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A 'No-Brainer' Income Strategy For Anyone With $1 Million 

9/11/2013

1 Comment

 
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RETIRE RICH

Investing well isn't about flashy and confusing charts or subscribing to pricey and highly ineffective advisory newsletters. It's about using a common-sense approach to allocating your money into the safest blue-chip performers in the market. I can't stress it enough... wealth is created over time and dividends are the less volatile means of achieving it. 

By Amy Calistri
 

Most people don't have a million dollars to invest. It doesn't matter. What I'm going to show you applies no matter how much money you have to invest -- whether it's $100 or $100 million. But there is a sad truth about a million dollars. Even that heady amount wouldn't earn you much in regular income -- if you put it to work in the "traditional" ways.

$560. That's the most you will get each month if you put that $1 million into a 1-year CD, which, according to BankRate.com, is yielding just 0.67%. For comparison, the average Social Security check is $1,266 per month. In other words, you'd earn more from Social Security than you would from $1 million.
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It's a similar story with a number of other investments.

10-year Treasury Note -- Sitting near historically low levels, if you loaned the federal government $1 million, with annual yields at 2.9%, you'd only earn $29,000 a year... or $2,900 a year on $100,000.

Savings Accounts -- With a maximum yield of 1%, the absolute best you'll get from a savings account according to BankRate.com right now is $10,000 a year.

Corporate Bonds -- If you invest in the right investment-grade corporate bonds, you could net roughly 3.5% a year on $1 million -- generating $35,000 a year in income. Not a bad amount of money to bring in each year, if it didn't require a million-dollar investment. A portfolio of $100,000 would earn just $3,500 per year.

S&P 500 -- You could also simply buy an index fund with your million dollars. With an average dividend yield of about 2%, you'd earn about $20,000 a year if you invested alongside the S&P 500.

The sad truth is that even with a million dollars, your options for income with "traditional" investments aren't very comforting. But there is some good news.

As of now, I'm earning $16,750 a year (or almost $1,400 a month) on a portfolio of securities currently worth $250,000 using my "Daily Paycheck" strategy. If my portfolio were worth $1 million -- four times as much -- I'd be earning $67,000 per year. That's considerably more than you can earn from Treasuries or CDs or the broader market.
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Of course, there's a big difference between a portfolio of dividend payers and simply putting your money in a CD, Treasury or even a broad index fund that tracks the S&P. I'll be the first to tell you that it's hard to match the safety of a U.S. Treasury bond if you hold it to maturity. But you might be surprised how stable a "Daily Paycheck" portfolio can be.

Let me give you one example...

You may remember the market sell-off that occurred back in August 2011. All the headlines were dour... investors around the world were anxious about a potential default by Greece, high oil prices, budget problems in the United States and elsewhere and soaring unemployment.
The S&P 500 lost 5.7% in the month of August alone; a major move for one of the world's most recognized indices.

My portfolio? Despite all the turmoil, my account fell just 1.0% during the month. That's roughly one-sixth the amount the broader market fell.

That's not to say my portfolio will always hold up as well, but I do like my odds. After all, the last time I checked, the S&P wasn't throwing off thousands of dollars in income each month, helping to smooth out returns no matter which way the market moves.
1 Comment
Mortgage Investors Testimonials link
9/25/2013 10:41:03 pm

Good strategy is very important for every business.

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