Investing in Bonds For Dummies by Russell Wild

Author:Russell Wild [Wild, Russell]
Language: eng
Format: epub
ISBN: 9781119121848
Publisher: Wiley
Published: 2015-10-26T00:00:00+00:00

Lining up your bucks

The gods of retirement offer you a number of options for putting cash in your wallet. If you’re one of those lucky Americans who can still bank on a solid fixed pension with health benefits, that’s great. Social Security, when you’re gray enough, can also provide steady cash … although at the time of this writing, it seems that Social Security may need to start slashing benefits (not all, but some) within the next two decades or so.

Because this is an investment book, I spend the rest of this chapter, and the next, talking about the money you can tap from your savings. Most of us who are not retired senators will need this money in order to retire, and it can come from one or all of three sources: interest, dividends, and the sale of securities. Your choice among these options (or some combination of the three) will have a great bearing on how big your portfolio needs to be and how much you can safely withdraw.

The best option — always — is to adopt a cash withdrawal plan from your portfolio that is flexible and potentially allows for all three sources of cash flow to play into your new paycheckless life. One of the biggest and most common investment mistakes that people make is to lock their sights on one form of cash flow (typically interest income) and ignore the others.

Toward the end of this chapter, I show you how a flexible, sensible, triple-source-of-cash-flow plan works. First, allow me to introduce you to each of the three options just mentioned and explain why the gods of retirement created them, where to find them, and how to maximize them.

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