How It Works
- Only prediction-enabled assets are used
- Assets with 'accumulate dividends' enabled are excluded from income (but still grow)
- Each asset grows monthly by its expected return plus its recurring contribution
- Monthly income is recalculated from the growing balances
- Coverage is only declared once income stays above expenses for a 30-year look-ahead
Key Assumptions
- 1Expected returns and dividend yields remain constant
- 2Monthly contributions stay at current levels, unless the optional contribution growth simulation is enabled
- 3Dividends are paid out in cash and not reinvested
- 4Dividend yield is applied to the asset's growing value, so income rises as the asset grows
- 5Your target monthly expenses stay flat in nominal terms, unless the optional inflation simulation is enabled
Mathematical Approach
Each month, for every distributing asset: New Value = Value × (1 + Annual Return / 12) + Monthly Contribution Monthly Income = New Value × (Annual Dividend Yield / 12) Total monthly income is the sum across all distributing assets. The simulation advances until: Total Monthly Income ≥ Target Monthly Expenses and that coverage holds for a 30-year sustainability check, which re-simulates growth to confirm income does not fall back below expenses. With the inflation simulation applied, the expense target compounds monthly at your inflation rate, so income has to catch and keep beating a rising target.
Important Limitations
- Dividend yields are assumptions, not guarantees — companies cut dividends
- Market volatility and price drawdowns are not modelled
- Dividend taxes are not deducted from the income shown unless the tax simulation is enabled
- Inflation only affects your target expenses when the simulation is enabled — asset returns are always nominal
- Assumes you never sell assets to fund expenses
Important: This prediction is only as good as the dividend yields you enter on your assets. It is a planning tool, not a guarantee — dividend income can be reduced or suspended at any time.
Frequently Asked Questions
When can I live off dividends?
Wealth Path simulates your distributing assets growing with contributions, recalculates the dividend income from the rising balances each month, and finds the month that income covers your target expenses — then verifies coverage holds over a 30-year sustainability check before declaring it.
Why don’t my accumulating ETFs count toward passive income?
An accumulating fund reinvests its dividends — it grows your portfolio but pays you no cash. Only assets set to distribute dividends produce spendable income in this prediction.
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The information and calculations provided are for informational and educational purposes only and should not be considered financial, investment, or professional advice. Projections are hypothetical, based on assumptions that may not reflect actual market conditions. Past performance does not guarantee future results, and all investments carry risk of loss. Consult a qualified financial professional before making financial decisions.