Finance Dividend-producing equities – steadyeddy, blue-chip dividend payers in established, mature sectors of the economy (think Canadian financials, pipelines and utilities) are a good income option for most retirees. Sure, their prices may decline in a downturn, but their reliable payouts provide a kind of “price floor,” making them less volatile than other types of stocks. Government bonds – the cornerstone of every well-built, defensively minded income portfolio. Sophisticated and/or risk-tolerant investors may want to investigate high-quality corporate bonds as well. Go for quality here; your bond portfolio is no place for uncertainty or speculations. Real estate – a rental condo, an investment in a Real Estate Investment Trust (REIT) or even a basement suite or coach house can be an excellent way to secure steady income. Bonus points: such income often offers a modest degree of inflation protection in the form of annual rent increases that most landlords pass on to their tenants. Cash and GICs – consider this the conservative anchor of your income portfolio. No, such investments don’t offer as much income as bonds. But they do offer rocksolid guarantees and security, something that can be very much appreciated if markets enter an extended downturn. Building a diversified, all-weather income portfolio isn’t just about seeking the maximum yield in the here and now. Rather, it’s about long-term, multi-year consistency – the ability to pay reliable income over several years, in all kinds of market conditions, without ever worrying about whether a dividend cut, a bond default or a late rent payment will disrupt your ability to pay your bills. Build “all-weather” income Income is the lifeblood of the retirement portfolio. If you rely on your portfolio for the bulk of your day-to-day retirement living expenses, then it makes sense to make this portion of your portfolio capable of generating a reasonable amount of income in any market condition, during any part of the broader economic cycle. By doing so, you’ll go a long way toward protecting not only your retirement lifestyle, but your peace of mind as well. Ideally, your income should come from a variety of different sources: 32 | www.snowbirds.org
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