Q: What investment strategies do you recommend for income oriented investors?
A: There are several changes you can make to your investment strategies to increase distributable income and your portfolio’s probability of not running out of money. These changes include reducing volatility and increasing the yield. This is typically accomplished by buying certain types of bonds as well as shifting toward value stocks over growth stocks. It may also be smart to follow a pre-determined set of decision rules for when to rebalance your portfolio. A common mistake among income oriented investors is to “chase yield”. That is buying the highest yielding stocks or bonds without understanding the risks and without regard for diversification. For more on this topic, read: Retirement Income – Maximize With These Strategies.