retired early at 33 and moved to Chiang Mai.
3:51 For those who don't know, Chiang Mai is I would say my favorite city, but at least among my favorite cities in the world, Chiangg Mai is also budget friendly. If you're comfortable with these kinds of cities, you can live on a more relaxed budget.
4:06 At this point in the video, I'll go ahead and put my portfolio up on the screen. This is not the totality of my investments, but this marks the dividend section of the portfolio.
4:22 I started buying dividend stocks 5 to seven years ago, and I sold some, jumped into some uh volatile stocks that turned out to not be good investments. Definitely lost some money there, but I started rebuilding, I'd say about 5 years ago.
4:40 I'll attempt to list my purchase price. I could also find the dates that I made these purchases, but this is to establish accountability so you know that I'm not just saying, "Oh, yeah, I recommended that stock on this date," but there's no record.
4:58 I'm fortunate that almost all of these dividend stocks have grown in value. I'm not a genius. This is not financial advice. I'm not certified or licensed to do that. I'm simply sharing what I've done to attempt to work toward financial freedom.
5:18 You'll see that the portfolio is valued at around 49,000 USD right now. And I intend to add to that every single month. My goal is to save roughly about a third of what I bring in.
5:38 I bring in about 3,000 a month in my current job net. If I can keep my spending to 2,000, realistically speaking, it's probably going to be more like 2,200.
5:53 But if I can increase that income through improving my job, that's a goal right now to get a higher paying job where I could save more like 1,500 a month, maybe even 2,000 a month because my income was very high, but tech tends to be very volatile.
6:09 Could I get back into it? I'm doubtful at this point. That's why I've elected to go the government route.
6:16 My goal with these stocks is not to sell any unless I have a strong reason to sell, like a very strong reason. My investment thesis has changed. A big example of this would be that they cut the dividend.
6:35 If they cut the dividend, then it doesn't make sense to own that stock to collect dividends. Another example would be if they get bought out.
6:43 It's not really a voluntary sale, but that's happened. I used to own Store Capital, the only REIT owned by Warren Buffett, and they took it private. So, I had no choice but to sell as that agreement was made.
6:58 I got what I felt like was okay value. I didn't lose money. Some people will see this portfolio and they'll say, "Why not increase your yield? Why not buy higher yielding stocks?"
7:13 And to that I would say I think that a safe withdrawal rate is 4%. When you get beyond a yield of 4% it starts to be less safe.
7:24 Are there dividend stocks that pay above that that I hold? Yes. And I'll get into that. A big reason is growth. If I hold a stock and I don't sell it and they keep growing the dividend, eventually my yield on cost will actually grow too.
7:41 Certain stocks are fine for cash flow. They are companies that are not really doing tons of innovation, but they produce stuff that people really need. An example of that would be Proctor and Gamble.
7:55 I've owned this for four years, I think, and there's been no growth. It's basically flat. But most people, they like to brush their teeth. Most people like to use soap when they shower. And so that's a fairly straightforward, predictable, easy to understand investment.
8:13 They're probably not going to come out with some kind of new artificial intelligence soap. But odds are, as long as people are around, they're going to be buying soap.
8:23 Well, why not super low dividends? Well, I do have some that are paying a low dividend. An example would be United Healthcare. They're currently at 2.2%.
8:35 But I bought it when it was undervalued and the yield was around 3%. And the share price has improved since then, which in effect lowers the yield. Not my yield, right? Not the yield on cost, but the yield as a percentage of current market value.
8:52 Some people would say, why not go all in on growth? You're young. I do have growth portfolios. However, I don't want to share my exact financial situation uh because I'm cautious about people knowing where I'm at financially.
9:14 Two, some of the growth stocks are locked into retirement accounts such that they're not accessible for me until I turn 59 and a half. So halfway between my 59th and 60th birthday, which is several decades away.
9:32 And besides that, they tend to be more volatile than the dividend stocks. So I mentioned that my target is 1,500 a month.
9:43 What does that look like? Well, at 4% yield, that would be a $450,000 portfolio. Now, that's assuming an average of a 4% yield.
9:55 One of the things that I plan to do is have a mixture of lower payers and higher payers. And ideally that averages out to 18,000 a year.
10:09 So currently, uh, my $49,000 portfolio yields around $1,750 and it's actually going to go up from there because a,000 of that is ready to be deployed.
10:27 This is a rough goal. Am I saying you can live on, 1500 a month? No. I don't know what your financial situation is. I don't know what your lifestyle is like. I don't even know where you live.
10:41 A single person can live on less than what a couple can and a couple without children is going to be able to live on less than what a family can live on.
10:51 Why not wait until I'm 67, right? At that point, I can max out my retirement and etc, etc. Well, one, I don't know what my health is going to be like when I'm in my 60s. Might not even make it to my 60s.
11:11 Two, there are things that I can do in my 40s, even 50s, even, let's say, early 60s, that may not be a possibility as I approach 70. There are activities, there are travels or trips, locations, different kinds of things that become more difficult as you get older.
11:31 Some guys who want to move abroad, they get to a certain age and they may have health issues. Then they may have insurance here in the states such that they're thinking, well, you know, I wanted to move abroad, but now with X, Y, or Z health issue, I better just stay put.
11:49 It's no longer on the table. What's the timeline here? Well, I punched some stuff into the calculator. I'm looking at roughly what could be a seven to 10 year process.
