A common goal expressed by clients phasing into retirement is a desire to invest to generate income to live on while leaving their principal intact. Why? They probably saw it used successfully in the past.
When many of our parents invested, they lived off the interest and dividends from their portfolios, replacing bonds as they matured and leaving their stock holdings untouched.
Why is this approach, often referred to as “investing for income,” or “income-only” investing, not necessarily the best idea for modern-day portfolios?
Why might your advisor suggest a different tactic, and what should you keep in mind when it comes to generating retirement income?Read more...