Q&A: Wants to protect his money
Question: I have been in the stock market for the past six years, went through the drop of 2008, and made some of it back. But now that I am 71 and the world seems to be going to hell in a hand-basket, I think I should get out and into something safer. What I have left, $450,000, is my retirement nest egg. Where can I put it that will give me a yearly income of $20,000 and will be relatively safe? Thanks for this service. It’s invaluable. – James B.
Gordon Pape answers: You are looking for a return of about 4.5% on your money. There are no totally safe investments that will provide that yield but there are several preferred shares and good-quality corporate and municipal bonds that are very low risk and offer returns in your target range. For example, we recently recommended the Bank of Nova 5.6% Series 17 Preferred Shares (TSX: BNS.PR.O) in my Income Investor newsletter at a price of $27 or less. At that level, they yield about 5.2% and they have the highest possible safety rating from Dominion Bond Rating Service. I suggest you ask your financial advisor to put together a portfolio of good-quality bonds and preferreds for you to consider. If you are willing to add a little more risk, also consider a few blue-chip common stocks with high yields, such as BCE Inc.