Investing for Income

[Philadelphia Eagle]

Most retirees rebalance their portfolios to gradually move away from equity investment and into more stable bonds and property funds.

REITS and more conventional bond mutual funds are a popular home for dollars seeking a stable return as time horizons shorten with age.

But there is a growing body of opinion which says that those seeking income generation should keep a proportion of their investment in equities (20/30% is often quoted).

They point out that a 'blue chip' equity with a strong dividend track record provides not only income but, historically, these equities have outperformed their peers in terms of capital growth as well.

So, they argue, investment in a 'blue chip' will provide the income you require and also grow in value over time so that you have an increasingly valuable asset to pass on to the next generation.

Thoughts?

[Lon]

Philadelphia Eagle wrote: Most retirees rebalance their portfolios to gradually move away from equity investment and into more stable bonds and property funds.

REITS and more conventional bond mutual funds are a popular home for dollars seeking a stable return as time horizons shorten with age.

But there is a growing body of opinion which says that those seeking income generation should keep a proportion of their investment in equities (20/30% is often quoted).

They point out that a 'blue chip' equity with a strong dividend track record provides not only income but, historically, these equities have outperformed their peers in terms of capital growth as well.

So, they argue, investment in a 'blue chip' will provide the income you require and also grow in value over time so that you have an increasingly valuable asset to pass on to the next generation.

Thoughts?
I agree basically, and am fortunate to have sufficient funds to deversify, both for income and growth. However, the ideal Estate Plan for my wife and me, would be to spend our last dollar the day we take our last breath and to hell with leaving anything to the next generation. That's a bit hard to calculate though, so like it or not, there will be a risidual estate upon our deaths,

[Philadelphia Eagle]

I'm sure many would agree with those sentiments.

I tend to take the middle path and invest nowdays for income rather than growth.

I always, however, keep a weather eye on overall performance to make sure that the income being generated isn't eating into the principal.

I find that watching 'total returns' is the best way of doing that.

I don't have many equity investments any more but like to keep a few in there.

Those which I have are 'blue chip' with sound dividend track records.