How to 'Double Your Dividends'
2013 was a tough year if you were an income investor.
After all, the Fed's zero interest rate policy ("ZIRP") has been punishing savers with its low interest rates since 2009. Many retirees depending on their accumulated savings had grown increasingly frustrated trying to eke out income from their hard-earned investments. So, it's no surprise that many had piled into income investments that promised regular high single-digit, or even double-digit, percentage income.
But with the Fed announcing the onset of tapering back in May -- and then actually launching it December -- the bottom dropped out from virtually all "safe" income investments.
Income investors suddenly found that even if a diversified portfolio of, say, U.S. Real Estate Income Trusts (REITs) boasted headlines about double-digit yields, that mattered little if the principal dropped by 20%, thanks to the threat of rising interest rates.
Meanwhile, these same investors stood by as stock market investors enjoyed their biggest gains since 1997.
Nicholas Vardy is currently editor of the monthly investment newsletter, The Alpha Investor Letter, which provides longer-term global investments. He also writes two weekly trading services, Triple Digit Trader and Bull Market Alert, which focus on making short-term profits in the hottest markets in the world.