With treasury yields well below 4%, and even decent corporate paper not yielding much better, the question I keep hearing from my elderly clients who habitable off of their investment income is where are they going to get the income needed to meet their expenses. Thrown into the mix that, in four years million and millions of baby boomers are set to retire, so they will plus need to start adjusting their portfolios to be more income oriented. I anticipate that we will see continued demand for high-rated bonds ,and as such I can’t assume that we will see yields back above 6% on good corporates.

What to do? The reply to that question is more involved than that space permits, but take a look at preferred stock to help supplement income. My buddy, Zack Miller had a nice post about that a while back. The problem with preferred stocks is that it’s tough

to get knowledge on each issue and the terms of the issue. additionally, liquidity can be an issue. That’s why I like the POWERSHARES ETF TRUST (AMEX: PGF). The ETF is well diversified as it holds about 28 issues. More crucial is that it is yielding a shade under 7%. With preferreds having been slammed by the final few months, there may be some opportunity for some capital gains as well.

Living off fixed income. Check out preferred stocks.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has a position and is faraway PGF. He has no positions in any stock mentioned as of 1/27/08

Original post by Aaron Katsman

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