The best way to generate cash from your investments in retirement?
Originally Published on Global News Erica Alini 28 September 2019 Author Erica Alini writes this article on Global News with the question: What’s the best way to generate cash from your retirement investments? Erica quotes financial experts Julia and Rona Birenbaum, certified financial planner and founder of Caring for Clients, on this matter. Managing money comes with challenges, and one of the challenges we face is allocating a portion of our paycheck towards an investment. However, there is a growing number of retirees or soon-to-be retirees facing the opposite problem: producing a regular cashflow from an investment portfolio. In this article, Alini further talks about a strategy that used to work very well in generating regular cashflow – the Guaranteed Investment Certificates (GIS) to which Julia Chung explains “[Until the 1990s], you could just take your whole portfolio, turn it into GICs, and get eight percent, which was a thing.”
“But as the general level of interest rates in the economy started trending lower, dragging down GIC rates as well, other cash-generating investments became more popular. These include real estate investment trusts (REITs) and high paying bonds. But arguably the most such asset is stocks that carry a dividend, a portion of earnings that a company distributes to its shareholders.” Alini continues.Julia Chung and Rona Birenbaum explain Dividend Investing and Selling Investment and here is what they have to say.
A dividend stock works a bit like a rental property, Chung usually explains to clients. The dividend is similar to the monthly rent: a regular source of cash. But you also own the stock, which, like the rental itself, will hopefully increase in value over time.Read the full article here.
One of the main arguments for that strategy is that retirees can draw on dividends for their cash-flow needs and never have to worry about the volatility of the underlying stock, said Rona Birenbaum, a certified financial planner and founder of Caring for Clients.
And if the companies you choose to invest in increase their dividend over time, you’re all keeping up with inflation, she added.