Living Off Dividends: Myths And Facts

Many investors often wonder if it is possible to live off dividend income. Living off dividends using dividend income is an alternative to take out money from your portfolio.

- 

Hemant Rustagi Chief Executive Officer, Wiseinvest Pvt Ltd.

Knowing how to live off dividends successfully means finding the right balance between income generated by your investments and the rate at which you spend that income. If you are someone who wants to explore this idea, you must do it after considering the related pros and cons. Of course, to implement this strategy, you must have a lump sum to invest.

Remember, there are two ways to get dividend income: dividend from stocks and dividend from mutual funds in your portfolio. Dividends are a portion of earnings that companies choose to distribute to their shareholders rather than reinvest in the business. Since the companies make the decision of how much dividend will be paid, as a shareholder you don’t have any say on both i.e. the quantum of dividend and the frequency at which it is paid out. Besides, the dividend yield is very low in case of growth companies.