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Old 07-12-2013, 11:44 AM   #1
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Investing for income

I have an elderly family member that settled a disability claim finally. She approached me with the question of what she could invest in to supplement her income for the rest of her life (her only other income is social security). Unlike the past, putting the money into a savings account, CD, treasury, ect. is pretty much useless due to insanely low interest rates.

This pretty much only leaves the choices of real estate, buying a part of a business, or dividend stocks. With the assumption that the FED is destroying the value of the dollar, real estate and certain dividend stocks do look attractive. The option of putting all her money in one local business is a bit risky for someone of her age. With the elderly, being a landlord (landlady?) isn't always viable. This leaves her with the limited choice of buying dividend stocks in an overheated market.

I am sure many people in their retirement years are facing a similar situation. There are so few places to invest thier nestegg for income.
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Old 07-12-2013, 12:11 PM   #2
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There is risk in everything. Spread your bets best you can.
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Old 07-12-2013, 12:19 PM   #3
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Originally Posted by PMBug View Post:
There is risk in everything. Spread your bets best you can.
Yeah, I was thinking companies that have long histories of dividends that produce something people need to have: Water, electric, foodstuff, basic materials, ect.
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Old 07-12-2013, 12:23 PM   #4
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Yes it's a huge problem, people are being forced into riskier and riskier areas to eek a return. A return that in no way justifies the risk to your capital.


I haven't done any of this myself, as my main investment plan has been merely to put most of my money into tangible assets with limited supply but given another 6 months or so I would start to invest in some of the following areas.

1. A South East Asia fund, I've heard Jim Richards/Marc Faber/Schiff talk about Myanmar/Burma a lot - Emerging from diplomatic isolation and Western sanctions it is a huge area of untapped potential, starting from dead poor so many investments there should survive and thrive despite the bleak global outlook.

I like companies like -

1. G4S - The largest security company in the world, even though they messed up the olympics, coming from South Africa, I know that when things get worse, security is the booming industry. (Their share price took a huge hit after an over-charging scandal I think in July from a high of 310 to a current price of 209. Before that, they had a smoothish 10 year uptrend going. Given that they have operations in 125 countries around the world I think they'll pull through and this is probably a good price to buy.)

2. Brewery Companies, e.g. SAB Miller;

When you look at the oldest companies that are still in existence and doing well, the most common seem to be breweries and banks. I don't know about the future of banks, but it seems that whatever has happened over the last few hundred years, people drink beer, so good breweries have continued to thrive. So I'd put my money here.

3. Follow Warren Buffet, he's made his two biggest purchases in the last few years, Heinz & a Railway company.
When the dollar gets weak and things get bad people will switch to cheaper foods like baked beans etc.
Railways are out of favour as it much more convenient to travel by car or use a trucking network for deliveries but rail can actually move 4x more goods per gallon than a truck, so when the fuel price rises as the dollar gets weaker, rail companies should benefit.
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Old 07-12-2013, 01:11 PM   #5
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I'm personally in this very situation. I trade for income, though I'm not "in" right now.
Don't forget liquidity, and avoid crowded trades, since when they tank, everyone can't get through the exit before the price tanks. High yield things tend to be "crowded" and it doesn't take much of a change in rates to make bonds tank hard - very easy to lose money - like losing 10% in a couple days in a bond fund that only pays half that a year. A trailing stop might not get it - you have to sit and pay attention.

There's really "no free" out there now, and very little "easy". The entire situation is just too common - everyone wants the same thing...

I looked at buying a local business, or some real estate. They are so not-liquid I had to rule it out.
Remember, when you get old, you might find yourself needing a ton of money all of a sudden over some medical or other emergency...there are some things you just can't sell fast at a fair value.
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