Jason Flurry, president of Legacy Partners Financial Group, favors a portfolio with a well-balanced mix of stocks and bonds that focuses on value and profitability on the equity side, and safety on the bond side.
Jason Flurry, president of Legacy Partners Financial Group
Because of the uncertainty, Flurry
suggests keeping bond maturities short and credit quality high.
Investors often associate bonds solely with income, but Flurry
says that's the wrong approach.
Bonds should serve as a safety measure in your portfolio, protecting against the volatility of equities, rather than just as a source of yield.
"Owning bonds basically allows you to own stocks without skewing your risk profiles," he
But the key to a steady, income-producing portfolio is in the equities you choose, says Flurry
, who favors value-oriented companies with steady dividends.
"Dividend-paying stocks and mutual funds of most profitable, well-managed companies will pay dividends during periods of market volatility," he
"They can be a great source of income in all market environments."
The challenge is earning dependable income without risking the chance you'll have to tap principal, he
To avoid eroding principal, he
recommends combining asset classes.
Not only will you broaden the sources of income, but you'll lower the volatility in the overall portfolio with diversification.
"I like the combination of low-risk bonds paired with value, versus growth-oriented, dividend-paying stocks, diversified by sectors in the market and among small, medium and large companies," he
Putting it all in the mix
Depending on the investor's personal risk profile, age and amount of assets, there are two possible approaches to designing an income-producing portfolio, Flurry
Flurry says investors will find possibilities for yield in the 2% to 3% range for the pure income approach and closer to 5% to 6% in the total return portfolio.