The biggest myth in retirement investing is that you should only live off your dividends and never actually touch your principle.

It sounds safe. It sounds intuitive. It even sounds responsible. But it's one the riskiest things you can do when designing your retirement strategy.

Today I'm breaking down the math to show you why this approach can jeopardize your entire retirement and show you what you should do instead.

To start though, we have to understand what you should do instead. To start, though,

we have to understand what does this look like? You know, if you want to create a certain amount

of income in retirement, how much capital do you need to do so? And if you're going to apply

the dividend yield framework or the live off dividends framework, you need to understand what size

of a portfolio would you need to meet a given

level of income. So let's assume that you want to retire. You want to spend $6,000 per

month in retirement, $72,000 per year. If you want to live just on your dividends, how much

money do you need to have in your portfolio to make that happen? Well, this, of course, is where

it depends on what stocks, what funds, what investments are you owning.

Let's take a high dividend paying stock to use as an example.

Let's use Ares Capital.

Now, this is not an endorsement.

This is not a recommendation.

None of this video should be advice.

This is just to use as an illustration.

Ares Capital, as of this recording, is paying a dividend yield of about 9.5%. You own $100 worth of Ares

stock, you get a dividend of $9.50 per year from those holdings. So let's use that math. Let's work

backwards and just saying, okay, I want to spend $72,000 per year, so $6,000 per month, how much do I need to have

in that stock? Well, in this case, I would need about $758,000 in that stock, so that on an

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