generating 1000 $ per month on 150 k investment

Folks,
I need you help on this one.

I need to invest some money for the old man. all is needed if for it to generate a 1000 monthly taxable income from a 150k lump sum. i'm aware how to easily generate such returns, The problem is how to minimize volatility.


I was thinking
25 % quality dividend generating (T, VZ, Con ed, KMB....)
25 % junk bonds (JNK, HYG)
25 % BAB (build america bonds)
25 % corporate bonds.


Any ideas ?

 

Just keep in mind you might be getting into the bond market close to the top.

 

I understand that, The thing is I don't see the fed tightening any time soon....not in the next couple years. Do you ? with the GOP taking over the house in November & housing showing structural weakness, me thinks we can expect even more deflationary pressures.
your opinion ?

 

I would put most of it in dividend paying stocks. There is a real demand for bonds and a fear of stocks . . . so many of these companies pay more in dividends than they do on bonds. And many companies trade for less than their cash, which is just as good as money.

 

It isn't easy at all to generate that kind of return. You are talking something like $12,000/$150,000 = an 8% basically guaranteed annual return. Long term, basic mindless index funds outperform most, including those with billion dollar research accounts. And the stock market is certainly not returning 8% guaranteed annually. Many huge firms would kill for a guaranteed 8% annual return. Your confidence is incorrect and naive.

It is only easily generated, until you blow up or it doesn't work.

 

you may as well just sell cash secured puts on dividend stocks. more return and exact same risk.

 

Uh, $1000/month is $12,000 per year, which is an 8% yield on $150K. I don't think the ideas you're describing generate an 8% yield, and indeed I believe no simple investment ideas will do so on average right now.

 

Consider putting some of the money into a carefully chosen business development company (BDC). They are required to pay out most of their income in dividends. PSEC pays 12% right now. Make sure you buy below net asset value.

Also consider buying some preferred shares, which act like bonds without a maturity date.

 

You can get 6% AAA bonds in AUD...

 

If the $150k princ. doesn't need to be touched, achieving 8%/yr AVERAGE return is feasible. But I sure as hell would diversify beyond just bonds.