No. of Recommendations: 0
The Foolish philosophy is that the best way to generate income in the long range and to protect your investments from inflation is stocks--specifically an S&P Index mutual fund.

You may also want to look into corporate bonds and bond funds. Theres a Bond and Fixed Income board in Fooldom where these are discussed. Enter bond in the board box below and press find.

If your marginal income tax rate is 28% or higher, you may want to look at tax free bond funds. I just did an analysis on Vanguards NJ Insured Long Term Bond Fund yesterday and concluded its taxable equivalent yield for me is 7.5%--with potential for capital gains as interest rates fall.

I have hadvpretty good luck with some of the partnerships listed on the NYSE. You can read about them in messages 549, 718, and 725 on the bond board. I have LRT, SBR, MSB and GNI. MSB is the one I would buy at the moment if you are patient (earnings are falling due to declining steel production). These are risky investments that generate tax protected income (partially deductible for depletion on Sch E--causing income to be converted to capital gains when you sell). They should be no more than a portion of your assets.

Some people are beginning to recommend high yield or "junk" bond funds. They will do well if interest rates continue to fall, though some could default if we go into a recession.

In the world of REITs I like KRT preferred D. Again risky, but nice yield.

As always, "results may vary ..."
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