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Yield Hunting: An Update On Our Core Portfolio

Published Mon, 16 Apr 2018 10:00:00 -0400 on Seeking Alpha

Our Core Portfolio has the goal of generating income for retirees or being the fixed income sleeve for accumulators. On the former we have highlighted on several occasions the predicament income investors and retirees are in today amid near record low interest rates. Previous retirees could invest in 6-month CDs as recently as 12 years ago and earn 5.50%. It's hard to imagine that today. In comparison, 5-year corporate bonds currently yield just 3.75% with significantly more credit risk than a 6-month CD.
Retirees are currently weighing the dilemma of investing more in stocks, despite the 9-year bull run and moderately high valuations or accepting low interest rates that are below their hurdle rates (required rates of returns to make their financial plans work). Most financial plans depend on their portfolios reaching a certain annual rate of return target. Forward estimates for portfolio rates of returns will likely be met over a long time horizon (10-30 years) but we have a large cohort of baby boomers at or near retirement today that are facing the largest risk in today's market: sequence of returns risk.
Sequence of returns risk is the initiation of drawing on your portfolio and then experiencing a large decline in portfolio value early in your retirement years. When withdrawing from an investment portfolio the impact is an increase in portfolio volatility. Think of retiring in 2007 and the next year seeing your retirement nest egg decline by 25-35% or more. At... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
SPDR S&P 500 ETF 271.65   0.0 0.00 4.80 1.73
ISHARES BARCLAYS AGGREGATE BOND FUND  

SPDR S&P 500 ETF - SPY
SPDR S&P 500 ETF - SPY  


Older articles featuring Spdr S&p 500 Etf (SPY):
REITs And Homebuilders Retreat As Yields Return To 2018 Highs
The Next Yield Curve Inversion: Like 2008 Or 1968?
Flattening Yield Curve, Trade Tensions, Kinder Morgan (Wall Street Breakfast Podcast)
A Yield Curve Inversion Is A Real Possibility In The Next 18 Months
Daily Risk Report: Flattening Yield Curve
On Slowing Growth, A Flattening Yield Curve And Bear Market Losses
The Hidden Risks Of Dividend Growth Investing
Dividend And Stock Buyback Growth Potentially Accelerate In 2018
The Dividend Champions Are Not 'Fair To Cheap'
What Bloomberg's 'Yield Curve Flattening' Report Does Not Say

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