The Income Conundrum (aka The Great Bond Heist)

  • Posted on: 9 December 2015
  • By: admin

Below is an excerpt from our recently published research piece "The Income Conundrum" (aka The Great Bond Heist).  The full report can be viewed at http://pathlightinvestors.com/income-conundrum
 

Low interest rates are fantastic for home buyers and refinancers, but there is a large class of individuals who are being severely punished by these depressed rates—The fixed-income retiree. Imagine working your entire life, saving, investing, and being responsible. Then the day comes to retire—the day which, in theory, your investments should shift to less risk, and focus on income generation. The safest income option has traditionally been U.S. government bonds. However, to the dismay of many investors, engineered low interest rates make this option a very poor one. In fact, it would require more than $5,400,000 invested in 10-year U.S. government bonds to generate $90,000 in annual income. Yes, $5.4 million in 10-year Treasuries will provide only $90,000 income per year.