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Old 05-19-2015, 06:24 PM   #21
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Old 05-19-2015, 06:37 PM   #22
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Yes they are subject to risk of rising rates. In such environment they will be punished just like Bonds.



But 6% qualified dividend yield is not too shabby in current environment.

I like the electrical preferreds as they are historically safer and can get the better yield with no expense fees from an ETF. But they are a PIA to accumulate from liquidity standpoint. I agree with you on the yield and personally I got dad to buy a slug of them. BUT, he doesn't care if the stock price drops to a penny as long as he gets the yield. However, I don't think Slave appears to be an "income yield investor". Reading between lines I see desire for maximum yield, with no risk of principal. These or stocks ,which has been stated as a no go, would not appear to meet their stated objective.


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Old 05-19-2015, 06:51 PM   #23
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I like the electrical preferreds as they are historically safer and can get the better yield with no expense fees from an ETF. But they are a PIA to accumulate from liquidity standpoint. I agree with you on the yield and personally I got dad to buy a slug of them. BUT, he doesn't care if the stock price drops to a penny as long as he gets the yield. However, I don't think Slave appears to be an "income yield investor". Reading between lines I see desire for maximum yield, with no risk of principal. These or stocks ,which has been stated as a no go, would not appear to meet their stated objective.


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You are right, but that means low yield and guaranteed erosion of principal via inflation. CD is pretty good vehicle to get him there. And there is no shame to have CDs.... I have some which will mature just at time when my daughter goes to college to pay for it.....Because I want 100% guarantee of money being there.

Inflation is not as big enemy of Coke or Marlboro cigarettes who will raise prices and dividends with inflation.
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Old 05-19-2015, 07:53 PM   #24
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My wife is the most risk-averse person I know. Because of that, we own way more TIPS than I would buy.

But, they are guaranteed by the federal gov't (which, after all, owns the printing presses), and they are indexed to the CPI.

Yeah, the yields are super low. IMO, those low yields just show us the true cost of trying to live in a risk free world.

If you buy TIPS because you can't stomach market fluctuations, I'd think about individual bonds instead of a mutual fund.
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Old 05-19-2015, 08:15 PM   #25
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You are right, but that means low yield and guaranteed erosion of principal via inflation. CD is pretty good vehicle to get him there. And there is no shame to have CDs.... I have some which will mature just at time when my daughter goes to college to pay for it.....Because I want 100% guarantee of money being there.

Inflation is not as big enemy of Coke or Marlboro cigarettes who will raise prices and dividends with inflation.

I am in 100% agreement with you, Eta. In fact I ditched all my CDs and IBonds as the yields were a pittance and then I got to pay 25% of what little there was back to government. Now I collect my 6.5% or so and only pay 15% tax due to the taxing structure of all my preferreds. But I pulled up the "big boy pants" and accept the fact capital erosion could/will occur. But since all I am doing is reinvesting the yield it doesn't bother me if the stock prices go down because I will receive an even higher effective yield.
I was just taking the other side as Slave seems to be of that nature and there is nothing wrong with that if the resources are there. I was of that nature for a long while and changed directions. But I know several people who remain the other way and they are doing fine and sleep well at night.


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Old 05-20-2015, 06:19 AM   #26
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Hello, Retired w/working spouse. Have slightly considerable savings / retirement we don't touch (unseen situations ??). We had a talk a cpl days ago and just can not stomach the markets any longer. We feel our nest egg should be sufficient to take us through retirement (health care). Actually when/if we start receiving SS will be like a raise above our current income. We both are thinking a CD type investment will let us quit fretting over our savings decisions. Currently brokered CD 10yr are @ 3.05% and would allow some inflation protection. W/SS, we look very, very good unless something really bad should happen. Without SS, we would be living how we are currently which is comfortable. With the current markets, would it be best to wait a bit to see if interest rates ever rise? Would the rise be so slow it wouldn't make much of a difference anyway? Any other suggestions appreciated. IF, there were a BIG correction, we may be brave enough to put in around 10% possibly.
I would not do a SPIA as it will lock up your money and you will not have access to it if you need a lump sum for some reason.

I helped BIL's mom get out of an underperforming deferred annuity she had and into Wellesley with a monthly automatic redemption that supplements her SS so she is more comfortable... sort of a roll your own SPIA but she has access to the principal if she ever needs it for a new roof or whatever.

Or if you want super-safe, then online savings or CDs are probably the way to go. Another good alternative might be target maturity bond investment grade corporate funds... the 2020 maturities yield about 2.25%.
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