No matter how many working years you have ahead of you, you had better get used to the possibility that interest rates could remain very low for decades, says philipvandoorn
No matter how many working years you have ahead of you, you had better get used to the possibility that interest rates could remain very low for decades and that you may need a new income strategy for achieving financial independence.
The brutal environment for investors seeking income Why look more intently at dividends? Consider this simple math: If you save up $1 million for your retirement nest egg and invest it in securities paying interest or dividends with an average yield of 5%, you’re looking at $50,000 in annual income. But what if those old assumptions about interest rates and yields have become unrealistic?
The opportunity from conversions from limited partnerships to corporations Clarfeld said “equity dividend investing provides a good opportunity in this market, because you can buy quality companies with higher yields that we believe, with pretty high conviction, can grow their dividends for the conceivable future.
In the extended low-interest-rate environment, traditionally conservative institutional money managers, including insurance companies and pension funds, are being forced to expand their horizons from bonds into “real estate, private equity, infrastructure and credit,” which means good times ahead for alternate asset managers, Clarfeld said.
Examples of income builders These two examples show how this strategy works. Both companies have been growing income for investors over the past five years. Home Depot is one of Clarfeld’s largest holdings; he said he also owns shares in McDonald’s and called both excellent examples of the type of long-term holding he and his colleagues look for.
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