This former banker earns over $250,000 a year from dividends — here are the 4 ETFs he swears by
- Helmut Jonen was an asset manager at UBS, where he earned 300,000 Swiss Francs a year.
- But 10 years ago, he quit his job to live off of dividends.
- He told Insider what ETFs he relies on and the keys to being a successful investor.
This is an edited, translated version of an article that originally appeared on January 3, 2023.
Helmut Jonen, 62, was an asset manager at the Swiss investment bank UBS. Ten years ago, he quit his job at the bank to live off dividends.
At UBS, Jonen’s annual salary was 300,000 Swiss francs, or around $322,400. He told Insider that he achieved financial freedom when he hit 240,000 Swiss francs, or about $257,800, a year in dividends — 80% of his salary at UBS.
“This year I will probably earn over 300,000 euros in dividends for the first time,” he said.
May was his record month last year; he earned over 35,000 euros in dividends, Jonen said.
The former asset manager relies on 4 dividend ETFs
Jonen said he started investing his money in the stock market in 1982, when he first began planning how to live off investments.
“If you want to live off dividends, you have to start in your mid-20s. If you don’t start until you’re 40, it gets pretty darn expensive,” he said.
Jonen has 101 open positions in his portfolio: 97 stocks and four ETFs. “It takes a bit of work,” he said, adding that he spent an average of about two hours a day on his portfolio.
Exchange Traded Funds, or ETFs, are investment trusts that investors trade on the stock exchange in a way similar to regular stocks.
The four ETFs in his portfolio focus on dividends, he said.
They are the Vanguard FTSE All-World High Dividend Yield, which “covers almost everything worldwide that pays dividends,” the iShares STOXX Global Select Dividend 100, which picks 100 “promising stocks,” the iShares Asia Pacific Dividend, and the iShares Emerging Markets Dividend, he said.
The latter two focus on the Asia Pacific region and developing countries, respectively.
Moving forward, Jonen said he wants to increase his positions, especially in the dividend ETFs, as they don’t require much effort.
Focus on ETFs rather than individual stocks if you don’t have the time to watch the market
If you’re just starting out in investing, you should only put money in individual stocks if “you enjoy it and you have the time,” Jonen said.
But for people who can’t spend hours each day poring over the latest market movements, then an ETF is the way to go, he said.
He said this could “to turbocharge your income” without you having to “waste time analyzing stocks.”
He added that individual companies could see dramatic turnarounds. “In the 1990s, Apple was almost bankrupt. Today, it’s the most valuable company on earth,” Jonen said.
But investors need to realize that even the healthiest company can get into serious trouble, Jonen continued.
That’s also why it’s important to diversify your portfolio right from the start, Jonen said, adding that no stock should make up more than 4% of your portfolio.
“That way, if something like Wirecard’s 2020 collapse happens, you’ll survive it,” he said.
Working with the wealthy taught him to play the long game
Jonen said he learned one key lesson from working with wealthy clients at UBS: think in the long term if you invest in stocks.
“I’ve been an investor for a long time, looking at stocks as a long-term investment,” Jonen said. But after conversations with clients, he said he learned to look even further into the future.
“Some investors in the stock market think overnight. They get nervous today when a stock drops more than 5%,” he said.
But he said that, at UBS, he learned to hold a stock for at least five years.
“I’ve learned that the most successful entrepreneurs are the ones who think in terms of generations. Thinking extremely long-term is the key to a successful stock-market career,” he said.