Submitted by The Investment Shadow
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WALL STREET'S EVEN DARKER SECRET: 8.63% TAX DEFERRED INCOME
As of Close of Business May 8th, no less than 57 multi-year experienced, Taxable Income, Closed End Funds (CEFs) were paying 7% or more in 401k and IRA eligible income to their shareholders.
31 issues (54%) paid 8% or above, and the average for the group was 8.56%. All of these portfolios are professionally managed by this long list of well respected, long experienced, investment companies... their purpose is dependable income production.
Blackrock, Nuveen, Pimco, Putnam, Invesco, Alliance-Bernstein, MFS, Calamos, Eaton Vance, Deutsche, Pioneer, Western Asset Management, Wells Fargo, Flaherty & Crumrine, 1st Trust, Brookfield, John Hancock, KKR, Babson Capital, Allianz Global, Neuberger-Berman, & Cohen & Steers
The investment portfolios include all forms of Bonds, Preferred Stocks, Mortgages, Senior Loans, etc. How difficult could it be to put together a well diversified, retirement income portfolio?
Most of these funds have paid steady, dependable, income for more than fifteen years, even through the financial crisis... several have been around since the '90s
Yet your financial advisor has probably never mentioned them to you as a viable alternative to low yielding income Mutual Funds or stock market dependent funds and ETFs.
The DOL (and other retirement plan "specialists") have effectively banned these programs from 401k Plans, and it's likely that you have never heard them advertised or even mentioned in the most popular financial newsletters...
... and what more than an average 8.56% could an IRA hope for?
One could conclude that Wall Street (even the CEF providers themselves) would prefer that you didn't even know that they exist.
Now here’s “the rest of the story”:
A May 15th data search at cefconnect.com reveals that nearly 90% of all Taxable/Tax Deferred Closed End Funds (CEFs) were selling below their net asset values (NAVs), and of those, 63% were available to all (yes, IRA and 401k investors, too) at discounts above 8%.
Income Mutual Funds (I believe) are never available at discounts from NAV, and how many discounted securities has your advisor suggested to you since 2012 or earlier? ETF prices, I understand, are manipulated by their creators to present within pennies of their NAV.
But tax-deferred/taxable CEFs historically sell at discounts as often as not, and this morning, nearly 62% of them were available to MCIM taxable, IRA, and self-directed 401k account investors at discounts of 7% and higher.
SO, WHY THE WALL STREET COVER-UP?
And, why aren’t you asking for more information?
Click for Details --> The Other Dirty Secret
Retirement Ready Income Programs
2971 Maritime Forest Drive
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494
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|Please read this disclaimer:|
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.
Risk Management: Income, 401k, and IRA Programs
Take a tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:
In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.
At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.
The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.
Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,
Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.
Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side... while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.
To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.
Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.
Total income is 6.5% of capital and more than covers the RMD.
Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds.
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|Please read this disclaimer:|
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.