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Subject:  Re: Getting cash from a stock portfolio Date:  6/12/2000  10:45 AM
Author:  TMFPixy Number:  4197 of 20632

Greetings, Boib, and welcome. You wrote:

<<I have always put money into the market. A dollar here a dollar there over the years has added up to a portfolio of about 200K. Now that I'm about to retire I want to take some money out.

It sounds fairly simple with a 200K portfolio to have an income of $1000 per month. A withdrawal rate of ½ of 1 % each month or 6% per year. Where I have a problem is how to convert this to a steady income stream. My portfolio has 10 holdings fairly evenly balanced. Some pay dividends some don't . I hold a Foolish 4 screen as four holdings and 2 MI screens which I consider 1 holding each. The remaining 4 holdings are MSFT NOK and 2 Canadian Companies. ( I'm Canadian… different cap gains and dividend taxation)

Any suggesstions as how I can manage an income stream. I have considered going to one or two index funds and setting up a periodic withdrawal program but don't really want to give up the potential additional returns I might get with the portfolio I am holding now.

I trade the MI screens quarterly but it looks like a loosing quarter when I rebalance this month. Also my F4 stocks didn't fair to well this year and I'm due to rebalance at the end of June. Right now I'm down 17% and will possibly hold Cat and EK and sell Sears at a loss and GM at a small profit.

I am comfortable holding 100% equities. Just looking for suggestions as to how I get cash out. >>

I wish there was a simple answer to your question as to how to withdraw your living expenses. Unfortunately, there isn't. In your case, the bulk of your money is held in mechanical investing shares that you rebalance quarterly. To me, that makes a fairly easy choice for a once a year withdrawal during one of your quarterly rebalancing drills timed to coincide with your FF annual rebalancing. Take out your following year's income in that quarter, and use the remainder of the portfolio for that quarter's rebalancing in the FF and the two MI portfolios. You could invest the income withdrawal in money market funds, T-Bills, or short-term CDs timed to coincide with a monthly or quarterly withdrawal as desired. Repeat the process one year later.

That ain't a perfect solution, but it's one that works fine for me.

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