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Strategies & Market Trends : Dividend investing for retirement
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To: Steve Felix who wrote (4227)3/28/2010 6:57:13 PM
From: Max Fletcher  Read Replies (3) of 34328
 
That is an interesting article, Steve. I look forward to Part 2. He brings up an interesting dilemma I've been wrestling with: most asset allocation models suggest a retirement portfolio needs at least 20-40% in bonds/fixed income. I have perhaps 5% and have been looking to place a pile of cash I am sitting on. Yet I believe bonds may be in a bubble at the moment, and I am also wary of long term structural debt problems in the US & much of the West.

I sometimes wonder if the Blue Chip multinational dividend aristocrats with LT dividend growth might be close enough to bond 'safety' to warrant cheating the asset allocation averages. As he writes:

With interest rates at all-time lows, we feel that selective equities like these offer safety conscious investors a possible alternative to fixed income. We believe that when, not if, but when interest rates increase, the principle value of fixed income instruments will fall. Although equities can never be considered as safe as bonds, the current aberrant values of both have, in our opinion, closed the safety gap considerably. Therefore, perhaps the risk return ratio today is upside-down.

As an aside, I am looking for fixed income funds in Canada, which appears to have a stronger financial foundation than the US - if anyone has suggestions I'd be interested.
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