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Investing Specialists

Wring More Income from a Portfolio

In search of extra income? Don't sacrifice stability.

My newsletter, Morningstar PracticalFinance, is designed to be your personal financial planner. In each monthly issue, I provide concrete advice for improving your portfolio and handling every aspect of your financial life. I also provide Portfolio Makeovers, in which I show you how to whip real-life portfolios into shape.

In a recent issue, I provided tips for maximizing your portfolio's income. The Portfolio Makeover from that issue is reprinted here.

Making adjustments to your portfolio to suit your life stage is one of the biggest challenges of managing your finances. Ideally, you'd make small tweaks to your portfolio every so often as you mature, but life gets in the way. I have often run into middle-aged individuals who have confided that they hold nothing in bonds, even though they recognize that it's probably time to give their equity-centric portfolios some ballast. They've been so busy working and saving that they haven't considered how to prepare their portfolios for retirement, when income and stability will be at least as important as capital appreciation.