FIRE Income from ETF dividends

[idnob]

Hello everybody.

I live in Europe and 1 year ago I set up my ETF account investing in Vanguard FTSE All-World UCITS ETF (VWCE) and I keep investing money in it periodically.
VWCE is an accumulating ETF which is ok for now since we have monthly salaries (and dividends are highly taxed in Denmark).
However I know that when reaching FIRE we will need to have a salary coming from our investment in form of dividends.

Will it make sense to switch to the the dividend distributing version of the VWCE (VWRL) when reaching FIRE?

[waltworks]

You can always just sell shares for income.

-W

[Metalcat]

There are a lot of posts here about investing only in dividend paying stocks, it was a huge trend a few years ago, and then people stopped talking about it because there's no real benefit.

[K-ice]

Will it make sense to switch to the the dividend distributing version of the VWCE (VWRL) when reaching FIRE?

You could trigger a major taxable event if you switch funds. All your gains could be taxed as capital gains in one shot. If you do get dividends, it is good to turn off the DRIP dividend reinvestment plan in retirement. You can sell some shares to make up any difference.

[ChpBstrd]

You can always just sell shares for income.

Yes. It's the same thing. Dividends essentially come out of the stock price. I.e. if you remove $1 from the company's treasury to pay a dividend, the company is worth $1 less than it was before.

Make your dividends vs. capital gains decision based on Denmark tax law - a subject I know nothing about.

[K-ice]

Although our taxes are different our dividends are also taxed higher than capital gains. 

This may provide some interesting information.

https://edrempel.com/self-made-dividends-dividend-investing-perfected/

[MustacheAndaHalf]

I live in Europe and 1 year ago I set up my ETF account investing in Vanguard FTSE All-World UCITS ETF (VWCE) and I keep investing money in it periodically.
VWCE is an accumulating ETF which is ok for now since we have monthly salaries (and dividends are highly taxed in Denmark).

Americans and Europeans have conflicting laws on investments, so hopefully you're not an American citizen living in Europe (subject to both!).

Selling stocks used to be expensive at full service brokers, so getting some money in dividends might have been more efficient.  But with selling ETFs costing nothing (at U.S. Vanguard), you can get dividends or sell shares.  Tech stocks don't tend to pay dividends, but have performed really well for the past few decades.  Excluding tech stocks just to get dividends could be a mistake.

I looked at separate developing and emerging market UCITS for Denmark, but their expense ratios (0.20% and 0.23%) don't leave room to save much compared to the all-world UCITS you mentioned (0.22%).  If you held 80% developed and 20% emerging, you get an aggregate expense ratio of 0.206% compared to 0.22% for the combined fund (both accumulating versions).  But an extra $1.40 out of every $10,000 probably won't make or break a retirement... after 70 years of compounding, it almost adds up to 1%.