Considering Dividend Income as the Fed Lowers Rates

If you are in retirement, or even semi-retirement, having a dividend rich portfolio is quite a necessary thing. The dividends you receive serve as a significant source of replacement income, filling the gap left by regular W-2 wages.

It's a delicate balancing act. I mean, just because you leave the workforce doesn't mean you no longer want to still grow your portfolio while covering your living expenses—who doesn't always want more money if you can have it? Avoiding having to dive into the principal is a big consideration as well. Especially in the beginning years. And of course, even when inflation is low, it's still a factor to keep in mind. That $100 you have today will not be worth the same $100 tomorrow because inflation will eat away at some of the value.

You need to have a reliable source of income to pay your bills while continuing to build your wealth as much as possible, and that means making things so that the dividend income you are receiving exceeds what you are using to fill the gaps.

That means sensibly managing dividend yields to ensure you can get the best bang for your invested dollars. But, in all fairness, that can be a bit tricky with so many variables to consider.

When we had the massive decades high inflation, courtesy of poor economic policy by the Biden administration, it came with at least one silver lining, and that was higher yields on basic savings from banks as the Fed raised rates in an attempt to slow down the economy.

In other words, being able to get a 5% yield on "safe" money was an advantage, and offered a bigger incentive to be cash heavy during that time. The thing is that when you are relying more heavily on dividend income as a major source of your income in retirement and semi-retirement, you want to keep your money as close as possible. You don't want an enormous amount of risk because the bulk of your growth opportunities have come to pass.

Chasing massive yields from monthly payers, such as can be found with many ETFs, can be very risky. Seeing yields surpassing 10% is not uncommon but share valuations can fluctuate wildly. So, finding more sure investments become crucial to maintain as much of your portfolio balances as possible.

Ideally, anything between 4%-8% is considered a good yield as an average to shoot for.

Now that interest rates are falling, it becomes less desirable to hold money in a high yield savings account and it becomes more important to start looking back to the markets to increase your dividend income.

The rate on my Ally savings account, for example, has fallen to 3.8%, and will likely drop further as the Fed continues to lower the benchmark rate. A $100,000 balance which offered $5,000 a year will now only offer $3,800 a year. I don't want to simply lose the $1,200 difference. But rather, I want to adjust my cash position to bring it back around.

One ETF I like is BXMX which offers a 7% yield and happens to be rather stable. While a 7% yield is always more attractive than a 5% yield, because the cash position was "safe," it offered a desirable compromise at the time. Now it offers a better opportunity to earn higher dividend income even if my principal will not have the same benefits of safety that my savings account did.

The key takeaway here is something I have always said that no matter whether you are still working or retired, your money should never be left in a set it and forget it mode. You have to be constantly aware of what's happening with your money, and what's in the best interest of maximizing its value, both in terms of growth and income.

The balancing act part comes in as you try to mitigate risk and offer all of the things you wish to get from it. Growth, income and relative safety.

Even finding something that offers 4% is better than making spending adjustments from the 1.2% you no longer will realize and is a decision that recoups at least $200 worth of potential lost income. It's still important to keep enough cash handy to deal with emergencies and keeping that money safe and accessible is essential. The rest of it should be maximized to offer the best return and income possible.

Currently I am only moving the dividends from the high yield savings to higher yielding stocks and ETFs. But as interest rates continue to fall, more of that cash position will be moved to higher ground.

Balancing growth and income while managing inflation and avoiding principal depletion can be a daunting task, but it's well worth being one to take on. Sensibly managing dividend yields and staying aware of market conditions, even when you no longer have a more reliable source of income, maximizes the value of your wealth and ensures more financial stability, even when things become more complicated or difficult.

It's more important to consider levels of safety in retirement and semi-retirement. Of course. But being too safe can cost you more money than a carefully considered level of added risk would.

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© 2024 Jim Bauer

More from the Springboard at HubPages:

The Biden Inflation Catalyst
Certainly, there are myriad factors as to what causes inflation to occur. Do presidents have a role? Most certainly they do, although they do not necessarily directly impact inflation, fiscal and other policies absolutely do. So, how can we tell Biden is the man behind the inflation we have now?

