Currently, my only income is from dividends and interest which is about $70k/yr. If I can lower my income, I can pay lower taxes each year and I may qualify for some low-income government subsidies like Obamacare Premium Assistance so I'm wondering what options are available to me.

My investments are currently a diversified mix of ETFs include some bond ETFs. I can't seem to find any ETFs that don't pay dividends. The lowest I can find are still around 1.5% yield.

I could just buy individual stocks that don't pay dividends, but I'm worried that isn't diversified enough.

One idea I had was to try and buy some local real estate with negative cash flow and try to make all my profit from capital gains which I can defer for years.

Anyway, I'm just curious about what strategies are available to try and lower your investment income.

  • That's a new one, advice on how to reduce your investment income. Here is one for you - don't invest. – Victor Jan 6 '18 at 7:00
  • Real estate with negative cash flow? If you want to throw money away just gift some to me. Real-estate with paper losses or break-even is achievable, but even better to have positive cash flow. – Hart CO Jan 6 '18 at 7:22
  • How about using a trust, retirement account, or other deferred vehicle? Real estate with negative realized cash flow seems like a bad idea - real estate usually doesn't appreciate as much as people think it does, and the negative cash flow would eat into that.. – D Stanley Jan 6 '18 at 15:47
  • FWIW if you buy EE Savings Bonds you can (and are encouraged to) defer reporting (and paying tax on) the interest until redemption or maturity; their interest rate is basically bupkus since the crash, but if held 20 years they get a minimum return of about 3.5% -- which is decent for zero risk but not great. – dave_thompson_085 Jan 7 '18 at 9:31

while I love the question, one has to ask why a sane person would purposefully seek government welfare. Do you think Veterans would chose VA hospitals if they had a choice for medical care, or people would choose to live in government housing?

On the math side, even if you earned 3% on dividends, you would have to have greater than $1 mil in principle to get you into a range of income (unearned income to be specific) that would allow you to receive subsidies. And if this were true, then use your equity to invest in solid companies and make $100-$200k in a year and buy your own good medical insurance.

Making investment decisions that purposefully lower your return doesn't make sense. I'm all for reducing tax consequences, but I'd still rather have 50% of $100k than 100% of $30k.


As long as the target income you desire is not too much lower, you don't need to do anything that drastic (and time consuming) to your portfolio like investing in negative cash flow real estate. Some steps that would tip your portfolio away from dividends/interest and how they distort a portfolio:

  • Broad growth ETFs (example VUG) as a replacement for more general stock ETFs will tilt you away from dividends but add some risk to your portfolio as growth stocks tend to get hit harder in recessions.
  • Municipal bonds can be tax free and there may even be bonds (even bond funds) that can be tax free in your state. Yield on muni bonds can be relatively low however and may concentrate your bond risk.
  • You could look into tax loss harvesting, but you want to be very sure you are doing it correctly to avoid the costs outweighing the gains.

In the end, it is unlikely to be worth the trouble. As getting significant subsidies from the government requires drastically lowering income to generally uncomfortable levels.

  • 2
    Muni bonds are exempt from income tax but do count in the modified AGI used for PPACA/Obamacare subsidy; see the instructions for form 8962 (on the IRS website) at line 2a. Capital losses can cancel capital gains but only $3k (per year) of other income including dividends and interest. – dave_thompson_085 Jan 7 '18 at 8:34

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