The Million-Dollar Optical Illusion That Fooled Me (And Probably You Too) 💰🪄

"Wait... if I keep selling ETF units every year... won't I eventually run out?"

That question haunted me for years.

It sounds perfectly logical.

Imagine owning 10,000 ETF units today.

Next year?

9,800.

A few years later?

9,200.

Fast forward thirty years...

"Uh oh... I'm running out of units!"

Our brains scream:

"Abort mission! This retirement plan is sinking faster than my New Year's diet!" 😂

For the longest time, I believed exactly that.

Surely fewer units must mean less wealth.

Then I built a spreadsheet.

And my spreadsheet politely told me...

"Congratulations. You're looking at the wrong number."

That was one expensive illusion.

🎭 The Great Unit Illusion™

Suppose you retire with:

• Portfolio: US$1,000,000
• ETF price (Net Asset Value or NAV): US$100
• Units owned: 10,000
• Annual withdrawal: US$30,000, adjusted for inflation.

At first glance, the maths feels scary.

Every year you're forced to sell a few more ETF units.

The unit count keeps falling.

But here's the trick your brain misses.

If the ETF grows over time, every remaining unit becomes more valuable.

Imagine owning ten apartments.

Would you panic if you sold one apartment after its value doubled?

Probably not.

You'd simply own fewer—but much more valuable—apartments.

Exactly the same idea applies to ETFs.

The problem?

Most of us count units.

Professional investors count wealth.

Huge difference.

🧠 Your Brain Loves Counting The Wrong Thing

Humans love counting things that are easy to see.

Followers.

Likes.

Calories.

Steps.

Shares.

ETF units.

They're visible.

Portfolio value?

Future purchasing power?

Lifetime income?

Those are harder to "feel."

Our brains confuse quantity with value.

That's why someone owning 1 share of a wonderful business can become wealthier than someone owning 100 shares of a terrible one.

One share of an exceptional compounding company can outperform a bucketful of mediocre investments over time.

The number isn't the story.

The value is.

📈 What History Quietly Teaches Us

Many accumulating ETFs automatically reinvest dividends instead of distributing cash.

That means every dividend received buys more investments inside the fund, increasing the fund's underlying value over time.

One example often cited is the accumulating share class of the iShares Core MSCI World UCITS ETF, whose net asset value has risen dramatically since launch as global markets compounded and dividends were reinvested.

The same compounding principle applies to many growth-oriented funds and businesses.

Look at companies like:

• Berkshire Hathaway
• Vanguard Total Stock Market ETF
• SPDR S&P 500 ETF Trust
• Invesco QQQ Trust
• Vanguard Dividend Appreciation ETF
• Vanguard Growth ETF
• Vanguard Value ETF
• iShares Core S&P Small-Cap ETF
• Vanguard Total International Stock ETF
• Vanguard Total World Stock ETF
• Technology Select Sector SPDR Fund

Although most U.S.-listed ETFs distribute dividends rather than accumulate them internally, investors can achieve a similar "total return" effect by automatically reinvesting dividends before making planned withdrawals.

Different structure.

Same economic engine.

⚠️ But Here's Where It Gets Dangerous

This doesn't mean you can blindly sell ETF units forever.

Here's the catch.

Markets don't grow neatly at 7% every year.

Sometimes they do this:

📈 +25%

📉 -32%

📈 +18%

📉 -15%

📈 +27%

Now things become interesting.

Selling during market crashes permanently removes units that would otherwise participate in future recoveries.

This is called Sequence of Returns Risk (SORR)—the danger that poor returns early in retirement can have a disproportionate impact on how long a portfolio lasts.

That's why successful retirees don't just ask:

"How much can I withdraw?"

They ask:

"When should I withdraw?"

Timing suddenly matters.

💡 The Wealth Builder Framework™: Stop Counting Units. Start Counting Wealth.

Instead of obsessing over how many ETF units remain, monitor these five numbers:

✅ Portfolio Value

✅ Withdrawal Rate

✅ Long-Term Total Return

✅ Inflation-Adjusted Income

✅ Years of Financial Independence Remaining

Notice what's missing?

Your unit count.

That's because unit count is often just a by-product—not the destination.

🔎 A Practical Checklist for Retail Investors

Before relying on selling ETF units for retirement income, ask yourself:

☐ Does the ETF have a long, diversified track record?

☐ Does it track a broad, liquid market or a robust investment strategy?

☐ Are costs (expense ratio) low?

☐ Can dividends be automatically reinvested during accumulation years?

☐ Is your withdrawal rate realistic, rather than simply hopeful?

☐ Have you stress-tested your plan against major bear markets such as 2000, 2008 and 2022?

☐ Do you have a cash reserve so you aren't forced to sell during deep market declines?

☐ Have you reviewed tax implications in your own country?

☐ Are you measuring total wealth instead of just counting units?

If you can confidently tick most of these boxes, you're thinking like a portfolio manager—not just an investor.

🎯 The Bigger Lesson

Dividend investing isn't wrong.

Selling ETF units isn't wrong.

Blindly believing one method is always superior?

Now that can be expensive.

The smartest investors understand that wealth isn't created by how cash leaves your portfolio.

It's created by how efficiently your portfolio compounds before the cash leaves.

Sometimes the biggest investment mistake isn't buying the wrong ETF.

It's measuring the wrong thing.

Once you see that...

You'll never look at retirement income the same way again.

🚀 Want More Wealth-Building Ideas Like This?

Every investor faces the same questions sooner or later. How do you build dependable passive income without sacrificing long-term growth? How do you avoid common retirement mistakes? How do you separate investing myths from evidence-based strategies?

That's exactly what Wealth Builder and other high-quality investing newsletters aim to solve. They simplify complex financial ideas into practical lessons you can actually use, uncover timeless investing frameworks, highlight real-world case studies, and help you think like a long-term wealth builder instead of chasing the latest market headlines.

If you enjoy challenging conventional wisdom while becoming a smarter investor, you'll probably enjoy discovering other like-minded newsletters too.

😂 Final Punchline

Think. Compound. Prosper.

#️⃣ Hashtags

#WealthBuilder #ETFInvesting #PassiveIncome #FinancialFreedom #Investing #RetirementPlanning #Compounding #TotalReturn #LongTermInvesting #MoneyMindset #InvestSmart #SequenceOfReturnsRisk

📝 Notes & Sources

Abbreviations

• ETF = Exchange-Traded Fund.
• NAV = Net Asset Value (the value per fund unit).
• SORR = Sequence of Returns Risk.
• ROE = Return on Equity.

Quotes & Concepts

• "The stock market is a device for transferring money from the impatient to the patient." — Warren Buffett
• Safe Withdrawal Rate research was popularised by financial planner William Bengen and later expanded by the Trinity University retirement studies.
• Total-return investing and dividend irrelevance concepts were developed in modern finance by Merton Miller and Franco Modigliani.

Readers should remember that historical returns do not guarantee future results, and taxes, fees, inflation, and personal spending patterns can materially affect retirement outcomes.