Where To Put Your Fixed Income $

January 26, 2011

in Investing,Retirement

I think that this is a dangerous time for bond funds.  Municipals are already in trouble.  The Fed has not been shy in stating its intention to re-inflate the economy.  Money market funds are yielding close to zero, as is any cash sitting in banks or brokerage accounts.  There are ways of earning 6% and above, by adding just a little more risk.  Check out closed-end funds.  Some are able to borrow money at .5% to 1.0% and reinvest it in other debt instruments to provide yields of 7% to 8%, with the possibility of additional distributions beyond that.  In Barron’s this week Bill Gross recommended Pimco Corp Opportunity (PTY), which quickly ran up in price.  But he also manages PFN, which is cheaper and still yields 7.7%.  Another favorite of mine is TSI, which sets a fixed distribution of 7% of NAV for the year.  It had an additional distribution at the end of 2010.  Each of these borrows at very low rates to boost its yield.  Study these and others at CEFConnect.com.  Disclosure: I own TSI and PFN and have purchased PTY, TSI, and PFN for clients.

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