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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35381  
Subject: Re: Income Investing: 5.5% goal possible? Date: 6/24/2011 8:11 PM
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Cb,

Sorry a bit late to the party.

does anyone here feel it's possible to achieve a 5.5% yearly return, with a somewhat low risk portfolio?

I'm doing a cursory check of "bond funds" and "income mutual funds" suggested by Money Magazine and it seems that the 10 year annualized return on these things is anywhere from 4% upto 8%.


IMHO it is possible to match these returns many ways and none of them are hands off autopilot style investing. Pick your bond vehicle(s) or income stream vehicle(s) of choice and with smart disciplined investing it is possible for us hacks to fall comfortably within the 4%-8% range. Much depends on how active and how disciplined you can be. Much depends on matching your personality with an investing vehicle(s) and style with your personality and skill set.

The more you know the better off you are, eventually. When beginning you will make more mistakes than more mature investors; too conservative, too active, not conservative enough, not active enough. When you are at the start of intermediate investing you are likely to make several major mistakes because you think you got this tiger by the tail and it aint got no teeth left. After that its about how you apply your skills wisely.

I am of the belief that an intelligent person is capable of learning a new skill like investing or investing in a new class. No on knows how skillful they will eventually be until they walk the road. The higher skilled folks can clear the 8% hurdle that the good pro funds chase, those who top out at a lower skill level should be able to bring home 4%. All of the above is possible to do with greater safety than simply buying X basket of funds and passively managing them using very occasional pruning methods or some annual rotation schedule.

The key to success is to learn and then think. The market does unexpected things that can be broadly anticipated and thus planned for. The willingness to accept what is occurring and recognizing that the broad strategic plan is still working but now requires some tactical adjustments is what is needed. Occasionally we stick to our guns and weather the storm. Occasionally we jettison plans A and B and shift to plans A' and B' doing so by the seat of our pants with every intention of knocking the rough edges off when things calm down.

Many vehicles and ideas have already been shared. Find the ones that interest you or make sense to you and have a go. The pro's are not magical. Very few are truly gifted. The greatest advantage the pro's have is not access to data and staff, their greatest advantage is they go to work every day. We often don't have time for that kind of commitment and we often do not have to commit that kind of time for our much smaller account of a single client whom we know pretty well.

jack
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