Investing for income?

[*Mountainhunter]

There seems to be a number of people here with strong financial experience. If you were investing money to generate income where would you do it? Annuities, Stocks with strong dividend histories, rental or commercial real estate? I will say I have been a landlord and I don't enjoy it.

 

[Craig Van Arsdale]

The short answer is Bitcoin.

No other investment holds a candle to it and real inflation is 15-20% a year, year over year on all the assets you actually want. CPI inflation is a govt controlled metric on items we all NEED not want. Until people can start to understand that if your investment is not beating real inflation it's no investment at all and they will suffer a loss in purchasing power year over year, some less than others compared to their returns.


Real estate is good for generating a secondary cash flow if you have easy access to credit and understand the benefits of maximizing the tax advantages ie 1031'ing a property over and over tax free.

 

[MR5X5]

How much do you have? How much do you need to generate? What is it for? What is your risk tolerance? You need to start with these questions and go from there.

 

[hodgeman]

It all depends on a multitude of factors? What is the corpus of the account (ie. how much money do you have) and how much income are you trying to generate? What kind of risk are you willing to take? Do you want to leave anything to your heirs or consume it over the course of your life.

While I think most folks do not need financial advisors while they accumulate their investments, few people can do tax effective distributions like a financial advisor.

In general, rental real estate can generate quite a lot of income with the lowest cash outlay...but as you mentioned, it's work and can be a lot of work once it gets to be a certain size. I view rental properties more like a job or business than true passive income similar what a bond ladder throws off.

Bonds used to have a good stream of income associated with them, these days they pay very little to nothing. Broad stock indexes (S&P, VTSAX, etc) can throw off a nice dividend stream and give you long term growth, with some risk.

Annuities can fit some situations, but I strongly distrust most people who sell them since they'll think anyone breathing should have an annuity.

In simplest terms, you can generate about 4% in cash annually from your investments with some combo of stocks and bonds without oversized risks but there are just far too many complex variables for simple answers to your question.

A good financial advisor who is a fiduciary (not an insurance salesman, annuity salesman, or shill to a product line) will be your best bet for a holistic approach.

 

[kentuckybowman]

There seems to be a number of people here with strong financial experience. If you were investing money to generate income where would you do it? Annuities, Stocks with strong dividend histories, rental or commercial real estate? I will say I have been a landlord and I don't enjoy it.

dont take any advice on here, get a certified financial planner with a great reputation. some of these responses so far are insane.

 

[redbarn]

The short answer is Bitcoin.

No other investment holds a candle to it and real inflation is 15-20% a year, year over year on all the assets you actually want. CPI inflation is a govt controlled metric on items we all NEED not want. Until people can start to understand that if your investment is not beating real inflation it's no investment at all and they will suffer a loss in purchasing power year over year, some less than others compared to their returns.


Real estate is good for generating a secondary cash flow if you have easy access to credit and understand the benefits of maximizing the tax advantages ie 1031'ing a property over and over tax free.

Yikes. Ask for financial advice on an internet hunting forum....

 

[*Mountainhunter]

I am not a novice when it comes to this, I do have a financial advisor and I will be speaking with him this week. I can sort out the viable from the not in a million years responses.
I am interested to hear what hard working smart people have done to generate income from lump sum investments for retirement income.

 

[MasterTimo]

I'd say you shouldn't go into any investment without knowing the full details.

Bitcoin, forex, stocks, shares, indices, they are all great to make more money, if you know what you're doing though.

 

[markwilson171]

I invest in dividend stocks using m1 finance. It’s a hybrid robo-advisor. Check it out.

 

[Wapiti1]

Most common is real estate. I prefer commercial and own the building and land my daughter runs her salon out of. Obviously, I give her a deal, but it pays the note and taxes. As she builds the business, it will be rent to own. I want nothing to do with residential renters.

Otherwise, the most secure is to set up an income portfolio and harvest the gains. You advisor should have several models for this. I don't like annuities unless they have a sell ability that preserves your value. Many have penalties that lock you into them. My MIL had one that was a giant PITA to get her out of when she moved into assisted living and needed to adjust the annuity terms.

I would not recommend Bitcoin. I prefer Dogecoin and Etherium. But they are fun investments for me. I do know some guys do well with digital currency trading, but it is time consuming, IMO, to do it well. It also has a lot of risk.

