Source: P172, P214, ETF for Dummies, 2nd Ed (2011) by Russell Wild:
P172: First, if you need a steady stream of income, nothing is stopping you from creating artificial dividends by selling off any security you like. You may pay capital gains tax, but that will be no higher than the tax on dividends. In the end, whether you pull $1,000 from your account in the form of recently issued dividends or $1,000 from the sale of a security, you are withdrawing the same amount. And what if one month you find you don’t need the income? You can sell nothing and pay no tax, whereas with a high dividend ETF, you’ll pay the tax regardless.
P214: Some people have this notion that withdrawing dividends from savings is somehow okay but withdrawing principal is not. Don’t make that mistake. The reality is that if you withdraw $100 from your account, it doesn’t matter whether it came from cash dividends or the sale of stock.
Would someone please explain the "mistake" on P214 and why it's a mistake?
How and why does the sale of financial instrument equate to the receipt of dividends?
If I sell a financial instrument that later appreciates in value, then this profit opportunity is lost.
In the case of a dividend, I'd still possess the financial security and benefit from the stock's appreciation?