Early retirement is gaining popularity among young Americans. Many are using safe dividend stocks and funds to cover their expenses and escape the 9-to-5 grind.
Last month, a Reddit user shared a milestone with a community of income investors on the social media platform, saying he has retired early and now lives off the income generated by his dividend stock portfolio. The portfolio screenshots shared by the investor showed his annual dividend income was about $91,000.
The Redditor, 40, said his dividend portfolio remains flexible and he’s open to adjusting his stock picks over time. He said his mortgage is covered by income from his real estate assets, and his car is fully paid off. The poster said he isn’t trying to maximize yield because his dividend income and earnings from other sources are enough to meet his monthly goals.
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The Redditor said he started investing at 25 with one goal in mind: don’t lose money. Some poor decisions cut his net worth to about half of what it could have been, he said.
“A lot of this was just good luck more than skills or hard work,” the Redditor said. “I did choose to devote as much of my income as possible to investing and lived well below my means as well.”
Responding to a comment suggesting he focus on earning more first and then investing in dividends, the Redditor said he’s no longer chasing higher income and plans to focus on enjoying life.
“Eventually you get old and die,” the Redditor said. “I’m no longer focusing on making money. Now I’m enjoying the money. Not trying to beat the market anymore.”
Let’s take a look at the top dividend stocks and funds in the portfolio.
iShares 0-3 Month Treasury Bond ETF (NYSE:SGOV) tracks the performance of U.S. Treasury bonds with maturities of 0-3 months. Portfolio screenshots shared by the investor on Reddit showed that he had a $313,500 stake in the fund.
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JPMorgan Ultra-Short Income ETF (NYSE:JPST) invests in short-term, investment-grade corporate and structured debt with fixed and floating interest rates. The Redditor had a $227,610 position in the fund.
JPMorgan Income ETF (NYSE:JPIE) is a fixed-income ETF that invests across multiple credit sectors to generate income. It has a dividend yield of over 5%. The Redditor had a $329,500 position in the fund.
