What’s a good target annual earning % for interest and dividends relative to portfolio size? I am new to investing and am generally just invested in the SP500 and total stock market via index funds

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Here's a non-helpful answer, it depends on your risk tolerance. That depends mostly on your age and financial goals. Younger people are generally a little more risk tolerant , while older people tend to focus more on capital preservation rather than gains.

General S&P 500 market funds have historically provided annual returns of about 10% minus fees for management. Some years are worse, some years are better, and if you had a crystal ball and could time entry and exit into these funds you could do much better. That's a pretty decent return over a long period of time - you can do better if you start investing in individual stocks or sector specific funds, but you can also do a lot worse and lose some or all of your principal.

Expect an average of 2% in dividends from S&P index funds or HYSAs. More specialized funds will pay higher divs such as REITs. Is your goal to use dividends/interest as sustainable passive income? Overall, not very tax efficient. But die hard dividend investors will aim for 4% to 6% of entire portfolio.

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