Quote:
Originally Posted by biggerboat
Thanks for the detailed reply. This is extremely helpful.
Yeah, I certainly understand the risks associated with principal but I believe I'm in a spot now where I won't need to dip into principal (well, never say never). So, I'm basically trying to ensure a somewhat steady and reasonably decent income for retirement. All of my 401k is currently in stocks but I just got a windfall and I'm looking at bonds (funds).
Thanks again!
This is a reasonably tough time to try to live off bond or dividend income. I will point out one more option. Vanguard has a managed payout fund. This is in no way a bond fund, it is 60% stocks, 12% bonds, and 18% "Alternative" investments, so it is not risk free.
"The Managed Payout Fund is designed to give you regular monthly payouts that can help you manage a portion of your retirement expenses. The fund is intended to supplement your other sources of retirement income.
The Managed Payout Fund targets an annual distribution rate of 4%. To accomplish this, the fund’s portfolio managers aim to adjust the fund’s overall asset allocation over time with an emphasis on sustaining its monthly payouts, keeping pace with inflation, and preserving capital over the long term."
Some of the payout may be a return of principle, and the payout could drop if the market goes bad, but it is a tool in the toolbox. *
*Do your due diligence. I am not responsible for any investment losses and am not a paid spokesman for Vanguard. Past results are no guarantee of future returns. I am not currently invested in this fund but may use it for a portion of my portfolio when I retire.