Daily Gains Letter

Income

Retirement planning isn’t just about tucking money away for retirement and hoping it lasts. It’s about replacing your main source of income once you retire with other sources of income; preferably with those that continue to generate income. Life doesn’t stop at retirement; neither should your investment strategies.

Retirement income can come from three different sources: social security; pension; and investments. A long-term approach to retirement investing produces income, wealth creation, and capital growth.

For the most part, Social Security was never supposed to be the sole source of retirement income. More of a starting point; and a very basic starting point at that. The average American can look forward to an annual retirement benefit of less than $15,000 a year; or roughly $1,230 a month. While social security is guaranteed, the income from it isn’t very much.

At the same time, fewer and fewer Americans have pensions to look forward to.

Since the average American cannot count on social security or a pension to carry them through retirement, it’s essential they find other sources to generate recurring income. As an investor, it’s important to be comfortable with and knowledgeable about both the equities you’re interested in and the potential rewards and risks.

If you’re just starting out in the work force, you can afford to be involved in riskier high-yield investment. If you’re nearing retirement, you’ll want to minimize your chances of loss by looking into lower risk, low-yield equities.

For those investors looking for higher returns and willing to take on a little bit of extra risk, they should look into high-yield investments like penny stocks and options. That said, high-yield investments are not for everyone.

Keep in mind; when you are looking for high-yield investments, your risk will be much greater than conservative investments like government bonds. But then again, a basic rule of investing is that high risk translates into high reward.

If you’re nearing retirement, you might want to consider blue chip stocks that offer regular, quarterly dividends. There are a large number of solid, publicly traded companies that have been providing regular dividend yields that significantly outstrip government bonds.

While there are no easy answers for retiring in comfort, investors do have retirement options that can help increase income and reduce market risk.


Top Stocks to Watch for Steady Dividends and Capital Gains



Top StocksThe stock market may be blooming again with the major key stock indices rallying back above their 50-day moving average (MA), but there is still ample downside vulnerability. We have the mess in the eurozone with Greece threatening to leave the euro and not honor its massive debt obligations. There's also the China risk. Then there are the oil prices. Oil rallied to $53.00 last week, prior to retrenching and then rallying again. It's going to be nerve-racking. The problem investors continue to face is the lack of alternatives to the stock market. The 10-year bond yields 1.82%, which is not great unless you have tons of cash. Of course, you could buy distressed high-yielding Greek or Russian debt, but why would you, gi ... Read More



How to Play America’s Widening Income Gap



America’s Widening Income GapWhen it comes to America’s income levels, we continue to be a nation of haves and have-nots—the latter being the majority. There are about 48 million Americans collecting food stamps and many more are struggling to pay rent and put food on the table. In fact, we are now also seeing once-middle-class families going to food banks. The government wants you to believe all is great, but that’s not true for everyone. Jobs are being created, but the majority are low-income service jobs that don’t require higher-level education. Yet highly educated workers are taking jobs that are far below their skill group and experie ... Read More



How to Generate Premium Income in a Stalling Stock Market



Premium Income in a Stalling Stock MarketThe S&P 500 recently traded at a record-high, just before tensions in the Ukraine erupted and the global stock market declined as fear of an escalation and war intensified. While the charts continue to show the stock market wanting to move higher after excellent gains in February, I still sense the upside moves will be more difficult to come by compared to what we saw in 2013. Even at this point, the Dow Jones Industrial Average and the S&P 500 are still negative this year. If the stand-off between the Ukraine and Russia doesn’t escalate, I would expect the stock mar ... Read More



Small-Caps with the Biggest Dividends



Small-Caps Offer the Biggest DividendsAt the beginning of January, I was optimistic that 2014 would deliver some good results to the stock market. I suggested that small-cap stocks would also continue to return profits to investors after a wonderful 2013 as the economy continued to show progress. But after a disastrous January, in which the small-cap Russell 2000 attracted the most selling and was down more than nine percent from its 2013 record-high, concerns surfaced. At this stage last year, small-cap stocks were blossoming with the Russell 2000 up more than eight percent by February. Now there are co ... Read More



Investing in These Collectibles a Better Bet Than Wall Street?



Investing in These CollectiblesNot all investing opportunities are created equal… Thanks to Antiques Roadshow and American Pickers, everyone thinks investing in collectibles is a great idea. However, the truth is that few actually have anything worth more than the day they were first purchased. That doesn’t prevent people from trying to guess what the next great cultural commodity is going to be. I remember (briefly) watching a home shopping channel years ago and listening to someone explain why “Beanie Babies” were the next big thing ... Read More



How to Profit from Fed’s Easy Money Mistake



Profit from Fed’s Easy MoneyThe Federal Reserve has been very accommodative. Its goals are very simple: it wants economic growth in the U.S. economy. As a result, the Federal Reserve is taking extraordinary measures, printing $85.0 billion a month and using it to buy U.S. bonds and mortgage-backed securities (MBS). The hope is that the money will go to the banks, which will lend it to consumers who then spend it, leading to economic growth. Sadly, the problems continue to persist in the U.S. economy, leaving economic growth still far from sight. The techniques used by the Federal Reserve are ... Read More



Top Four Overlooked Stocks for Income-Seeking Investors



Income-Seeking InvestorsThe 2014 Winter Olympics in Sochi, Russia may be just around the corner, but when it comes to breaking records—for better or worse—Wall Street remains the gold-medal champion. Thanks to the Federal Reserve, interest rates are at record lows, and will stay there for the foreseeable future. The U.S. national debt is at a record $17.1 trillion, while at the other end of the scale, the S&P 500 and Dow Jones Industrial Average recently posted record highs. This is in spite of economic indicators that suggest the markets should be moving in the opposit ... Read More



Time for Income-Starved Investors to Reconsider REITs?



Time for Income-Starved Investors to Reconsider REITsAfter a serious pullback in May, is it time for income-starved investors to reconsider real estate investment trusts (REITs)? Or will America’s favorite sugar daddy, Federal Reserve Chairman Ben Bernanke, tease investors with ongoing threats of tapering? The North American REIT bull market was stopped dead in its tracks on May 22, after Bernanke hinted the central bank might begin tapering its massive $85.0-billion-per-month government bond-buying program. By being the major purchaser of U.S. gove ... Read More



Safe Stocks to Shield You from Fed’s Bad Decisions



 unemployment rateIt was just a week ago that the Federal Reserve, pointing to an improving economy, said it would continue its quantitative easing program—at least until America’s job market improves substantially. We weren’t, however, told what “substantially” looks like. Many think that means an unemployment rate of 6.5%. And to get there, the U.S. would have to create somewhere in the neighborhood of two million jobs. That’s assuming all things remain equal—but, of course, they never do. The Federal Reserve also said that, thanks to the economic rebound, it would consider tapering its monthly $85.0-bil ... Read More