As the Federal Reserve recently made a significant move to cut interest rates, investors are left wondering what’s next for their portfolios. The trend is clear: rates are on the rise in the short to medium term. This shift has significant implications for those seeking stable, long-term passive income.
For income-focused investors, including retirees and near-retirees, finding the right balance between yield and risk is crucial. One approach is to diversify across a range of portfolios, each designed to achieve specific goals. This could include a mix of buy-and-hold, rotational, and bucket strategies, each tailored to provide sustainable income while preserving capital.
One such approach is the “3-Basket” method, which aims to reduce drawdowns by 30%, generate 6% current income, and outperform the market over the long term. This strategy focuses on dividend-growing stocks, carefully selected for their potential to deliver steady returns.
When building a portfolio, it’s essential to consider a range of factors, including the investor’s risk tolerance, time horizon, and income goals. By doing so, investors can create a tailored strategy that meets their unique needs and helps them achieve financial freedom.
Remember, investing always involves some level of risk. It’s crucial to do your own research, consider multiple perspectives, and consult with a financial advisor if necessary. With careful planning and a well-diversified portfolio, investors can navigate the changing interest rate landscape and achieve their long-term goals.
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