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Rising costs of living and shrinking savings are forcing millions of Americans to consider retirement abroad. Last year, data from the Social Security Administration showed that about 450,000 people were receiving benefits outside the US by the end of 2021, up from 307,000 in 2008.
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Retirement in the Philippines For a ‘Fraction’ of the US Cost
Earlier this month, American dividend investors shared their retirement stories on /Dividend, a community of more than 618,000 income investors on Reddit. The investor, 41, said he retired in the Philippines four years ago “for a fraction” of what he paid back home.
“We have a property. I lost 40 lbs. Our health is good. My husband farms, we have 10 dogs, we have fields – 3 crops a year. I work around the property taking care of fruit trees. in the country a lot. Life it’s good.
Earn Monthly Dividends After Selling Your Reverse Home
The investor, who is said to be married to a 39-year-old Filipino woman, sold his home in the US for about $175,000 and invested in two closed-end funds. According to the data provided, he earns about $2,700 per month from these two funds. He also has a leveraged ETF in his portfolio, which he says is mostly for “capital gains.”
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Life in the Philippines – Own Land, Starlink, Driver, Cook and Caretaker
Redditors initially grilled investors on the choice of risky ETFs and the sustainability of retirement plans. However, he feels confident and talks about the quality of life in the Philippines.
“We have more than 10,000 sqm of land, gated. We use Starlink. We have two (2) vehicles. We have a staff of three (3) people – a driver, a cook and a nanny. This method is silent, so I can compare it year by year.
He also told investors that his retirement model is not for everyone and that he understands the risks.
“I know my situation is different and there’s a lot to say about closed-end funds and what’s right and what’s not. This setup has worked for me and it may not work for you. I have no plans to change.”
‘Freedom To Do As We Like’
Investors shared some other insights into their decision to retire abroad during the discussion:
“Now we have the freedom to do what we want. My husband does a lot of gardening, our children have parents instead of people who work. we’ve earned it.”
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Let’s look at ETFs in an investor’s portfolio.
Aberdeen Global Income Fund
Abrdn Global Income Fund Inc (FCO) generates income by investing in fixed income securities. The fund’s portfolio includes government and corporate bonds and debt instruments from various countries. FCO pays a dividend of around 14% and is paid monthly. Over the past year, the fund is down about 4.8%.
A retired American investor in the Philippines said he owns 19,739 shares of FCO and earns about $1,381 per month from this investment.
“FCO has been paying monthly dividends for over 20 years,” he said when asked about his reasons for investing in this fund.
According to the fund’s latest quarterly report on its website, it returned 0.72% on a net asset value (NAV) basis in the three months ended July 31, underperforming the composite benchmark by 4.26%.
PIMCO Dynamic Income Fund
PIMCO Dynamic Income Fund (NYSE:PDI) is a high-yield fixed income fund that invests in debt securities, including mortgage-backed securities and bonds from emerging and developing markets. PDI yields around 16% and pays monthly dividends.
A 41-year-old retired American investor living in the Philippines said he owned 6,015 shares of PDI and collected about $1,326 a month in dividends from this investment.
The PIMCO Dynamic Fund typically invests approximately 25% of its total assets in privately issued mortgage-related securities and 40% of its total assets in securities of issuers related to emerging market countries.
In its latest quarterly commentary, the fund management said PDI performed well due to exposure to corporate credit, emerging market debt and residential mortgage credit. The fund’s asset class returned 4.93% in the third quarter as risk assets rose after the Federal Reserve’s 50-bps rate cut.
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ProShares UltraPro QQQ
A retired American investor in the Philippines said he owns about 1,818 shares of ProShares UltraPro QQQ (NASDAQ: TQQQ), which, according to him, are worth $130,000 at the time of posting. So far this year, TQQQ is up 60%.
“I use TQQQ for capital gain and the rest for life. I reinvest part of the dividend every month,” he said.
Investors received a lot of flak for TQQQ investments, as Redditors questioned the logic of investing in risky funds in retirement. QQQ is a leveraged ETF that corresponds to 3x the daily performance of the Nasdaq-100 Index, making it volatile and risky.
Here’s how investors explain their investments:
“You don’t know how many of my colleagues before made the same comment. But they are still working and I am not. Dividend income is not designed to add much value. It is for dividends. FCO has paid the same monthly dividend. for over 20 years You can build a budget that I have heard arguments that 3x leveraged stocks are only used for trading tools in ROI vs. TQQQ work and have been for many years.
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While Realty Income is certainly a solid choice for investors seeking consistent monthly dividend income, it’s important to remember that publicly traded stocks are subject to market volatility. For those looking to diversify their income streams and potentially mitigate market fluctuations, real estate investing through a platform like Arrived is worth considering.
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This article 41-Year-Old American Retiree Seasons Dividends In Philippines With Family Shares Stock Portfolio–’Life Is Good. Freedom To Choose’ originally appeared on Benzinga.com
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