Here's Exactly How Many ETF Shares You'd Need to Replace Your Salary With Dividends
These top dividend ETFs offer different paths to replacing your salary.
Overview
The average American salary is currently about $65,000 a year, according to the Bureau of Labor Statistics. Your salary might be much higher or lower than the national average. However, we'll use this median as our baseline to determine how many ETF shares the average person would need to buy to replace their salary entirely with dividends.
It's actually a rather simple formula that you can easily translate to your own situation. Divide the income target by the fund's current yield and then divide that number by the current share price to reach the number of shares you'd need to own. Don't worry if math isn't your thing. I'm going to run the calculations on two of the largest, most popular dividend ETFs: Vanguard High Dividend Yield ETF (NYSEMKT: VYM) and Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). That way, you can see the impact that a fund's current yield has on this equation.
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Originally published at www.fool.com.