Better than bonds is my previous post in which I offer a reasonable alternative to just buying straight bonds and GIC’s to cover your retirement income.
But if that’s too risky for your desires, I’ve come up with something that’s even more stable and very boring.
A portfolio entirely of bonds and GIC’s is about as boring as you can get, but that’s too boring. So to shake things up just a bit, I’ve done some sprinkling.
A pinch of prefs for your taste buds…
Preferred shares (prefs) offer an attractive compliment to bonds, especially as a hedge against rising interest rates. In recent years, the rate reset feature of prefs has burned a lot of investors who didn’t know, or understand what they were getting into but it’s that same feature that will provide some protection for a portfolio of bonds.
There’s no need to reach for yield with prefs and included in the model portfolio are prefs issued by highly rated companies. As for the bonds, again, nothing exotic and the laddered list of maturities includes the same publicly listed names which are the go-to’s for Canadian pensions an annuities.
So while not an actual annuity, I’d argue the stability of this portfolio is definitely annuity’ish.
Or annuity-like.
