How Equities Can Help Juice Your Portfolio's Yield

Portfolio yields are under pressure due to the worldwide flight to safety over the last few years, making conservative and income growth portfolios more difficult to manage. While bond investments made a few years ago have done historically well, new investments have greater principal risk with low historic yields. Some advisors have simply shifted from bonds into stocks, but for those truly in conservative and income growth risk classes, adding equities will increase the portfolio’s standard deviation, a common measure of risk, reducing the portfolio’s ability to soften the “blow” from the next crisis or even modern day volatility. Investors should never chase yield, meaning one should not simply buy the highest yielding product with no concern about who is paying the interest. No company pays a high yield on its bond simply because it just wants to be nice. Yield is based on the risk of getting your money... Read more