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Monday, March 18, 2024

Investing for Income – Part One

Sometimes we need a little cash.

We usually talk about long-term investing from a growth standpoint but, in dealing with my Mom's account down in Florida and hearing what her friends had to say, it seems to me that there is a great need for people to draw incomes from their investments.  This is, of course, very dangerous - because the assumption is that people are retired and, therefore, would very much like to not lose their principal.  From talking to various investment advisers it seems to me that one can expect about 6% from a conservative account so the question is what can we find that does better than 6% but is still fairly conservative

My intention is to test-drive a virtual portfolio of $500,000 and see how it performs over time, our goal is going to be collecting $4,000 a month, nearly 10% without touching the principal and we'll see how it performs over time.  Of course we will be favoring dividend stocks but a little option selling also allows us to make our own dividends.  We'll do our best to account for margin requirements as well.  

I don't want this to be a high-touch virtual portfolio, that would not fit in well with the kind of investing we're looking at.  However, unlike building a long-term virtual portfolio early on in life, we won't be scaling in as much because - if someone just collected a $500,000 life insurance policy but needs $4,000 a month to live on, then if they wait two years to build up a virtual portfolio properly they will likely have eaten into 10% of the principal.  Of course - over-investing can cause just as much damage and I REALLY wish the market wasn't so toppy but my Dad just died and my Mom has to deal with this now and her friends have issues now - they don't all have the luxury of waiting for better market conditions.

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