Published Fri, 13 Nov 2020 07:00:00 -0500 on Seeking Alpha
Seeking AlphaPortfolio StrategyAdjusting Your 60/40 Portfolio For A Zero Yield WorldNov. 13, 2020 7:00 AM ET|| Includes: AIF, BGB, BIMBX, BTZ, FLC, FPF, GOVT, HYI, MBB, PDI, TLTby: Alpha Gen CapitalAlpha Gen Capital Yield Hunting: Alt Inc OppsSafe 8+% Income Stream using CEFs, ETFs, Munis, Preferreds, and REITs.SummaryIf you continue to use a 60/40 portfolio then you will likely be disappointed with your returns for the next five to 10 years.
We are entering a new paradigm that will either need you to accept lower returns or do something different.
In this report, we look at what different things one can be doing to improve the risk-return trade off in your portfolio.
(This report was issued to members of Yield Hunting on Oct. 28. All data herein is from that date or prior.)
This will be a multi-part series on fixing portfolios for baby boomers as we enter a new paradigm.
I spend a lot of my time reading journals and white papers on retirement income planning. This is a quick evolving area of research since just as recently as 12 years ago, you didn't do need to do much "planning." In 2007, the six-month certificate of deposit ("CD") earned you nearly 5.50%. Hard to fathom today, isn't it? It was very easy to produce income and for a retiree to replicate the paycheck. Today, not so much.
The 4% rule by William Bengen came out nearly three decades ago and continues to be misunderstood. I have received countless questions regarding it. They primarily go like this: "If I get an average of 4.1% annual return and my withdrawal rate is 4.0%, then my total liquid assets ("TLA") will never go down, right?"
The 4% rule adjusts the withdrawal rate for inflation. So you need to generate an average annual return of the withdrawal rate plus inflation. If you assume a 4% withdrawal rate and 2% for inflation, then your portfolio must generate 6% or more for it not to start to go down.
Generating a 6% return today is difficult. And the math continues... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|HIGH YIELD INCOME FUND||15.21||0.0||0.00||0.00||7.00|
|FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND||21.51||0.0||0.00||0.00||6.34|
|BLACKROCK CREDIT ALLOCATION INCOME TRUST IV||13.75||0.0||0.00||0.00||5.82|
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