As we discussed in the first two parts of this three-part series, we do not recommend turning to dividend-yielding stocks or high-yield (“junk”) bonds to buttress your retirement income, even in low-yield environments. So what do we recommend? Now we’ll answer that question by describing total-return investing. 

Here is a hard lesson that seems to be consistently ignored and yet gets repeated over and over again: If you don’t understand an investment, don’t invest in it. The pitfalls of these glowingly pitched products may not be readily apparent, but they often rear their ugly heads at some unexpected point in the future with disastrous results for investors.

If, on April 1st, someone offered you an investment that promised the higher returns of the stock market with no risk of loss, you would suspect a prank. I’d hope that if you heard this on any other day of the year you would would immediately think “scam.” Yet, every day of the year some stockbroker or insurance agent is making this outrageous claim about a product referred to as some variation on the term “indexed annuity” or “indexed life.”

In Part I of our three-part series on investing for retirement income in low-rate environments, we explained why we don’t advise bulking up on dividend-yielding stocks as a reliable way to generate retirement cash flow. Like the Three Little Pigs’ straw house, dividend-yielding stocks can disappoint you by exhibiting inherent risks just when you most need dependability instead. Another popular tactic is to move your retirement reserves into high-yield, low-quality bonds. Let’s explain why we don’t typically recommend this approach either.  

We understand why bulking up on dividend-yielding stocks can seem like a tempting way to enhance your retirement income, especially when interest rates are low. You buy into select stocks that have been spinning off dependable dividends at prescribed times. The dividend payments appear to leave your principal intact, while promising better income than a low-yielding short-term government bond has to offer.

I make about 60K per year. My boss puts in 15% of my annual income in a Simple IRA (all at once). I've never contributed any of my own money, but would like to start doing that if possible. Is there a maximum amount that can go into a Simple IRA each year?

When introducing evidence-based investing, we like to begin by explaining why we feel it’s the right strategy for those who are seeking to build or preserve their wealth in wild and woolly markets. Of course sensible strategy is best followed by practical implementation, so it’s also worth describing how we select the funds we typically employ.

Understand that there is an intricate interplay between developed nations’ monetary policies, global interest rates and the markets in general – and that these components are nowhere near one in the same. Anyone who claims to know exactly what will happen in one arena when we pull a lever in another had best be able to present a functioning crystal ball if he or she is to be believed.

There’s a joke circulating online that, if you commit a crime and you need to hide the evidence, you can stash it on page two of a Google search. At least 90 percent of the time, nobody looks there. In fact, about half of our clicks are bestowed on the first two hits we see. 

Why do investors spend more than they need to on their investments? While spending less to earn more seems obvious, the costs themselves aren’t nearly as apparent.

The recent downturn for stock prices requires some reiteration of our basic investing principles of patience and perspective. All of our latest articles tackle this important theme. Plus, big news in Phoenix!