Once my less than 2% allocation to i-bonds ends with the maturity of my current holdings over the next 2-3 years, I won’t be holding any bonds. My asset allocation will be 97% stock.
{{ If one is following the well-known “4% rule” – withdrawing 4% of your portfolio for living expenses every year – then one naturally wants to minimize the risk of a big downturn as much as possible.
But we think investors can do better than the standard recommendation with nothing but stocks and cash.
Back when I had a CD ladder my longest maturity was 6 years. After that, I kept most of my “cash” in a short-term bond fund with a 2-year duration. Today, all my cash is in a money market fund.
" Of course, a portfolio made up mostly of moderately high-yielding stocks with a relatively small cash allocation will be more volatile than a portfolio with a very large bond allocation. But the key is to focus on the portfolio’s income rather than its market value.
While the traditional 4% rule would have a retiree draw from the market value, the landlord way of investing would have a retiree merely withdraw the income.
At High Yield Investor, thoughtfully curating portfolios of high-yielding stocks is our specialty…"
Aha! Seems the author is talking his book and fishing for customers.
His “landlord” approach to taking only dividends but not principal isn’t really different from taking interest from a bond ladder. Except the stocks are more volatile than a bond ladder.
I’m not rejecting the concept of a portfolio of dividend-yielding stocks. In fact, I held stocks for many years and would happily buy them again at reasonable valuations. One candidate is SCHD ( Schwab U.S. Dividend Equity ETF).
But any stock fund will reflect volatility in the market. Especially the overvalued SPX funds. And maximizing potential with maximal volatility doesn’t appeal to me.
Selling subscriptions - that’s Mr Samuel Smith’s job. Last year, on SeekingAlpha, at the start of the year, he posted a 10-holding stock & ETF portfolio with a forever dividend theme. Then shortly after, there was an update to the portfolio. Then a new post, with a slightly different theme, (… and usually a subscription pitch at the end of each article ). Throw enough ideas out there, then one or two will look pretty decent for a short period of time.
Sorry Sam, no aiding and abetting from me this year.