12:04 Jason took six years, but he was very aggressive. He was very, very aggressive in his saving and investing. He sold his car. He moved to a cheaper apartment. He was eating ramen every day for lunch. I'm not quite sure I can make all of those sacrifices.
12:20 He also moved across the country, which is something I did for a better job opportunity than what was available locally. But just because I'm not willing to commit all the way in the way that he did, doesn't mean I can still use a lot of these steps.
12:33 It's probably going to take me longer than 6 years, but it will take me less than 30 years. I'm hoping.
12:43 Now, along the journey, things may change. I get into a comfortable job that I'm good at. I know generally how it works. Then I may say, you know what, I'm going to continue to live frugally. I'm going to continue to save and invest a lot. But maybe I do wait until say 62.
12:57 But most likely it'll be sooner than that because I miss
13:03 I miss living in Asia for many reasons. I miss the vibrancy of the cities. There's always something going on. There's always something interesting to do. I miss the food that I like. I find that I'm healthier over there overall and you have to have the finances to do it.
13:23 I think that's a big barrier for a lot of people that they'd prefer to live over there, but their finances are not in order such that it's sustainable. Some might say, why not go all in on growth? Why not roll the dice?
13:34 But to me, this is a much more predictable, boring strategy that may not be the fastest, but is something that I feel comfortable with managing. Now, if certain growth holdings of mine hit certain levels, then I will probably take some profit and roll that profit into dividend payers to increase my cash flow.
14:04 That's the X factor where if I was starting with just the 49K and nothing else, it would be a lot slower journey. But some of my growth stocks, they are not in retirement accounts. And so they are more liquid, more easily accessible. And thus, if I wanted to convert them into cash flow choices, then that's very doable.
14:27 It does sacrifice growth. It can expedite the process for me to move abroad. And my goal in moving abroad would be to work on things that I find more interesting or more fulfilling. Most of us work our day job because it is fairly predictable and we need money in order to live.
14:51 But if we didn't have to work for money in order to live, we might work on any number of things that we find more fulfilling than our day jobs. And for some of us, it's not that we hate our day jobs, but rather that we'd rather do something else.
15:07 For me, I actually don't mind my job. I'd rather just live in a different location. And I think some of that's the case for some people as well, like, hey, I really like whatever I'm doing, but I'd rather do it somewhere else.
15:21 The next question that might come up from some folks is, well, what if the market crashes? Well, there's a couple ways to solve for that, in my opinion. One is that you have an emergency fund. I don't believe in living without an emergency fund.
15:37 Having a stockpile of cash to get you through whatever amount of time you feel comfortable with. For some people, maybe it's 3 months of expenses. Other people, it's 6 months. Another way I'm going to handle this is to pick conservatively.
15:54 I'm not going to buy meme stocks and junk. I'm going to attempt to buy fairly boring and basic stuff that's easy to understand. Not, you know, well, this thing is wild and crazy and it's going to make me a millionaire overnight, bro.
16:13 Uh, nothing wrong with that for some folks, but I think if you pick conservatively, then you have higher margin for error. An example of this might be Walmart stock. I am very doubtful that Walmart is going to go bankrupt anytime soon.
16:33 You look at their cash flow, you look at their ubiquity in American society, you look at their growth in e-commerce, then yeah, they might have some tough years. They're probably going to outlive me. Being realistic, Walmart is probably still going to be around long after I'm gone.
16:54 Another aspect of this is maintaining my retirement accounts. I've contributed substantially to a Roth IRA and to a 401k. I find that when people talk about market crashes, they often think it's going to be both ways.
17:06 During a severe downturn, typically a lot of people are hurting. It's not just, oh, the investors get burned. that I've noticed in our country, the investors often seem to get bailed out and it's actually the working person, at least in recent decades, that seems to suffer.
17:23 I'm approaching my mid-30s now. And working for the government, you have this option, at least the government that I plan to work for, to return to work down the line, assuming you pass the probation period, assuming that you leave on good terms.
17:42 It's not just, oh, you left us, we'll never hire you again. Now, for some jobs, there's going to be different requirements. If you're at a physical job, you may have to pass a fitness test, but I suspect that in the US, there will always be some amount of opportunity.
17:56 It may not be ideal, but we're probably not going to be in a situation where nobody's employed and everybody is just rioting in the streets. What's more likely is some kind of UBI will come out. At least my suspicion.
18:14 I can't guarantee this, but I suspect that UBI will happen for the stability of society. Another aspect of this is that I think that more conservative people tend to be able to weather economic downturns. A lot of people talk about 2008.
18:31 It was a tragic time for a lot of people. I do not belittle those people. I certainly have not made perfect financial decisions. However, in my neck of the woods, many people made it through the downturn. Some people did not, and that's very unfortunate.
18:47 But not everyone suffers through downturns equally. Especially not in the modern world where we have essentially figured out food production. And we have aging declining populations in the western world where housing is eventually going to moderate in price and transportation.
19:09 While certainly more expensive than it was in the past, the population is highly urbanized such that there are places you can live in proximity to what you need food wise. Unless they're on GLP1s, nobody's going hungry here in America.
19:28 So anyway, that about wraps it up. Let me know what you think down in the comments. Is there anything? What are your thoughts? It always helps to generate an interesting discussion. Maybe you think this is a crackpot idea. Maybe you think it's the best thing you've ever heard of. Maybe you're somewhere in between.
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