How can you generate income in the current low interest rate environment?

ABOUT THIS EPISODE

Where can you generate income in a low interest environment? Financial expert John Browning explains this in an easy-to-understand way. If you want your investments to generate more income, listen to this episode.  

Welcome to the build your life podcast with John Browning. Build your life as a relaxed and unedited conversation with financial expert in number one Amazon bestselling author, John Browning Jones, the founder of Guardian Rock Wealth and serves clients across the United States. John's the author of the book build a life, not a portfolio, a guide to your financial future based on your personal values, which you can purchase on Amazon, or stay around to the end of today's show and I'll tell you how to get a free copy mailed right to your door. I'm Michael The lawn, your host for the next few minutes as we chat with financial expert and business owner John Brownie. My John Browning, welcome to your podcast. How are you today, sir? I'm doing fantastic. I've got much better weather than I that I've had for a month or two, so that's good and seems like my spirits just get lifted that much more...

...when I've got sunshine and not so much rain. So absolutely, absolutely well. I'm glad that you're doing fantastic, because I'll tell you what's not doing very fantastic, John, is my my my money that I have in the bank right now because it's not generating very much income for us because we, I mean, interest rates are low, which is great if you have a loan, it's just not very good if you've got money invested or something. So my question today for you is, how can you generate income in this current low interest rate environment that we're in? Yeah, that's that's been a big question for the past few years and really the past year in particular, because if you first of all, if you look at the money that you have in the bank, and we talked about this an episode or two ago, you're learning less than half a percentage point, which is putting you behind every single day that you have it in there, because inflation is eating away at that much faster than half a percent well, the same thing holds true...

...if you take a little bit more risk and go out further on the curve and buy a longer term bond or fixed income security. The the race that you're getting there are below the historic rate of inflation. And unless you start taking even more risk, which is something that fixed income is not really supposed to be doing for you. Fixed Income Portion of your portfolio is supposed to be number one, providing fixed income preferably above the rate of inflation. And number two is supposed to add some stability to your portfolio. And and what we're finding now, and have for the past several years, really the past almost almost decade now, is that because of where rates are, and this is this kind of gets complicated. I don't want to confuse people. I'm happy to talk to them oneonone when I can give them oneonone actual financial advice. This is not but what's happening now, with rates so low, is...

...that it's becoming more and more volatile, because that's how the math of fixed income work. So used to manage fixed income portfolios back when we add. Yeah, so, that used to do that on Wall Street. So, so I like fixed income, but it's just not doing the job that most people needed to do. So how do you create right? Told you what doesn't work. Is So John, when you're going to get to the point? Right? Right, rn, so it courts. It depends, right. Everything depends on the objective of the individual risk parameters, on all of that. But generally speaking, if you're in need of ongoing income, so you need to pay the bills every month, you don't necessarily want to be generating capital gains and then are they long term or short term? And what are my taxes? It makes it a little bit more difficult. So you may want to have some securities in your portfolio that are generating it enough to...

...at least cover most, if not all, of your ongoing monthly needs. Most of us have monthly bills, whether it's a mortgage or utility payments. At least we've got right. So I'll give you some of the steps that that we go through and we're looking at it and there's some mistakes to try and avoid here too. So there's many ways to invest for income, but I'm just going to talk about a few. Most importantly, you've got to understand that high dividend yields on stocks or interest or high interest rates are not necessarily good investments for you because they may have more volatility than you realize. It's really nice to get that check every month or every quarter, every six months, but you may not realize what the underlying risk is and that's where somebody who has the right experience can, can really, can, really add...

...a lot of value. The couple ones that you should look out for are closed in funds. Again, I'm not saying these are bad, but you have to be very careful with how much risk is built in there, because they do tend to use leverage and that's borrowing money to Jack up the rates for you the investor. Again, not bad as a portion your portfolio, but be where. I've taken so many calls over the past thirty years with people upset that they're they're fixed income, they're safe, quote unquote, portfolio just dropped in value, maybe even more so than they would have expected their equity physician. So funds can drop very quickly. So be careful. For preferred securities is another way to generate some income. Bought here again, you can expose yourself to greater than you really want to have in terms of sector exposure to the financial industry, and then you also don't have a lot of...

