Unfortunately I don't have enough in my SIPP to cover the income from dividends alone so I will have to
periodically sell some of my shares to cover future income which will be a bit of a shock as I have generally bought shares, etf's etc, but I am sure I will get used to it.
Not exact matches
This isn't a problem for investors with long time horizons (say 10 + years to retirement) or large enough portfolios to live entirely off dividends, but if your portfolio is small and you need to
periodically sell shares to fund living expenses (such as with the 4 % rule), then this short to medium - term risk is something to be aware
of as you think about portfolio diversification.
You may
periodically book profits by
selling some
shares to keep it below 5 - 10 %
of your total portfolio.
You define the asset allocation based on your risk profile, time to retirement, etc., then you
periodically sell the
shares of the investments that have grown faster than the rest and buy more
shares of the investments that are relatively cheaper.
However, if you need to take some money out
of market
periodically for a use such as college admission fee,
sell just a few
shares when the -LSB-...]
However, if you need to take some money out
of market
periodically for a use such as college admission fee,
sell just a few
shares when the price is 25 % to 30 % up and keep the amount in bank.