No. of Recommendations: 4

You wrote, Here are some examples of what preferred stocks may do for you..................Xot

You should add, Past performance is no guarantee of future results.

More importantly, proteusmp3 doesn't give us any indication as to his risk tolerance or his time horizon. If he may need the cash in the next year, the fluctuation in price of preferreds, like any long-term debt, could swamp any returns from interest or dividends. That's especially true when we eventually see rising interest rates since the market price of these securities is likely to fall in response.

As long as proteusmp3 is looking for long-term holdings or is simply interested in locking in a rate and turning his cash into an income stream, I'd say one of your portfolios would work out. If he's planning to pull the money out in 3 years to buy a house or car, I'd say he needs to be a little more careful and go for shorter duration investments...

Or perhaps go with a mix. I have my taxable savings and investments split between savings / IRAs, preferreds, and stock funds. There's certainly a lot to be said for keeping some cash liquid.

- Joel
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