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Strategies & Market Trends : Dividend investing for retirement
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To: maverick61 who wrote (27881)9/3/2017 12:26:06 PM
From: research12341 Recommendation

Recommended By
Hoatzin

   of 34328
 
Before you put any money int fixed income investments, here are a few points you might consider:
1. If you have any sort of fixed annuity, either from a company plan or something you purchased, that is essentially a bond investment. Multiply the annual annuity by 14 or so to get an approximate bond equivalent present value.

2. Same with social security, but use a 15 or 16 multiplier to include the future cost of living increases.

3. Interest rates run in long cycles. Rates were low in the 1950's, then gradually increased until the mid 1980's, then gradually decreased to where te have been over the past five years or so. I think there's a very good probability that rates will gradually increase over the next 30 years. This will result in principal losses in any sort of bond portfolio.

4. At some point, the only way for the US to pay down its debt will be through inflation, which will go hand in hand with the secular trend I noted above.

In my opinion, individual bonds or bond funds are not a particularly attractive investment for current retirees due to the above factors. I'm in my 60's, have been retired for almost ten years, and I have virtually no bond investments other than some preferred stock I bought during the financial crisis carnage, and tactical positions in a few high yield funds.
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