Balanced High Income

There is more than one way to skin a cat, and while some investors don’t mind “where” the income comes from (as long as it hits their bank account regularly) others have strong opinions and preferences regarding the following “sources” of income:

Dividend Income: These are payments, typically sourced from a company’s profits, that are distributed to shareholders. Many investors strongly prefer generating income (for spending needs) from dividends because they tend to be much steadier than relying on prices returns—which can be volatile.
Price Returns: Selling some of your winners to generate spending cash can be a much more powerful strategy (than relying on dividends) in the long-run, but in the short-run—price returns are highly uncertain and risky).
Total Returns include both price returns (appreciation) and reinvested dividend income.
Distribution Income is the cash paid to shareholders (from ETFs, mutual funds and other investment vehicles), it is often expressed in a yield percentage, and it is often confused with dividend income. Distribution income can include dividend income, price returns (appreication) and even a return of your own original investment dollars (return of capital). A lot of investors confuse distribution income with dividend income and then are surprisingly disappointed a few years down the road when they realize the distributions have been eating away at the share price and the value of their capital.
Non-Taxable Income: Not all income is created equally. For example, dividends are often taxed at a lower “qualified” tax rate, long-term price returns are often taxed at a lower “capital gains” rate (as compared to short-term price returns), and distribution income can cause some unexpected tax bills if shares are sold after years of “return of capital” distributions have eaten away (lowered) your cost basis. Further, municipal bond income is often exempt from federal (and sometimes state) taxes, and most investment income is not taxed in an individual retirement account (IRA) until you start taking withdrawals (which are generally taxed at your ordinary income tax rate).

Understanding not all income is equal is a critical part of being a good investor. It can mean the difference between retiring sooner or later, and running out of money during retirement or having assets left over for your heirs.

But at the end of the day—what matters most—is doing what is right for you—based on your own individual situation—so you can both live well and sleep well at night.

My objective here is to help you better understand the different types of investment income—so you can make informed decisions—that are right for you.

By giving you customizable strategies, including the Blue Harbinger:

High-Yield Portfolio
Top Bond ETFs
Long-Term Capital Appreciation Strategies (to generate “price gains” that fund a portion of your spending cash needs)
CIO Vantage (Asset Allocation)

The goal is to help you generate “Balanced High Income” that is right for you.