10 Funds To Retire Today; $6,000 Monthly Income
The income is important, but it does not have to come at the cost of growth. We need growth to beat inflation and unforeseen circumstances of the future for many decades. We present a portfolio of 10 funds that is highly diversified with nearly as many different asset classes. The portfolio offers a 7% plus yield and roughly $6,000 monthly income based on a $1 million portfolio.
ECONOMICS
Financially Free Investor
1/12/20252 分钟阅读
My post content
This article is focused on retirees and income investors who want to generate a passive income that is relatively reliable and consistent..
Write your textHere are some risks with the above portfolio that the investors should be aware of:
Market risk: Obviously, there is a market risk with any such portfolio. This is more true with a portfolio that has very high exposure to equities. If the broader market were to enter into a prolonged downturn, this portfolio would perform in line with the market. In certain situations, it may even perform worse. To mitigate this risk and allow a faster recovery, the investor should withdraw less income during the down-market years and possibly more during the bull years.
No downward protection: The portfolio is well diversified with exposure to many different equity asset classes; even then, there is no hedging or downside protection. In all likelihood, it will have drawdowns similar to those of the S&P500 during any big correction. That said, the portfolio provides a significant income on a regular and consistent basis, and even during a correction, the income will largely be protected. A regular and fairly stable income will likely make the ride much smoother compared to the S&P500.
The current market is overvalued by some metrics, though it can still continue to go higher. At least some of the funds in the above portfolio may be overvalued at this time. One way to mitigate this risk is to buy in multiple installments using the dollar-cost average method.
Sensitivity to Interest Rates: This portfolio has many securities that are sensitive to the direction of interest rates, especially the real estate, preferred securities, and the technology sector. Even though the interest rates are declining, the Fed has signaled only two cuts in 2025, which is a much slower pace than the market would like. Also, there is some chance that inflation will prove stickier than thought and become an issue once again. If the interest rates do not decline enough or rise from here, nearly 70% of the funds in this portfolio are sensitive to interest rates and may lose value.
Unexpected situations may arise as the future is always unpredictable, and the portfolio may not perform as we expect. The only way to mitigate this risk would be to monitor these funds at least periodically and make sure that nothing has changed fundamentally. here...
