📈 Diversifying Your Portfolio with Fixed Income & Dividends 📊
Fixed income products and dividends are essential for a balanced portfolio. Recently, the S&P 500 and Dow Jones Industrial Average reached all-time highs. Yet, some investors are hesitant to make new purchases at these levels. 🤔 A well-balanced portfolio can help reduce volatility, allowing investors to enter the market when prices drop. 🔄
In previous videos, I’ve talked about structured notes as a great option for protection during market declines. They can also boost returns when markets rise. 📉📈 However, structured products might not suit everyone due to their limited liquidity and 3-5 year time frame.
Alternatively, consider adding fixed income instruments and equity dividend ETFs to your portfolio. 💡 These investments offer stability and income without relying on price increases alone.
💰 Why Fixed Income?
Fixed income securities are often more predictable than growth investments. They provide a clearer risk-to-reward dynamic. 🏦 There are many options to choose from, including:
- Government bonds
- Corporate bonds (with different credit ratings)
- MYGAs (Multi-Year Guaranteed Annuities)
- REITs (Real Estate Investment Trusts)
- Preferred Shares
- Equity-themed ETFs
📊 Current Fed Rates & Market Outlook:
The Fed Funds Rate is currently 4.75%. The Federal Open Market Committee (FOMC) may reduce rates by 0.25% in December. More rate cuts are expected through 2025. 📉 Locking in current rates could be a smart move for fixed income investments.
💸 Average Yields of Fixed Income Securities:
- Money Market Funds: 4.25% 💵
- 10-Year Treasury Bonds: 4.25% 🏛
- 1-Year Bank CD: 4.35% 🏦
- Investment Grade Corporate Debt Fund: 5% 💼
- Guaranteed Multi-Year Annuity (6-10 years): 5.5% 📆
- High-Yield / Junk Corporate Bonds: 7% ⚡
💡 Hybrid Investment Options:
- REITs (Real Estate Investment Trusts): 5% 🏠
- Preferred Shares: 6% 📊
📈 Equity Dividends:
- Dividend Growth Funds: 2.25% 💹
- High-Yield Dividend Funds: 4.5% 💰
- Derivative Income Funds: 8% 💥
🔍 Exploring Lesser-Known Investment Categories:
Some of the investment categories above are widely known. However, others like MYGAs, REITs, Preferred Stock, and Derivative Income Funds are less familiar and require more education before investing. 📚
In this episode of TriathlonPartnersTV, Ira explains the benefits and risks of these products. He also highlights four categories that could be valuable for your portfolio:
- Multi-Year Guaranteed Annuities (MYGA) 🛡
- Real Estate Investment Trusts (REITs) 🏢
- Preferred Stock 💳
- Derivative Income Funds 💹
🔒 MYGAs
MYGAs offer guarantees from state insurance regulators, tax-deferred growth, and interest rates typically 1% higher than fixed income products issued or guaranteed by the FDIC.
🏠 REITs and Preferred Stock
REITs and Preferred Stocks can provide qualified dividend treatment. This means they may be taxed at lower capital gains rates instead of regular income tax rates. 📉
📈 Derivative Income Funds
Derivative Income Funds generate dividends from the premiums of options sold by the fund. This often results in higher yields than typical dividend funds.
We hope this video provides a solid foundation for understanding interest-bearing products and dividend-paying securities!
At Triathlon Partners, we aim to engage, educate, and empower clients to make informed decisions that match their financial goals. 💡
If you found this video helpful, please subscribe, leave a comment, and visit our website at www.triathlonpartners.com. We greatly appreciate your support on social media, friendships, followings, and thumbs up! 👍
Have a blessed day! 🙏✨
Additional Resources
Mastering Retirement: The Secret to a Balanced Portfolio
TriathlonPartnersTV: Annuities, RILA s & Tax-Deferred Growth
TriathlonPartnersTV: Retirement Annuity
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