by Jeffery Voudrie
Retirees have two major investment goals. They want income to provide for their living expenses today, and they need growth so they can maintain their standard of living in the future. This week I'll focus on effective ways to manage your portfolio that may dramatically increase your income. Next week I'll share growth-oriented strategies.
My clients expect me to find opportunities to increase their income and grow their money. That's why I've developed specific strategies using high-yielding securities--strategies my clients can't get elsewhere. Understanding the investments used may help you develop your own strategy.
High-Dividend Paying and Preferred Stocks: The days of being able to buy a dominant company like AT&T, hold it for life and live off the dividends are over. A great company today can be a has-been tomorrow. If managed correctly, though, a basket of high-dividend paying stocks can be a great addition to a senior's portfolio.
There are many quality companies that pay dividends of 6-9% per year. These are often the companies ignored by Wall Street and other advisors because they have little growth potential. Instead, they have stable cash flows and pay healthy dividends.
For instance, Citizens Communications (CZN) is a rural telephone company. Rural doesn't mean small. They operate in 24 states and are one of the nations' largest independent telecommunications providers. Boring. Yet it pays out a dividend of over 9%! I'm not saying you should rush out and buy Citizens, but this is just one of many such over-looked companies.
Canadian Income Trusts (CITs) are another example of securities that can provide an income stream of 5-8% per year. CITs are foreign securities that trade on the Pink Sheets in the U.S. Don't think that they are risky companies because they trade on the Pink Sheets. They aren't. In fact, many are some of the largest and most stable businesses in Canada.
For instance, Yellow Pages Income Fund provides online and offline telephone directories across much of Canada. Its business is stable and doesn't grow by leaps and bounds, yet it pays a dependable dividend over 5% in U.S. dollars. Moreover, it has steadily increased it.
Closed-End Funds (CEF): These are similar to the open-end mutual funds we are all familiar with. The difference is that they act more like a stock. Money is initially raised in a public offering. The money manager then oversees that pool of money. The size of the pool isn't determined by investors putting money in or taking it out. Just like a stock, investors buying and selling shares in the CEF determine its share price, not the underlying value of its investments.
This presents opportunity. First, the manager has the ability to buy investments for the long-term. Unlike the open-end fund manager, the CEF manager doesn't have to sell investments to fund shareholder withdrawals. Secondly, assets can be purchased for a discount to their market value.
Morgan Stanley Global Opportunity Bond Fund (MGB) is an example of a closed-end fund that has done well. Its current yield is over 8%. Typically, I only recommend buying CEFs trading at a discount, but this one may be worth its premium.
High-yielding investments have up and down cycles so you have to be disciplined and patient. These cycles don't affect the dividend, but you should only buy when the investment is at or below an established target price.
The problem with these investments is that they require work. They are not investments the average investor should own unless that investor is willing to commit several hours a week to research and monitor each one. You will also have to make adjustments from time to time.
On the other hand, isn't that what people should expect from their advisor? Aren't you paying them to manage your money? Yet few advisors use these gems. Most advisors don't even understand these investments nor do they have effective strategies that leverage their benefits. Instead, they focus on selling you, then moving on to the next person.
You deserve better. If you aren't able to invest the time and energy into managing investments like these you should find a professional that will. There's no reason you should have to settle for low-yielding investments.
Have a financial question? Send me an email and I'll personally respond, free of charge. Go to www.guardingyourwealth.com and click on 'Ask Jeff'.
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In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.
About the Author:
Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He'll answer your financial question - FREE at www.guardingyourwealth.com
Article Source: http://www.goarticles.com/cgi-bin/showa.cgi?C=428115
In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr. Voudrie provides personal, private money management services to clients nationwide.
About the Author:
Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He'll answer your financial question - FREE at www.guardingyourwealth.com
Article Source: http://www.goarticles.com/cgi-bin/showa.cgi?C=428115
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