Jeremy

 

[Afhunter1]

I know quite a bit about investing and accumulating wealth. I have rental properties, run a beef farm, work as an accountant for my day job but when it comes to turning what I have when I retire into income I have no clue and will let a financial advisor handle it. I want to enjoy my time when I hit that age and not worry about making a major mistake.

I’m 40 this year and will be hanging it up at 55. Other than my farm. That’s for fun

 

[MattB]

Since you were already a landlord and did not like the experience, I would recommend stocks that pay a significant dividend. They typically are not the sexiest and don't generally have as much appreciation potential as growth stocks, but that is not a bad thing in retirement.

You might reconsider real estate with a property manager (my strategy). I do not want to be hassled with the small issues that come with property ownership so I pay them to deal with it.

With the amount of growth in the money supply we've seen in COVID, my advisor recently cautioned against high quality bonds at this time. With low interest rates, he does not think most will keep up with inflation over the intermediate term.

 

[DmrbigEshotT]

Everyone thinks they are Warren Buffet since 2012 and even more so since April 2020.


Sent from my iPhone using Tapatalk

 

[Jbenson]

Landlording is all about profiling the shit out of people, plain and simple. I am a carpenter so I do all the work myself and that saves a ton of money. I do all the work when I buy a place, so you dont get nickle and dimed for the next 10 years and get maintenance calls all the time. Profile, profile, profile. Check them out on social media, ask around about them. It's easy for me as I live in a small town. But every one of our rentals will be free and clear in 5 years, paid for entirely by the renters.

 

[Jbenson]

But my wife is also a financial advisor, so we have our investments pretty diversified.

 

[Craig Van Arsdale]

Matt,

What will beat real inflation? Only a handful of tech stocks to my knowledge and I think the argument could easily be made that investors are using these stocks as an inflation hedge which explains the astronomical PE ratios...

I agree bonds are not worth the paper they are printed on in this environment. I don't see Money printer go Brrrr slowing down anytime soon.

Real Estate is doing well (Still not beating real inflation in most areas though) but I think the question has to be asked over the next 10-20 years. What will all the Boomers kids that inherit homes do with all these houses? Might be a good idea to be putting extra thought into who will be your renters and where will the trend in that area/demographic go.

Is value investing dead? Seems very hard when the money supply is increasing 25% year over year? Like building a house with a measuring tape that keeps changing... How do you value investments with no stable base currency anymore?

Investing is becoming more challenging when you start thinking of all these moving parts. It's not the same game anymore we've all been used to the past 15 years.

 

[Craig Van Arsdale]

Yikes. Ask for financial advice on an internet hunting forum.....

Yikes. Ask for financial advice on an internet hunting forum....

Triggered?

Bitcoin seems to have that effect on people...

There is no one post that is going to answer a question like this for someone. Everyone is in such a different position in life with different circumstances.

Im just pointing out a serious fundamental change that has totally changed the way we have to look at investing as long as governments around the word are printing fiat at these record levels.

2008 financial crisis kicked it off and COVID is the path to UBI and more and more social programs that can never be paid for.

 

[Beendare]

I know for a fact there are many savvy financial guys here.... but without knowing anything about you...its difficult to give advice.

ive known a few good financial advisors... and a whole bunch if crummy ones....be careful. Maybe a better question would be to ask how do I find a good financial guy.

...

 

[*Mountainhunter]

Thanks to all who have responded. I know there is no magic with these things.

 

[MattB]

Matt,

What will beat real inflation? Only a handful of tech stocks to my knowledge and I think the argument could easily be made that investors are using these stocks as an inflation hedge which explains the astronomical PE ratios...

I agree bonds are not worth the paper they are printed on in this environment. I don't see Money printer go Brrrr slowing down anytime soon.

Real Estate is doing well (Still not beating real inflation in most areas though) but I think the question has to be asked over the next 10-20 years. What will all the Boomers kids that inherit homes do with all these houses? Might be a good idea to be putting extra thought into who will be your renters and where will the trend in that area/demographic go.

Is value investing dead? Seems very hard when the money supply is increasing 25% year over year? Like building a house with a measuring tape that keeps changing... How do you value investments with no stable base currency anymore?

Investing is becoming more challenging when you start thinking of all these moving parts. It's not the same game anymore we've all been used to the past 15 years.

My FA's perspective is that equities are likely to outpace inflation for the foreseeable future. Inflation remains low due to the global economy being depressed, and my personal view is that the current levels of sovereign debt will keep interest rates artificially low.