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Reconsider focusing solely on income investments for retirement 2010-04-26 Income investments are a great way to accumulate income through stock dividends and payouts, but retirees should consider diversifying their portfolios to stretch their retirement income. Emphasizing income-producing investments in a stock portfolio may result in lower rates of return due to long-term inflation or taxes, according to the Wall Street Journal. Stock dividend payouts and bonds may provide a safety net and a steady flow of income, but over time, inflation and higher interest rates may increase the risk of higher losses, the Journal reports. The market will always face inflation at times and many will not lose large amounts of income as a result, but investors can reduce the risk of losing large amounts of retirement income by diversifying their portfolio. "In maximizing income, you run the risk of overexposing a portfolio to a certain sector of the market," Vanguard Group principal John Ameriks told the Journal. Over time, taxes may also deplete dividends and income from investments held in taxable accounts. Payouts from government or corporate bonds are taxed as regular income at a rate of 15 percent excluding additional state taxes, the Journal reports. By exploring investment options, retirees may better protect their investments from market conditions.  |
