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Alternatives In A Fixed-Income Portfolios

Sunday, November 20, 2011 - 5:20 AM
If you want yields over 5%, you'll have to think differently in today's world and you'll have to accept some risk. I don't know how much risk is involved in the alternatives mentioned in this Barron's article, but I would guess there's more than the article suggests:
Thinking differently, however, raises new challenges for retirement. Yields of 5% and 7% are attainable, but you have to look globally and across asset classes that may seem unfamiliar, such as emerging-market bonds, global infrastructure stocks, master limited partnerships and mortgage real-estate investment trusts.

Note, you can access more of the article via Google News.
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,633
1. Sunday, November 20, 2011 - 2:59 PM
I read the article and what they failed to mention was that each investment category generating at least 5% returns today all declined by at least 40% from 9/2008 - 4/2009. Some of these investments, like leveraged closed-end funds, can easily lose 10% of principal if the market has a hiccup. So if you have the stomach for this type of volatility, then you may want to take a look at these asset classes. I personally do not think a 5% return is sufficient reward to take the risk of losing my principal or not knowing I am going to get my money back on a time specific date.
loulou552 posts since
Aug 3, 2010
Rep Points: 3,431