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Investing Specialists

Test-Driving an Income-Centric Retirement Portfolio

Our yield-focused portfolio delivers a lumpy cash flow.

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Much has been made of the so-called "war on savers"--the fact that the Fed's zero interest-rate policy has shoved conservative investors out on the risk spectrum. As yields on CDs and money market funds have shrunk, investors in search of a positive real yield have embraced all manner of higher-risk/higher-yielding securities. 

To test how the low-yield environment of the past decade and a half would have affected retired investors attempting to live off income from their portfolios, we ran a simulation along the lines of the retirement-portfolio "stress tests" we featured last week and the week before that. The simulations illustrate three of the key ways that retired investors could generate cash flow from their portfolios: pure total return, pure income, or a combination of the two. This week, we'll look at the pure income strategy.

Christine Benz has a position in the following securities mentioned above: VTRIX. Find out about Morningstar’s editorial policies.