Part 2 of 4 in Our New Series…
[Editor’s Note: This is Part II in our four-part series on a brand new income crisis in America. Make sure you’re up to date by reading Part I here. And stay tuned throughout the week to learn how to protect and grow your wealth despite the new challenges facing American retirees.]
“The only thing necessary for the triumph of evil is for good men to do nothing.” ~Edmund Burke
I’m reminded of this historical truth today as we talk about the new crisis that is threatening American savers.
As I mentioned yesterday, this “silent wealth killer” has the potential to destroy the retirement you’ve planned and worked so hard for.
And this crisis isn’t a result of a bad decision you made, or something that you should have seen coming. In my opinion, it’s a financial evil that is spreading through our country and hurting retirees and those who are wisely planning for retirement.
Just like Edmond Burke said, this evil will triumph if good men do nothing.
But we don’t have to stand by and let this financial evil triumph. Today, you can take action with your savings and retirement funds to make sure you fight back and protect your family.
The Answer to Negative Interest Rates: INCOME!
As I mentioned in yesterday’s alert, the silent wealth killer that is threatening so many American savers is negative interest rates.
We’ve seen these financial parasites in other parts of the world and the results are truly devastating. When you have negative interest rates, it means that your savings can actually deteriorate while sitting in your bank or brokerage account.
Of course, we’ve had our challenges with low interest rates for years in America. But last week, some of the key treasury bonds that affect how much interest you’re paid on your cash balances actually flipped and gave investors a negative yield.
It’s a frightening sign of what’s to come in the years ahead for savers.
That’s the bad news. And it truly is a crisis for those of us who have carefully set aside our savings.
But as with any other crisis, there’s also opportunity if you know where to look.
And in the case of negative interest rates, the best antidote to this sickness is income!
After all, if you’re able to earn income from the savings you’ve worked so hard to accumulate, it can take the place of the interest that you were hoping would accumulate over time.
Today, I want to explain how to safely transition from relying on interest payments from your savings, to pulling cash from some of the market’s most reliable income generators.
And the best part is, our current market environment actually gives you an advantage in setting up these new streams of income!
The Timely Opportunity for Dividend Stock Investors
One of the best ways for “good men” to triumph over the threat of negative interest rates is to invest in quality dividend stocks.
When you buy shares of a dividend stock, you’ll actually own a small piece of a profitable company. And as a part owner, you’re entitled to your portion of the company’s earnings!
Dividend stocks pay out a portion of those earnings to investors, and they typically send the payments out on a quarterly basis. So for every dividend stock that you invest in, you’ll usually get four income checks a year.
And depending on which dividend stocks you invest in, these payments can dwarf the income you would normally receive from a savings account or money market fund.
Of course, with negative interest rates coming to America, those income payments are becoming even more valuable! After all, the negative interest rates are leaving savers with fewer options for generating income during retirement. So I’m expecting to see a wave of investment cash moving into these reliable dividend stocks.
And that’s where the timely opportunity comes into play!
As you know, the overall market has entered a “flash bear market” with investors scrambling to minimize their risk of a coronavirus-induced economic slowdown.
This selling has knocked stocks of all shapes and sizes lower. Including the very best dividend stocks that I follow!
So today, you can use your hard earned savings to buy these reliable income-generating stocks at discount prices.
And keep in mind, for many of these companies, the dividends that you receive going forward will be exactly the same as the dividends the companies have been paying all along.
Only now, you can buy your claim to these dividends at a much cheaper price.
It’s the perfect scenario for savers who want to get away from the negative interest rates, and fight this “financial evil” with reliable income.
That’s why I put this series together for you. To show you how to best fight against negative interest rates, and how to safely invest in these income opportunities.
My Three Pillars for Income Investing Success
In my former career as a hedge fund manager, it was my job to help our affluent customers generate income from the vast wealth they had already created. It was at this position that I developed my Three Pillars for Income Investing Success.
These are the principles that I use to make sure that every dividend stock that I buy (or recommend) gives us the best opportunity to safely grow our wealth.
These principles are:
- Start by protecting your capital.
- Make sure you generate a reasonable yield (or income).
- Buy companies that will grow over time.
We’ll talk more about all three of these principles in the next two parts of this series.
But I wanted to highlight that first principle a bit more today.
You see, when you’re a saver, the most important thing you can do for your wealth is to protect the savings you’ve worked so hard to accumulate. After all, if you run out of savings, you’ve got to start all over!
So when I look at dividend stocks, I want to focus on companies that have reliable businesses. And I want to make sure I always pay a reasonable price to buy those stocks.
Of course, the market will always fluctuate. And the share prices for our dividend stocks can move higher or lower.
But if you invest in companies with reliable businesses — and a history of paying their investors year in and year out — your wealth will be much more stable and you’ll be able to rely on the income paid to you each quarter.
So as we start putting together a list of dividend stocks to invest in this week, I’m encouraging you to stay away from businesses that have significant challenges or risks. This is how you protect your capital.
In particular, now is not a good time to be looking for bargains in travel or leisure stocks, energy companies, or any other dividend stocks that are negatively impacted by the coronavirus crisis.
These may be good speculative trades for more aggressive traders. But they’re not the types of stocks you want to buy with the savings you need for retirement.
Protecting your capital means paying attention to what not to invest in, as well as picking out the best opportunities that you do want to purchase.
Tomorrow, I have a special treat for you!
Our lead income analyst Jonathan Rodriguez is going to break down one particular income opportunity that passes our Three Pillars for Income Investing Success.
You’ll definitely want to take a close look at this dividend stock and consider locking in your own share of this company’s income!
I look forward to our conversation tomorrow.
Here’s to growing and protecting your wealth!