Income Investing Today: Safety & High Income Through Diversification
President, Income Securities Advisors, Inc., Publisher, Forbes/Lehmann Income Securities Investor, and Author
April 19, 2008
It has been widely reported that the baby boom generation has not adequately saved for their rapidly approaching retirement years. Because of this, many boomers believe the only way to catch up is by investing in common stocks. But stocks are inherently risky, particularly for those close to, or in, retirement. Income Investing Today offers an alternative�income, through diversification over a variety of securities, that can provide a healthy annual cash income without the downside risks of the stock market.
The virtue of income securities, says fixed income expert Richard Lehmann, is that once you understand them, the selection process is substantially easier and safer than for stocks, for a number of reasons. Credit ratings make risk evaluation highly reliable. You also aren't as vulnerable to price fluctuations due to quarterly earnings reports and missed forecasts since the companies' survival�not its prosperity�is your main exposure. And you won't often see a bond or preferred drop by 20% when a company misses its sales or earnings forecasts, but when this happens it probably represents a buying opportunity.
In spite of all you may have heard about stocks versus income investing, it is not an either-or choice. Properly done, a portfolio with a diversification of income securities can, over time, equal or exceed the returns from common stock investing with much lower risk. It has worked for the author. In Income Investing Today he shows how it can work for you.
Richard Lehmann is President of Income Securities Advisors, Inc. (ISA) and publishes the Forbes/Lehmann Income Securities Investor newsletter. He also writes a fixed income investing column for Forbes Magazine. Furthermore, he publishes the ETF Investor Newsletter and Distressed Debt Securities Newsletter. Lehmann is also president of an investment advisory company. In 1983, he founded a predecessor to the ISA, The Bond Investors Association as a non-profit information organization for individual bondholders. Lehmann has been actively involved in fixed income investing and bond defaults since 1976. He has been on the Editorial Advisory Board of the Municipal Finance Journal for more than ten years. He has taught accounting, finance and financial analysis at Barry University.