From my web site dated October 30, 2007 (unedited):Not Total ReturnRetired? Nearing retirement? Focus on the income stream, not total return.When Total Return is RightTotal return tells you what happens during accumulation. If you start with a fixed amount and leave your money invested, total return is what you are after. The total return is the ratio of the final balance to the initial balance with all dividends reinvested. Even if you are making deposits, total return is a good way to go.When Total Return is WrongYou make withdrawals during retirement. You cannot depend on income from selling shares. Prices fluctuate much too much. Selling too many shares in a down market leads to bankruptcy. You need a better source of income.Income from dividends is much more reliable. Even under worst case conditions and after adjusting for inflation, dividend income have only fallen about 25% peak to valley. Prices fluctuate twice as much, peak to valley, sometimes more, taking over a decade to begin to recover. That is why depending upon price appreciation is so dangerous. That is why total return investing leads to bankruptcy.When High Yield is RightThere are many times that high yield investments are the right investments. You need to be careful, as always, because yield alone does not tell the entire story. But mix high quality and high yield and you have a winner. Combine a high yielding portfolio with limited income growth with a fast growing moderate yield portfolio and you can easily push the continuing withdrawal rate above 5% (plus inflation). I call this a Dividend Blend. With care, you can lift the continuing withdrawal rate safely above 6% (plus inflation).Due diligence is key.Have fun.John Walter Russell
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