Investing Guidelines for Seniors
Board: Value Hounds
I have the responsibility for helping some seniors make good investment decisions regarding the deployment of their investable assets.
Many have come to me (and increasingly so in the last few years) complaining bitterly that the banks only are paying them a few dollars on their money and that those few dollars were not enough to meet the income needs that aren't met by their pensions and Social Security. They ask me what they should do?
I first explain to them that IMO this is exactly the position and decision that Mr. Bernanke wants them to have to be in and decide upon and why he has initiated the Zero Interest Rate environment and defends it so vigorously, that he wants people to invest in the markets. etc., etc.
Then I'm left with the original question: What to do with the money.
Several years ago, I put a lot of them into nicely paying (a percent or more above T-Bill rates) utility companies and pipeline companies.
Now, I think the equation may be shifting and the signpost for it the rapid movement (rising) in the 10 year T-Bill ($TNX is the symbol for the 10 year yield) on StockCharts.com.
If, indeed, we are entering a period of long-term increases in rates, then one of the things that concerns me is that heavily indebted companies are going to find increasing pressure on their profit margins from higher debt service costs. Utility companies and pipelines companies both usually carry very high debt loads....ergo, perhaps something different needs to be done.
So, I'm casting my screening net across the sea of potential candidates and trying to find large cap (because I think they will fare better if/when any economic turmoil arrives; low debt (for the above stated reason); decently dividend paying enterprises.
My problem so far is that many of the ones that meet the above standards are already getting pretty pricey & I don't want to put them into something that will take back in price history what it provides in dividends.
Three ideas I have so far are: COP, CVX, and USMO (this last one doesn't really meet the definition of large cap but I've had good investment experience with it over the years, but they always call most of their distributions a return of capital).