The One Way To Reliably Fund Your Retirement Dreams

When I started in the investment business, it was Morning in America, Ronald Reagan was in the White House, The Orioles had just won the World Series, and Lee Iacocca had just introduced the United States to the Minivan.

In other words, I have been doing this for a minute or two.

I have seen substantial bull markets, several crashes, and some versions of everything in between.

Paul Volcker was the Fed Chair when I started, and there have been four more since. There was no internet, and long-distance calls still cost extra.

A lot has changed since then.

Today, your minivan can make your long-distance call for you.

Trading has moved from the trading floors of the exchange to offices with high-speed data connections.

Markets have evolved,

There are financial products in wide use today that no one even imagined in 1983.

But some things – critically important things – have not changed.

While all the excitement and drama in the markets is centered on trading and speculation, the simple truth is that people are now looking to get rich by next Tuesday.

The big money in the world is focused on retirement. These individuals and institutions are looking for a reliable return to fund retirement dreams.

The owners of that money would like as much of that return to be paid in cash as possible.

Most retirees I have met would love to find a reliable source of income that they can own and forget about.

There are triples to take, gold to play with, grandchildren to spoil, and life to be lived.

Most folks within a decade or so of retirement share that vision, and they would really prefer that the nest egg they have worked so hard to build can find a way to grow without necessarily being exposed to the possibilities of a market crash, setting them back a decade or two.

After a period of outstanding returns in the stock market, that becomes a very real and large concern.

There is the question of inflation. Thanks to incredible advances in medicine, we are living longer. Over decades, inflation can take an income that was more than adequate to barely enough to get by.

The other thing that never changes about Wall Street and the financial services industry is that they will always take the same approach and sell you what is popular.

My first sales manager once said, "Ya gotta feed the dogs what they want."

The problem is that the stuff that is easy to sell is also usually the worst when it comes to subsequent performance.

A great story does not book the luxury cabin on your next cruise.

A reliable source of income that grows over time is needed to accomplish that.

Over the last four decades, I have observed that those who achieved this goal of an outcome-based return that protected them from inflation used a latent approach to generating income.

They did not just use dividend-paying stocks, bonds, and bank products.

These often do not generate enough income, may not protect your money from inflation, and, in the case of dividend stocks, may collapse in a market crash.

They own widely diversified portfolios of assets that produce lots of cash and do not all move in the same direction simultaneously.

When one zig, the other zags.

You should own some high-yielding stock with fantastic dividend growth characteristics.

Owning stocks like Altria (MO)and Washington Federal (WASH), which have high dividend yields of 7.9% and 7.25%, respectively, makes sense, given that both have grown their payouts at a rate that easily exceeds inflation.

More importantly, through recessions, crashes, and crises, neither has cut the dividend in more than 30 years.

Rising energy prices and inflation can be terrible for stock prices. To protect your portfolio, consider owning some oil and gas royalty companies like Blackstone Minerals (BSM) and Dorchester Minerals (DMLP). These companies have high cash yields and perform very well when energy prices are climbing.

You can choose a mix of mortgage-related investments, special arbitrage strategies, direct lending, private credit funds, real estate-related income-producing securities, or any of the other options for your portfolio.

Owning a portfolio of as many of the high income producing alternative income sources, along with traditional income opportunities, can produce the income you need, protect you from inflation, and increase your "Sleep Tight" factor when it comes to managing your retirement funds.

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