As the market continues to be highly volatile, more and more would-be traders are starting to pay attention to such things as "yield," safety, and steady "cash flow."
These ingredients are the life-blood of an investment strategy practiced by one of Forbes' most successful editor/partners, Richard Lehmann. You may recognize Richard as Forbes Magazine's Fixed Income columnist and resident bond expert. He is also author of fixed income bible Income Investing Today and editor of monthly newsletter Forbes/Lehmann Income Securities Investor.
Richard's portfolio of safe, conservative, high-yield fixed-income securities has beaten the stock market for years. Given the market pullback, some of his recommendations are now providing yields as high as 17%. And if you had invested $100,000 in Richard's high yield model portfolio in 2000, it would have been worth $266,000 in mid 2008 compared to only $85,000 for a similar investment in the riskier S&P 500.
That means his readers have been able to more than double their capital … while protecting themselves from the looming threat of more market volatility.
With Richard's fixed-income securities picks and portfolios, you can build or re-build your retirement nest egg … generate the income you need to live after you stop working … and preserve the wealth you worked your entire life to accumulate.
These ingredients are the life-blood of an investment strategy practiced by one of Forbes' most successful editor/partners, Richard Lehmann. You may recognize Richard as Forbes Magazine's Fixed Income columnist and resident bond expert. He is also author of fixed income bible Income Investing Today and editor of monthly newsletter Forbes/Lehmann Income Securities Investor.
Richard's portfolio of safe, conservative, high-yield fixed-income securities has beaten the stock market for years. Given the market pullback, some of his recommendations are now providing yields as high as 17%. And if you had invested $100,000 in Richard's high yield model portfolio in 2000, it would have been worth $266,000 in mid 2008 compared to only $85,000 for a similar investment in the riskier S&P 500.
That means his readers have been able to more than double their capital … while protecting themselves from the looming threat of more market volatility.
With Richard's fixed-income securities picks and portfolios, you can build or re-build your retirement nest egg … generate the income you need to live after you stop working … and preserve the wealth you worked your entire life to accumulate.
In a recent interview, Richard shared with Forbes 5 portfolio strategies to help you ensure a financially secure retirement … for as long as you live.
1. Forget tax-free munis.
Tax-free municipal bonds are the most widely advertised income investment � promising safe, tax-free returns.
But even at today's attractive yields, forget them, advises Richard, who says they're a terrible value. They are only for the super-rich, who are interested in preserving their capital. And now as the bond insurance industry implodes we are discovering that "safe" munis aren't so safe after all. A much better alternative is "corporate preferred shares."
These essentially allow individual investors to buy corporate bonds equivalents once available only to institutional investors � as preferred shares on the stock exchange.
While they aren't tax-free, the income generated by many preferred shares is taxed at the reduced 15% rate for dividends.
So they actually generate a superior return compared with tax-free munis.
Depending on their rating, preferred shares are yielding between 8% and 14%.
Even after the 15% tax on dividends, that's still a heck of a lot better than the measly 3.8% that AAA-rated munis yield.
In his monthly advisory Forbes/Lehmann Income Securities Investor, Richard Lehmann offers a wide choice of preferred shares … ranging from AAA-rated to below investment grade. Some of these pay dividends as high as 250% of Treasury yield!
To find out which high-yielding preferred shares Richard is currently recommending, click here to subscribe now.
To find out which high-yielding preferred shares Richard is currently recommending, click here to subscribe now.
2. Canadian energy royalty trusts you can take to the bank.
Despite the recent decline in oil and natural gas prices, don't give up on Canadian oil trusts. The best income play on crude oil prices is still to invest in select Canadian energy royalty trusts. Unlike U.S. energy royalty trusts, which stop paying once the trust runs out of oil….
Canadian energy trusts can acquire and add more reserves to replenish depleted supplies � and as a result, pay off perpetually.
Traditionally, these Canadian energy trusts have been exempt from corporate tax.
In November 2006, Canada announced its intent to tax these trusts � sending investors scurrying.
But what many don't realize is that the earliest this tax would go into effect is 2011.
