With millions of baby-boomers starting to become anxious about their retirement, income investing is certainly much on their mind. This book breaks ground in advocating that an income investor should allocate his portfolio over a variety of income dependencies that react to different economic events. This includes a portion for interest rate sensitive securities (straight bonds and preferreds), a portion for stock market sensitive securities (convertible bonds and preferreds), a portion allocated to high dividend paying raw material or energy related securities (Canadian oil and gas trusts and utilities), a portion allocated to real estate securities (REITs) and a portion to special situations that come up from time to time (currently GM and Ford debt issues). This is a departure from the traditional approach where the investor defines his risk tolerance, which is invariably low to medium risk, and then finds this can only yield a 5% to 6% return. The principal investment option offered to such investors by brokerage firms are investment grade bonds and preferreds, preferably in the form of a mutual fund. This is because, given the investors self-imposed definition, most brokerage houses are very limited in the advice they will provide because of legal liability concerns. Let a stock investor lose 50% of his money on a stock decline and a broker can feel safe. Let an income investor lose 50% because they invested in a junk bond recommended by the broker which defaults and the lawsuit threat is at hand. The book will discuss the approach the author uses every day to show that a portfolio with a diversification of income securities can equal or exceed the returns from common stock with much lower risk.
Book Details:
- Author: Richard Lehmann
- ISBN: 9780470128602
- Year Published: 2007
- Pages: 256
- BISAC: BUS036000, BUSINESS & ECONOMICS/Investments & Securities / General
About the Book and Topic:
With millions of baby-boomers starting to become anxious about their retirement, income investing is certainly much on their mind. This book breaks ground in advocating that an income investor should allocate his portfolio over a variety of income dependencies that react to different economic events. This includes a portion for interest rate sensitive securities (straight bonds and preferreds), a portion for stock market sensitive securities (convertible bonds and preferreds), a portion allocated to high dividend paying raw material or energy related securities (Canadian oil and gas trusts and utilities), a portion allocated to real estate securities (REITs) and a portion to special situations that come up from time to time (currently GM and Ford debt issues). This is a departure from the traditional approach where the investor defines his risk tolerance, which is invariably low to medium risk, and then finds this can only yield a 5% to 6% return. The principal investment option offered to such investors by brokerage firms are investment grade bonds and preferreds, preferably in the form of a mutual fund. This is because, given the investors self-imposed definition, most brokerage houses are very limited in the advice they will provide because of legal liability concerns. Let a stock investor lose 50% of his money on a stock decline and a broker can feel safe. Let an income investor lose 50% because they invested in a junk bond recommended by the broker which defaults and the lawsuit threat is at hand. The book will discuss the approach the author uses every day to show that a portfolio with a diversification of income securities can equal or exceed the returns from common stock with much lower risk.
Using the term Inconomics coveys the concept that fixed income investing, like economics, is anything but fixed. The investment vehicles the author will be reviewing and recommending range well beyond traditional fixed income securities or creditor instruments such as bonds. In the current low interest rate environment, achieving a high level of income without also assuming inordinate levels of risk requires a blending of investments that are dependent on diverse economic events, not just interest rates. This is much like the reasoning behind buying indexed stock funds, reducing risk through diversification across a wide range of sectors, not just companies. What is presented in this book is an introductory work that covers the minimum a reader needs to know about fixed income fundamentals, a sample of real life situations where selection skills were helpful and a discourse of strategies and the types of securities best suited today for small investors.
RECOGNIZED EXPERT IN FIXED INCOME: Lehmann has been involved in fixed income investments for more than 30 years as a writer, investor and activist. He has testified before Congress, written articles and is currently president of Income Securities Advisor Inc (ISA) which is a financial and information provider on the Bloomberg electronic information system and has a website: www.incomesecurities.com. ESTABLISHED AUDIENCE: Lehmann writes a monthly column for Forbes magazine and is the publisher of the Forbes/Lehmann Income Securities Investor Newsletter which has some 7,000 subscribers. PROMOTION: Lehmann’s newsletter is advertised on Forbes online store. This book will be mentioned in his magazine byline. There is a confirmed endorsement and/or foreword from Martin Fridson.
About the Author
Richard Lehmann (Miami Lake, Fl) is President of Income Securities Advisors, Inc. (ISA) and publishes the Forbes/Lehmann Income Securities Investor newsletter. He also writes a fixed income investing column for Forbes Magazine. Furthermore, he publishes the ETF Investor Newsletter and Distressed Debt Securities Newsletter. Lehmann is also president of an investment advisory company. In 1983, he founded a predecessor to the ISA, The Bond Investors Association as a non-profit information organization for individual bondholders. Lehmann has been actively involved in fixed income investing and bond defaults since 1976. He has been on the Editorial Advisory Board of the Municipal Finance Journal for more than ten years. He has taught accounting, finance and financial analysis at Barry University. Lehmann has testified before Congress on municipal defaults and reform legislation.