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Next week, my Dad and I are going to have a heart-to-heart talk about an extreme makeover for his income portfolio.
First on my list of income investments to propose to Dad are my favorite, crash-resistant, dividend-paying investments — conservative stocks that are currently paying out yields of 5 percent, 7 percent, even 9 percent.
He’s concerned about a decline in the stock market, and rightfully so. But I will show him how these stocks did relatively well in the last decline, and why I actually would welcome lower prices now: At lower stock prices, we can get even better dividend yields.
Second, I want to tell him about a powerful strategy that can give him a second stream of income from many of those same dividend shares.
I think this will be a very pleasant surprise for him — because he can do it without adding any additional downside risk and without having to invest any additional money!
Third, I will bring him up to date on other income investments and strategies that I like. For example …
I’ll tell Dad about the best way to squeeze more income out of real estate, and I’ll show him the one type of property that I think he should consider buying.
We’ll talk about investments that can give him a stake in gold and other natural resources, while still allowing him to collect regular income checks month in and month out.
I also want to cover bonds — the kind I wouldn’t let him touch with a ten-foot pole, plus the only one I’d buy for him immediately. I think a coming spike in interest rates is going to be another great way to secure a life-changing income. But timing is key.
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Ever since I was a child, Dad has taught me so much, I feel I should do the same for him. So if we have time, I also want to give Dad a chance to really learn something of value from this conversation.
I want to give him a crash course in bonds — how he can add some traditional fixed-income investments to his portfolio without worrying about crooked ratings agencies, high-fee brokers, or outsized risk.
And I want to give him a primer on preferred shares — what they are, how they might fit into our strategy, pitfalls to avoid, etc.
I’ve been talking about many of these things with you for years now right here in Money and Markets. Now, it’s time to start using them for my own dad’s retirement account.
After All, Washington Has Repeatedly Demonstrated
That It Doesn’t Give a Hoot About Retirees!
In recent weeks, I’ve written plenty on the subject of Social Security. And while we all have different views on the how’s and why’s, nearly everyone agrees that current system has been ignored, plundered, and left for dead by Washington.
Meanwhile, even those Americans lucky enough to have savings of their own are dealing with near-zero interest rates, instigated by the Federal Reserve’s policies.
The worst part is that Ben Bernanke and his colleagues continually deliver the same old message: “Don’t expect rates to move up anytime soon.”
It’s a real problem for folks like my dad (and probably you, too).
So my message this morning is simply this: Have conversations with your own family members sooner rather than later. Talk about your retirement options … your hopes, dreams, and fears … the expectations that you have. And by all means, find ways to help each other now.
Don’t wait for solutions from Washington. Don’t hope or pray that rates are going to magically return to “normal” levels. Start finding ways to get better, safer growth and income on your own.
After all, there are a lot of great opportunities out there. I’ll do my best to continue helping you find them in future columns. And I’d love to continue hearing your ideas as well!
Best wishes,
Nilus
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