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Psst...Looking for Income?

Posted by Barrett Costello  March 3, 2014 03:04 PM

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Think outside the bond. Yes, if it's income your desire, you should be looking at many more places. Places you may not have heard of or considered before.

The fact is many folks need to supplement their income from places like Social Security, pensions etc. which can be woefully inadequate with the ever rising costs of daily essentials. With interest rates effective near zero, there isn't much your bond (unless you invest in emerging market bonds or high yield "junk" bonds - and that means taking on more risk that you may be willing to) or that CD from the bank can do.

So, don't discard or dismiss many high quality companies that have decades long histories of paying increasing dividends that many times eclipse the income from bonds and bond funds. Consider other vehicles like Master Limited Partnerships (MLP's) that can also be accessed via mutual funds and ETF's, helping to avoid the hassles of Schedule K-1's. And today we have a plethora of new innovations like non-traded Business Development Companies (BDC's) that don't move with the markets and manage to provide healthy income in the 6%+ mark.

So, if it's income your want, then think outside the bond. Because bonds have an inverse relationship with interest rates, when rates inevitably tick up, your bond holdings make head south.

Kash Ahmed,MBA, MSF is the founder and President of American Private Wealth™. When his schedule permits, Kash teaches as a professor of Finance and Investments at the graduate level, both in the United States and overseas. Kash Ahmed is a proud member of the Financial Planning Association of MA.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
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