walkinwood
Thinks s/he gets paid by the post
Scott Burns had an interesting question on his blog
The answer focuses on risk as you would expect, but it is an interesting idea.
Junk Bond Fund Could Be Used as a Life Annuity - Registered Investment AdvisorQ. I plan to retire sooner rather than later. I would like a consistent income stream without annuities. I've owned junk bond funds over the years, (mainly in retirement plans). It seems that while fund values change, their payout is "relatively" stable in 7 to 10 percent range. (price goes down, effective yield goes up). That yield is on par with annuities, even through changing interest rates, economic health, etc.
What are the relative options of high yield (junk) bond funds compared to annuities? I know there are risks and variability, but if in annuities, you surrender your money in exchange for the income stream, then changes in fund value to get a similar level of income seems the lesser of evils. —N.S., Dallas, TX
The answer focuses on risk as you would expect, but it is an interesting idea.