I finally have an answer for what’s keeping you up at night…
I call it the 5.6%-a-Year “High-Yield CD.”
The simple goal here is to keep you from digging into your nest egg while interest rates in America are at zero.
Importantly, this investment…
- Is even easier to buy than a bank CD.
- Doesn’t lock you in like a CD for a three-year term (or any term).
- Pays you a high rate of interest every month.
- Is safe, as I’ll explain.
[ad#Google Adsense 336×280-IA]Zero-percent interest – through the year 2014. That’s Fed Chairman Ben Bernanke’s promise. And that’s impossibly hard for savers to deal with…
Think about it… zero percent of any amount is still zero, regardless of how much you’ve saved. And zero percent (or close to it) is what the banks are paying today.
So I’ve come up with a solution…
In my True Wealth newsletter, we’re turning to high-yield bonds to find income.
We’re buying the safest ones… ones maturing in just three years, rather than way out into the future.
For us to fail in this investment – for us to NOT get our money back, plus interest, paid monthly – the economy would seriously need to fall off a cliff within three years.
I don’t believe the economy is headed over a cliff. I don’t believe the world will end between now and three years from today.
That’s why the high-yield play I’m recommending is safe… Its bonds all mature before the end of 2015. If high-yield bonds soar, our investment won’t go up much. We’ll just collect safe income. On the flip side, if all high-yield bonds tank, our investment won’t fall much. We’ll just keep cashing our monthly checks.
The bond fund we’re buying is called Guggenheim BulletShares 2015 High Yield Corporate Bond Fund (BSJF).
Because these bonds all mature soon, it’s much less volatile than most high-yield bond funds. Also, its managers do very little trading (low “turnover”), so you end up with a much smaller tax bill for capital gains at the end of the year (it should be near nonexistent). And its expense ratio is relatively low, at 0.42%.
I also like the fact that BSJF pays dividends monthly… Your bills arrive in your mailbox monthly. So it’s important to have monthly income arriving to meet those expenses.
Since August of last year, this fund has paid income of roughly $0.12 a month… which is 5.6%, based on yesterday’s closing price.
I consider buying this fund to be like buying a 5.6%-a-year “high-yield CD.” You can collect interest every year and get your money out at the end.
Again, if high-yield bonds soar this year, you won’t get much upside. But if they crash, you won’t get much downside. That’s why I say it’s like a CD.
Of course, it will be a bit more volatile than a CD. When the stock market crashed last October, this fund fell 5%. That could happen again. But I think it’s worth it… You can collect 5.6% a year in interest for three years. Even with the risk of a 5% fall in that time, it beats the return on your money in the bank.
Where else can you beat that on a risk-versus-reward basis? Nowhere – at least until we get past Bernanke’s zero-percent interest-rate policy. And that was my goal… to find a way to get past 2014, with some real income – safely.
This exchange-traded fund “matures” on the last day of 2015. But listen up… You don’t want to hold it until then! By the last day of 2015, this will be a fund full of cash, not bonds. That’s because every bond this fund holds will mature sometime in 2015, and every company should pay the fund back the full amount of its loan.
You don’t want to own a fund of cash. So it is best to buy today and sell BSJF in early 2015. Between now and then, you’ll collect a safe 15%-plus in dividends.
Good investing,
Steve
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Source: Daily Wealth