Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Best of 2012: 6% Income in Retirement

October 25, 2017 By E.J. Smith

Originally posted: June 19, 2012

I came across a special report on retirement income last week during my daily reading regimen. I was surprised by one particular article on ways to boost your retirement income. The recommendation was for preferred stocks—an area I know well and a choice that makes sense in the right environment. But now is not that time.

The hook for preferred stocks is the current yield of 6%. But one catch, as the article correctly points out, is that preferreds are lower on the food chain than bonds. There’s more risk of not getting paid if the company can’t make rent. Another risk I want to point out to you that is not covered in the article is the maturity risk.

You may never hold the preferred until maturity—they go out a long, long time. If you’re 65 or 75 years old, you’re buying the payment or the 6% yield. Your plan is that it gets paid in perpetuity. You may not be around when it matures. But the maturity risk is real during your holding period.

The law of the relationship between preferred prices and interest rates is like the law of gravity. If interest rates go up, then prices must come down. It has been my experience that once prices begin their decline, the same is true for investor risk tolerance. If you can’t stomach the decline, you may be forced to sell at a loss much greater than the 6% yield you were so pleased about today. Remember, interest rates can’t go below zero. They’re at secular lows today. And if rates go up, then, as I explained, prices will no doubt go down.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Are You a Baby Boomer with a Retirement Income Problem?
  • Will You Run Out of Money in Retirement?
  • Maximize Your Retirement by Leaving Income Taxes Behind
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com
Latest posts by E.J. Smith (see all)
  • The Fed is Sacrificing Retirees to Save the Banks - January 15, 2021
  • February RAGE Gauge: Americans Focusing on What’s In Front of Them - January 14, 2021
  • There’s Always a Way Forward for Americans Like YOU - January 13, 2021

Search Young Research

Most Popular

  • Do You Remember When NASDAQ Dropped by 82%?
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Gavekal Chairman: Renewables Bubble is "Stupidest" Ever
  • Don’t Be on Their Radar, Get Out of Debt Now
  • Democrats Eager to Get Back to Protecting the Rich by Ending SALT Deduction Cap
  • Stocks: Are You Sticking Your Neck Out Too Far?
  • There's Always a Way Forward for Americans Like YOU
  • Overtaken By Nvidia, Intel Fires Bob Swan
  • The Power of a Compound Interest Table
  • H2O, Skiing, Hiding A$$ET$, Bitcoin, Ammo & More

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Remembering Rev. Martin Luther King Jr.
  • Insurrection Was the Furthest Thing from Trump’s Mind
  • Who Are Those Urging Violence?
  • Are $2,000 Checks Going to Rebuild NYC?
  • An Alert for Warm Weather, Wine Loving Mavens.
  • Key West’s Number One Restaurant: The Thirsty Mermaid
  • VIDEO: Henry U.S. Survival AR-7
  • Cancel Culture, the Great Purge, Double Standards
  • How Are You Doing on a Local Level?
  • We Support Censure of Flake, McCain and Ducey

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Social Media

  • Facebook
  • Twitter
  • Youtube
  • Pinterest

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.