Recently, I did a rough calculation of the dividend yield on my stock portfolio. The formula is based on the total dividends I collected for FY15 divided by the total amount I invested. The current annual yield of my investment portfolio stands at 5.40%.
Being curious how much I will have when I reach 55 years old, I used the Dividend Calculator found on Dividend Ladder to do a projection. If I have a total invested amount of $200K (for illustration purposes only) and with my current annual dividend yield of 5.40% (current), how much will I have for retirement at 55 years old?
I punched in the figures as follows:
Principal amount: $200K
Annual addition: $24K
Years invested: 21 (I am currently 34. At 55 years, thus 21)
Annual Dividend Yield: 5.40%
Dividend Reinvested: Yes
Here are the results. At age 50, I will be a millionaire! By 55 years which is my targeted retirement age, I will have $1.5 million.
Having said that, is $1.5 million today or in the future enough for retirement? Nevertheless, I shall invest prudently and consistently to improve the annual yield of my portfolio. Looking forward to days where I shall never had to work a single day.