Question that comes up for me every few years: Why would anyone who has 2 million dollars, needing 60K per year, do anything but create a well diversified collection of MLPs, CEFs, BDC’s, Preferred stocks, REITs, HYB’s, and other higher than average income producing products? For example, with a blended yield of 6%? Thoughts?
Tecunseh Amos: yes you are right
Andy Pickett: That’s my goal. Use a mix of dividend growth stocks to reach 2-3 mil then trade those out for 8-12% BDC stocks and sit back and collect a check. Then give my lucky az kid the millions.
Kenneth LaVoie: well if there’s any such thing as reincarnation I’ll come back as one of your kids. But your comment is exactly along the lines of my thinking. I think it probably does hinge on where a person is in their life/work cycle.
Kenneth Hughes: Are you adopting???
Peter Venetoklis: Because there are many other ways to invest money that are legitimate, and because there are many additional elements that individuals consider in choosing how to invest their money.
John Paul Martin: Yeah the key is getting to the 2 million. Some of the classes you mentioned can be more sensitive to rate cuts. It’s all dependent on weightage.
Jon Fiah Ali: i mean…getting to 2-3M isnt small change
Neal Mattingly: MLPs are a tax time headache. Most BDCs are return of capital and lose money over time. Some CEFs are solid but suffer similar to the others.Now if you bought a lot of SPY, DIA and TLT and sell calls for income that works.
John Paul Martin: AMZA is an ETF investing in MLPs that gives 1099 instead of a K-1
Neal Mattingly: That is an improvement.
Kelvin Esguerra: Nice to know
Steven Heller:
Tenor
Dave Shaheen: Additionally KMI, a pipeline company, is NOT K1.
John Paul Martin: Steven Heller Yep. AMZA is the ticker.
Charlene Bell: No tax headache if all your investments are in an IRA…
Ralph Al: Frank RahlfsYou make 1000 dollars a year on 10000That is 10 percent yield Please give me your stocksBecause you are like me Not that rich like some of these other people
Ralph Al: I will take this to my grave
Michael H. Mundt: Frank, Am I to understand that your post above indicates the number of shares of each stock you own?A total of 725 shares?
John Anderson: Because they underperform the broad market.
Kenneth LaVoie: True (underperform over time) but I’m thinking of someone in their 60’s, who favors steady, consistent cash flow vs. the prospect of earning 9-10% over time but also having the danger of a 20-30% drawdown. Not defending one position or the other, just going through a thought process here.
JC Catalano: Old people cannot afford losses with no jobs to compensate for losses. Slow and steady is their mantra. I don’t blame them one bit…
David Martin: Drawdown isn’t a consideration when one is living on their dividends. Value of the principal almost becomes a non-factor, since one is relying on the income.
Ralph Al: Well maybe they do
Bill Degnan: I fit this profile. I am 71 and invested in stocks, MLPs, REITS and both Fidelity and Vanguard funds. I would not be comfortable investing in real estate, gold, or other. Fortunately, I have other sources of income and just reinvest dividends. It is not all that hard to accumulate $2 million if you start early. Looking back, I never thought much about the size of my holdings. It was only in the past 10 years that I really started to focus. One thing that helped me is that I worked, for a number of years, for a firm that provides investment tools to fund managers. I was based in Boston and supported investment managers with Fidelity, Putnam, State Street Bank, Mass Financial Services and others. I learned a lot while in this role.
Hiren Shah: Bill Degnan please share me ur knowlede 🙂
Kenneth LaVoie: Fantastic response, thank you Bill! I am thinking that with ENOUGH diversification (careful, not just for the sake of filling every income bucket) one would do well. One could set it up to cashflow MORE than they need, so that they could reinvest some back into the stronger securities maybe…
Bill Degnan: Hiren Shah No magic here. Just long term (50 years) investing in solid stocks and was adequately diversified. Compounding is mostly responsible, but I always invested as much as I could. I paid off my mortgage as soon as possible and increased my bu…See more
Kassandra Lee: Bill, you give me so much hope. Right now I am lucky if I can put anything into my own investing, but always put a little into my IRA and my work matched fund. My main focus has been to pay down my debt and mortgage faster so that I will have the abili…See more
Bill Degnan: Kassandra Lee You get it. Keep at it and you will be fine. Its a marathon, not a sprint.
Deuel Stephens: Well for me being a bit older and newbie I’m stocking up on REIT’s BDC’s because it’s going in a ROTH ira…. I’m more concerned about cash flow so they peak my interest…. I plan to feast on some consumer staples next but REIT’s in the ROTH was a no brainer
Kassandra Lee: Are you able to purchase individual stock through your ROTH or do you have to go through a broker to do that? My ROTH was my very first retirement fund I set up so it has been a set and forget for me as it has always done well. I was poking around recently to see about adding MAIN to my ROTH but only see the option to invest in more funds.
Deuel Stephens: Kassandra Lee I use a self directed IRA account with Ally invest
Deuel Stephens: Most online brokerage accounts will allow you open accounts you control