Investing for Retirement

The days of clipping bond coupons to live off the income and preserve principal in retirement are long gone. In fact, many investors who have been chasing high income have bought investments that over-promise and under-deliver. They have also taken on a level of risk that they are often not aware of.

 

Income vs. Cash Flow -There is a key distinction between income and cash flow - income is money received and cash flow is money withdrawn. In today’s low interest environment NS Capital believes that when it comes to paying for your retirement, you should only be concerned with the total return of your portfolio and the after-tax cash flow, not whether the returns come from selling securities or income – because it should be both.

 

That is why we designed the NS Capital Retirement Portfolio (see below) where specific assets that combine both income and securities sales are organized for cash flow while other assets are left to grow to protect against inflation and out-living your money. 

A Retirement Portfolio Must Accomplish Three Things:

  1.  Be a source of monthly cash flow

  2.  Protect your purchasing power by keeping up with inflation

  3.  Grow assets over time to protect against the risk of out-living your money

 

The way to accomplish all three goals is to build a portfolio that is structured to meet each need over the appropriate time frame:

  • Liquid Assets Core – Provide immediate cash flow (generally, 3 to 5 years during which specific assets are targeted for liquidation and distributed for monthly cash flow)

  • Purchasing Power Ring – Protect purchasing power (4 to 7 years)

  • Longevity Rim – Protect out-living your money (7+ years)

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