...capital appreciation, typically speaking, with preferred securities, but still good to have potentially a portfolio. And the other third one that people use a lot and can be very dangerous are mlp's or master limited partnerships. They can have tax and tax implication. Sometimes you buy these on the exchange and you don't even realize that it's an MLP and suddenly you've got a tax issue. You got to wait at tax time for a k one form that comes before you can do your taxes and it just becomes a big can become a big headache and less your CEPA or or whatever. Yeah, the other good one to potentially use and a way to get some yield, but you have to be very careful with and know what you're buying, is reats or real estate investment trusts. But here again there are good ones and bad ones. In particular,...

...many of the reads out there that are private reads, put that in quotes, can be much more risky than some of the publicly EGS, you know, exchange treated ones. Also, what sector of the read market are you in? There's some really great opportunities out there, but they meet on he is higher yield, but those higher yield ones may be more risky than you should have for your risk parameters. Okay, so selective. Second Yeah, wow, let us so, let me, let me, let me bring this down to my level. So we started talking about how do you generate income in the current low interest rate environment? That was the question. Who answered it like a Master and I lost you somewhere along the line. But basically, here's my answer. Is it is possible to generate income, even in a low interest environment, through different sectors or through different strategies. Let's...

...just say it. It is possible. Correct, that is correct. Yes, awesome, all right, that's the real answer. The people are looking without. I'm looking forward that. I mean, do I have to settle for five percent or point o five percent? Know there are ways to do it, but you need to reach out to John to have that conversation, because we're not going to do that here on the podcast, that's for sure. But I think that's really that, because most people say, well, you know, I and twerits are low and I'm just going to grant and bear it and what I can do, what I heard you say, is, you know what, I'm going to help you a grant and maybe actually make some money, because there are different ways, different strategies, different different vehicles, for lack of a better term, that that are out there that John understands and knows about, to work with your risk tolerance, your portfolio, the life that you want to build and and be able to manage that so that you can build a life, not a port not just a portfolio,...

...and actually generate some income in a little interest environment. That's fascinating. So if yours intrigued as I am, reach out to John Browning Guardian rockwellcom and have that conversation, because that's really, really interesting, John. That's awesome. Yeah, that's that's the kind of stuff we love to do here, is show people how they can make things work to them, even for them and their portfolio, even when it seems like all the traditional things that they've used for the past twenty thirty years don't work anymore. Well, that's the innovation of the market. It's the evolution of the market and there are things you can do. And you know, those are just some of the things that we use. There's also ways to generate income while you are reducing your volatility, but that probably goes beyond the scope of of Yes, well, just just once again, you you've opened up a can of worms and and basically have shown your cards to go. You know more about this than...

...most of us put together are going to be able to do, because this is where you've lived your life and that's why people just need to reach out and have that conversation. So, Guardian Rock wealthcom, schedule a zoom call or phone call with John Browning and just talk to him about life and how you what you're wanting to do now and what you're want to do in the future, and see if there's a good spitche if he can help you. It's going to be a great conversation, John, thanks for answering that question. That you can generate anything tem in a low interest environment. Reach Out, talk to John Browning and we will talk to you. I'm guessing the next episode. That's right. We'll talk to you in all right, take care, man, all right. Money really is a big part of our lives and John Browning can help you and your family learn how to keep money in the proper perspective. It's important, but it's only a tool that can help you build the life that you want. If you like, John Emilie a free copy of his book build a life, not a portfolio. Go to John's website, Guardian Rock wealthcom, and click the contact to US link...

...and send your request. John Will Mell a copy of his book right to your door absolutely free. Thanks for listening to building your life podcast with John Browning. Be Sure to subscribe to this podcast so each new episode will be sent to you automatically when it's released. Have a terrific day.

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