| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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How to Keep Cash Coming in Retirement |
SmartMoney Magazine - Oct. 21, 2010 - by Glenn Ruffenach
Chances are good you have a large-cap fund as part of your nest egg—say, one based on the S&P 500. So, two quick questions: First, what direction has that fund been going in the past few months? (Up? Down? Sideways?) Second, what’s the yield on the S&P 500? The fact that many investors can answer the first question—and are clueless about the second—reveals what’s wrong with retirement finances today.
In short, we focus most of our attention on price movement or capital gains at the expense of income. That’s no surprise. The bull markets of the past three decades, with gains of 30 percent or more in a single year, made us “greedy,” says Jack Gardner, president of Thornburg Securities in Santa Fe, N.M. “We became so tilted toward growth that the whole discussion of income has virtually disappeared.”
Well, let’s talk. Recent history has taught us that we can go a decade or more without capital gains. That’s less of a problem during our working years, when we’re drawing a salary and don’t need to sell off bits of our nest egg to pay the mortgage. But once we start living off our portfolios, depending on capital gains and liquidating assets to meet expenses is a game of luck. If you happen to retire at the start of a nice, long bull market, you win; your savings likely will grow and last as long as you do. If you retire at the onset of a nasty bear market, you lose. Unless you enjoy the thought of moving in with your kids.
Income, then, should be Plan A in retirement, and capital gains, if they happen to come your way, a backup. The challenge, of course, is to pick the right investments to generate that income. Annuities? Dividend-paying stocks and equity funds? Bonds and bond funds? Preferred stocks? Master limited partnerships? Rental property? Ultimately, there are two deciding factors: stability (what won’t fall apart in down markets) and growth (what will keep up with and outpace inflation).
A good litmus test comes from Charles Farrell, a principal with Northstar Investment Advisors in Denver, whose investment strategy starts with an asset allocation of about 45 percent equities and 55 percent fixed income. The latter, a mix of corporate debt, Treasury bonds and agency bonds, provides a healthy dose of defense against another crash, he says. On the equities side, he aims for roughly four dozen dividend-paying stocks, domestic and international, in 10 sectors, including energy, health care and consumer staples. When sizing up prospects, Farrell and his partners look first for a current “meaningful” yield and second for a company’s ability to increase its dividend faster than the rate of inflation. An index he developed (which can be found at www.northstarinvest.com/fnri) offers some specifics: The companies it holds—Coca-Cola, General Mills, Intel and Wal-Mart, among others—feature an average dividend yield of 3.5 percent and a five-year historical dividend growth rate of about 11 percent.
Such a combination delivers both stable income (bond interest) and growing income (stock dividends). There’s also the bonus of principal protection—again, from the bonds—and the potential for capital gains from the equities. For most investors, these building blocks should look familiar: a relatively conservative asset allocation, diversified holdings and a buy-and-hold approach. The objective isn’t price appreciation but generating steady cash.
Don’t like the idea of individual stocks? Try mutual funds or exchange-traded funds that focus on dividends. Vanguard’s Dividend Appreciation ETF (VIG: 50.51*, +0.41, +0.81%) tracks the Mergent Dividend Achievers Select index, some 140 firms that have increased dividends in each of the past 10 years. Want more security? Stephen Horan, head of private wealth at the CFA Institute, a nonprofit group of investment professionals, likes longevity insurance, an income annuity that kicks in with regular payments at, say, age 85: “It helps manage the biggest risk facing most retirees—outliving your assets.”
Read more: How to Keep Cash Coming in Retirement - Personal Finance - Retirement - SmartMoney.com http://www.smartmoney.com/personal-finance/retirement/how-to-keep-cash-coming-in-retirement/#ixzz130WOfyHB
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Income Security Recommendation January 2013 Issue.
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