Consider premium bonds In today’s low interest rate environment,
if you park your money in bank deposits or money markets, the interest you receive generally
will not be enough to pay your bills.
Even leaving a million dollars in Certificates of Deposit (CDs) in a bank will only generate
a few thousand dollars a year of spending money.
So how can retirees supplement their income without too much risk to their principal?
A solution may be to purchase bonds, especially “premium bonds.”
Buying a bond means lending money to a country or a company.
In return using your money for a set period of time, they pay you interest.
Since bonds are not as safe as bank deposits, they generally pay a higher yield.
Some bonds issued previously offer high “coupon rates.”
They may be higher than what newly-issued bonds pay today.
Since everyone wants to get a higher interest rate, these high-coupon bonds sell at a premium
price.
By buying a premium bond, you get more cash flow from your investments than if you buy
a bond at par or at a discount.
When the premium bond matures, you won’t get the same amount back that you paid.
But you will have received more cash flow every year, which means that you have effectively
achieved your goal.
Premium bonds are not for everyone, and they carry risks, but anyone who is looking for
income should consider if they are appropriate for their individual situation.
For more information about how to have a financially stronger retirement, download a free copy
of The Retirement Planning Book at www.profile-financial.com/rpb.
Alternatively, call me on 02-624-2788 and let’s start talking about the best way to
get income from your investments.