High Yield Investing for Retirement - No Deposit, No Return

It seems to me that there are two basic reasons for watching high-yield shares as part of a retirement portfolio. First, if you're young and looking to generate income for retirement, you want to see your money grow, not only because it adds to it on a regular basis, but because it is "working for you", and is generating its own income hopefully you are reinvesting. The second reason is really the first coming to fruition. And 'when you are retired and want to live on income that is generated by the money you have invested during your working life.

According to a recent issue of Time Magazine's big switch from U.S. pension plans to defined 401Ks had no success with the average 401K at retirement far in the amount of funds needed to retire. The simple reason for this deficit is that people tend to not have the tax benefits of a 401K and simply do not contribute enough (even giving up these corporate matching contributions if applicable) or sign up and do not contribute at all. This applies whether Roth IRAs, or the original version.

So how does this link with high-yield shares. Simple, we've all seen recently as a portfolio investment can take a beating, regardless of the quality and diversification of your investments. Well, if you are invested in high yield securities, and regularly reinvesting the dividends (as a youth), then buy more when it is available at lower prices (a method known as dollar cost averaging). If you are a senior living off your income and have invested in a carefully managed portfolio of stocks and high yield, despite the fact that the market is down, your income stream remains the same and you are "paid" for wait for the market to return. Compare this scenario with being fully invested in a growth fund that pays little or no dividends, and planned to take, such as 4% per year (as recommended by a consultant). If your portfolio or mutual fund, fell by 30% then say that you are pulling out close to 6% of the capital. Which means you have to cut back the amount you take out or to return to 4%, or you must come to terms with the fact that you could run out of money before you run out of time.

Let me be clear, I'm not recommending anyone to put all your eggs in the basket made available to high, as it has the good sense to limit investments to a segment. However, it makes sense to consider actions of high yield as a portion of your retirement nest egg if you are willing to handle that portion carefully to ensure that you have invested in the "best of breed". You can then see how the magic of compound interest (dividends in this case) works its wonders.

But first of all, as the jogger in that cold winter morning, you must take the first step to getting on the road. Difficult as it might be to move forward when you're done you'll be glad you did the first step. No deposit - no return!

Boyd Investment Holdings LLC. ....