Turn Your Portfolio Into a Paycheck

Bills come every month, but the stock market doesn’t always cooperate. Many people stress over when to withdraw money from their investment portfolio.

• Should I sell now, or wait until the market recovers?
• Should I withdraw a little extra while stocks are up?
• What if I pick the wrong time?

These questions create stress by turning withdrawals into a guessing game. Instead, treat your portfolio like an employer that delivers a steady paycheck.

That’s the idea behind the Paycheck Calculator — it applies a rules-based approach to withdrawals so you don’t have to guess month by month.

The Problem With Ad-Hoc Withdrawals

When withdrawals are ad-hoc, emotions creep in:

• Selling after a downturn (locking in losses).
• Withholding withdrawals when nervous (starving your budget).
• Selling too much in good times (reducing future growth).

This is market timing in disguise.

A Paycheck Approach

Instead of guessing, set a fixed monthly withdrawal amount or base it on actual expenses to create your “portfolio paycheck.”

Enter your withdrawal amount and portfolio balances; the calculator shows cash and investment draws and portfolio changes. The process is rules-based, not emotional.

Why It Works

• Dollar-cost averaging in reverse: You sell a little each month, spreading out the impact of market ups and downs.
• Built-in rebalancing: Withdrawals naturally draw down cash. When it runs low, the calculator shows you how much investments to shift to stay aligned.
• Emotional detachment: It becomes a ritual, like payday, not a reaction to headlines.

Example: A $1 Million Portfolio

Suppose you have a $1,000,000 portfolio with 70% in investments and 30% in cash, and you set a $3,500 monthly paycheck. The withdrawals adjust automatically with market changes, keeping your overall allocation on track. For instance, if the market dips, more of the paycheck comes from cash and less from investments; if it rises, the opposite happens. You can optionally rebalance to restore your target mix. The table below shows how the paycheck is allocated, along with cash and investment balances and their percentage of the total portfolio:

* Note: In the Market +1% scenario, optionally rebalance by moving $1,050 from investments to cash to restore the 70/30 allocation.

Taxable Accounts

For taxable accounts, the source of your paycheck matters, as selling investments can trigger taxable events. You can choose whether to rebalance your portfolio in either direction based on your financial strategy.

The calculator identifies which side of your portfolio is overweight:

• If investments have grown faster, you’ll sell more investments to rebalance.
• If you hold excess cash, you’ll draw from that first (and avoid tax implications).
• If you expect another paycheck next month, you might choose to skip rebalancing smaller cash amounts to investments.

This strategy maintains portfolio balance while minimizing tax drag.

Make It a Monthly Ritual

The real benefit is in making withdrawals a consistent habit rather than a stressful decision each month:

1. Pick the same date every month.
2. Plug your numbers into the calculator.
3. Transfer the recommended “paycheck” amount into your spending account.

Ten minutes, done. No market timing, no stress.

Conclusion

A portfolio paycheck takes the uncertainty out of investment withdrawals. It’s consistent, rules-based, and flexible enough for different financial goals.

You can plug your own numbers into the Paycheck Calculator to see what a monthly paycheck would look like for your situation.