Also, while the tax rate in Canada is 35%, the effective tax rate for Canadian corporations is a mere 7%.
So even if the tax on Canadian energy trusts actually starts in 2011 � and it may not, since the party in power does not hold a majority in parliament � the effect on dividends is negligible.
Richard's 3 favorites are among the largest energy royalty trusts in Canada � and in Canadian energy trusts, size does matter.
These trusts have 9 years of reserves as well as vast acreage of undeveloped properties.
So they are likely to pay increasing dividends for a long, long time. Right now, they pay yields of up to 30%.
As a subscriber to Richard Lehmann's Income Securities Investor, you get the names of his top 5 Canadian energy trusts � some of which have yields over 30% -- with your very first issue. Click here to subscribe now.
3. Profit from undervalued "special situation" income plays.
Income investments aren't only for income.
Some generate superior total returns through a combination of high yields and capital gains.
One of the ways Richard helps his readers generate the dual objectives of growth and income is with "special situation" plays.
Typically, these are companies whose shares (preferred and regular) have fallen in price because of negative news.
Right now, he's recommending a closed-end utility fund.
Closed-end funds have suffered price declines in excess of their net asset values (NAVs) because they use up to 30% leverage.
Result: In down markets, the leverage enhances losses causing prices to fall.
Now there is an opportunity for individual investors looking for growth and income. While leverage drove the fund down, it should also drive the fund back up in a recovery. In the meantime, it provides a 24% dividend yield.
4. Reallocate your portfolio to achieve retirement objectives.
There is no magic formula or hard-and-fast rule determining how to allocate your investments between stocks and bonds.
The amount of your portfolio that should be in fixed-income securities vs. the stock market depends on:
* Your age
* Your job status -- working, retired, getting ready to retire
* Your income
* Your net worth
For instance, if you are a 65-year-old retired person with a net worth of a couple of million dollars, you don't need to increase your nest egg.
You'd therefore invest a larger portion of your wealth in safe, conservative fixed-income securities with good credit ratings.
By doing so, you'd protect yourself against big investment losses which you can't afford, since you are not working and therefore don't have a paycheck coming in to replace them.
If you invested $1 million of your money in a diversified portfolio of fixed-income securities earning 8.5% annually, you'd collect $85,000 a year in dividend payments � taking care of most or all of your daily needs.
5. Invest the income portion of your portfolio in Richard Lehmann's high-yield securities.
Thousands of investors at or near retirement age depend on Richard Lehmann to help them navigate the somewhat complex � and unfamiliar � terrain of corporate bonds, preferred shares, convertibles, hybrid preferreds, PET bonds, and other fixed-income securities.
In each issue, you'll find dozens of recommendations on fixed-income investments with yields ranging from around 5% to 20% and even higher.
Best of all, there are 4 portfolios to choose from, each tailored to achieve a different set of investment objectives.
These are:
High Current Income Portfolio � achieves superior income by investing in securities rated Ba2/BB or below … generates a 8.23% yield and has outperformed the S&P 500 over the last five years.
Medium-Risk Portfolio � generates high yields and high monthly dividend checks with fixed-income securities rated between Ba3/BB and Baa2/BBB … produces a 11.53% yield.
Low-Risk Portfolio � a portfolio of fixed-income securities with credit ratings of Baa3/BBB and higher (these are all investment-grade securities)… our safest and most secure income portfolio … yet it produces an 8.23% cash yield.
Multi-driver Portfolio � For 2008, Richard has also added a portfolio that includes diverse income generating sources to minimize exposure to any one economic event. This portfolio has built in 16.21% yield.
There are 2 ways you can "hire" Richard Lehmann to increase yield, capital gains, and safety of principle on your fixed-income investments.
The first is to become one of his private clients. But with a minimum account size of half a million dollars � and a one percent management fee � that will run you a minimum of $5,000 a year.
A much more cost-effective alternative is to subscribe to Richard's high-yield income investment newsletter, Forbes/Lehmann Income Securities Investor.
Your cost is as little as 47 cents a day � less than you pay for your morning cup of coffee! And of course, you can cancel and request a refund on all unmailed issues at any time.
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