During times of heightened risks and market volatility, it’s a great time to review your goals and objectives and make sure your portfolio is aligned accordingly.
A diversified portfolio that includes holdings in a variety of asset classes can reduce overall portfolio volatility and improve risk-adjusted performance.
For instance, over the past few years, it has been difficult for those in retirement to find ways to earn income, especially with the Federal Reserve keeping interest rates low year after year.
Extremely low rates on savings means cash that has been accumulating within accounts is hardly earning any interest.
Because of this issue, many retirees are now having to find part-time employment.
Here are three ways to stretch your dollars in retirement.
Own stocks that pay dividends
Instead of having a weighty cash and fixed income investment portfolio, consider adding equities back into your portfolio.
For the past few years, the theme among investment managers has been investing in equities vs. fixed income, domestic vs international and growth vs. value.
Investors looking for alternative sources of income should consider large-cap stocks that have strong balance sheets, dividend growth, access to capital as well as being innovative in 2021, companies such as AT&T (T).
AT&T owns HBO/Cinemax and is looking to work with Hollywood on releasing movies the same day as the theaters for clients to stream on their 5G network.
That should generate huge earnings for the company. Plus, it already pays a high dividend of 6.8%.
PepsiCo (PEP) would also be a great stock to consider. With its diversification across the globe and within many business segments, it is positioned well for global recovery and the weaker U.S. dollar.
PepsiCo also has an attractive dividend of 2.8%.
Kimberly Clark (KMB) a household products company since 1872, produces tissues, toilet paper, paper towels, soaps, and more. A pandemic favorite where all the supplies were swept off the shelf in 2020. Plus, it pays a 3.2% dividend.
Look at bond alternatives
With yields relatively low, investors may want to diversify their fixed-income holdings and seek yield in products outside of traditional bonds.
Especially as uncertainties fade and with the continued support from the Federal Reserve in U.S. credit markets, investors should consider intermediate and long-term investment-grade as well as high-yield corporate credit as they will pay a higher premium.
Therefore, consider the iShares Broad USD High Yield Corporate Bond ETF (USHY) or iShares 20+ Year Treasury Bond ETF (TLT).
Lower your expenses
U.S. home prices continue to post robust gains in 2020 as indicated within the Case Shiller report, another sign that the American housing market remains strong despite economic fallout from the coronavirus pandemic.
Therefore, those entering retirement or currently in retirement and not needing such a large home might consider selling to a smaller home.
Downsizing will help reduce utilities and house maintenance expenses, including property taxes. Plus, it would be a good reason to move away from that annoying neighbor!
Some individuals today are expected to live longer into their 80s, 90s and possibly into the 100s. Those considering retirement should pay close attention to the cost of living, future inflation as well as long-term care.
