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Author: Rayvt Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Re: Income Investing: 5.5% goal possible? Date: 6/22/2011 7:52 PM
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*Nothing* solves the problem the OP was asking about. investing where the primary goal is income.... does anyone here feel it's possible to achieve a 5.5% yearly return, with a somewhat low risk portfolio?

I brought up inflation because that's what kills portfolios that are heavily weighted to "low risk income" investments. The protection from inflation comes from much riskier -- and certainly much higher volatility -- stocks.

Neither bond, nor bond funds, nor preferred stocks, nor CDs will solve the inflation issue. CDs and such super-safe investments have trivisl returns, so they are out as a primary vehicle.

Ken French (of Fama/Fench) had an interesting video of what he called "Homemade Dividends". http://www.dimensional.com/famafrench/2011/05/homemade-divid...

Bond funds are frowned upon by people who appear to be authoritative. Individual bonds seem to be superior, but as far as I can tell come with a huge inherent risk unless you can do a massive amount of DD investigation. And unless you have a very large portfolio, it's hard to be adequately diversified in bonds, since par is typically $1000 and the typical minimum order size is 10 or 20 bonds.

For a small investor, referreds, limited to a subset that pass a handful of simple rules, seems to me to avoid most of the negatives of bonds. But I'm always ready & eager to hear about something better.

Uh, yeah, I should stop rambling.

So.....anybody have more suggestions for the OP?
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