Student Loan Forgiveness Was a Misguided Initiative Anyway

Whenever the government opts to simply distribute funds, it's bound cause issues, and understandably so, for numerous reasons. It's not their money, after all. It's our money. And how ever it gets spent needs to at the very least, make sense.

The student loan forgiveness program never did.

If you benefited from the program, it's easy to see why you might support it. But at the end of the day, the bottom line is clear: if it's debt, and it's elective debt like college loans, then the responsibility to repay it should fall on the one who incurred it.

While the program was a key initiative touted by the Biden administration, polls consistently showed it was extremely unpopular—not to mention it wasn't actually constitutional.

When the government is already burdened with its own enormous debts, and is literally hemorrhaging money, how can we, as Americans, support what is essentially frivolous spending of our tax dollars? It makes no sense.

We know the why of course, although the left would never admit to it. They called it a "crisis." They were trying to buy votes from a needed sector of society. It's really that simple.

It's dead in the water now, as was recently announced. Well, of course it is. They don't need the votes anymore. Well, that and the Biden administration knows the program won't see the light of day under the Trump administration anyway.

Nor should it. Because again, it made no sense to do it in the first place.

I think there were a good many people who thought about it and wondered, where else could the money be spent if we could assume we actually had it to spend? What other areas may have offered better opportunities to provide relief, not to just one sector of society, but the masses?

Maybe we could have suspended the federal gas tax to help reduce the cost of gas and diesel. Maybe we could have offered an automatic energy credit to help with the burden of higher energy bills, especially during winter months.

Or better yet, perhaps we could have looked to aid our aging public by raising social security benefits, suspending income taxes on those benefits, or if we wanted to forgive debts, maybe we could have forgiven medical debts incurred by seniors.

The point is that while just giving money away alone rarely makes sense, if it was to be given away, at least one could better digest the notion of doing it at all if what it was given away for made at least some sense.

Set aside, if you will, that many people had to be left scratching their heads a bit at the whole idea of student loan forgiveness. I mean, aren't college grads supposed to be the smartest of the smart? They couldn't figure out how to manage and repay the debt? And wasn't the whole sell of the college education to make more money than non-college grads? But they couldn't repay the debt even with the supposed higher wages? And non-college grads would now have to pay college tuition through taxes on lower wages?

Beyond just giving money away, perhaps what would be better to do is to address why college costs as much as it does, and why the promise is not delivering the goods, but rather saddling students with debt they can't repay in the first place.

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© 2024 Jim Bauer

From the Springboard on HubPages:

What Are the Drones Doing Over Our Heads?
Despite reassurances, the mystery of the drones over New York and New Jersey has imaginations running wild. Until we have some answers, it's anyone's guess why they are there and what they are up to, leaving growing public concern and speculation.

We're Missing the Mark on Mass Shootings: The Same Will Be True in the Madison, Wisconsin Case

Whenever a school shooting occurs, or any mass shooting event for that matter, it is always a terrible tragedy. There is always something that gets missed before it happens. By the parents. By the administrators. By our politicians. By frankly everyone. In the aftermath we want answers. Unfortunately, the questions we pursue are often not the ones that lead us to the solutions we need.

For instance, President Joe Biden wasted no time to seize the opportunity to advocate once again for stricter gun control laws. One has to question the relevance considering the shooter in this case that happened in Madison, Wisconsin was a 15-year old girl who, by current law, cannot even legally obtain a firearm.

What law would have prevented her from getting access to a gun?

And of course, it's likely that calls for tighter regulations will intensify in the coming weeks following this tragic event that left three people dead, including the shooter, and many more injured. To me, that is as much a part of the tragedy as the event itself.

As controversial as it may be to say this, and this is something I have been saying for a long time, guns are not the issue, and if we ever want real solutions, we need to set the guns aside in order to get to the bottom of it.

Lack of religion isn't the issue either, as this Wisconsin school shooting clearly suggests. It happened at a private Christian school, and one would presume not only were the parents religious, at least the shooter was exposed to a religious upbringing.

Of course, the details are quite slim here. The shooter took her own life and so she can't tell us what motivated her to do the shooting which left one teacher and a fellow student dead. But one would presume that there was likely some bullying going on.

What it comes down to most of the time for me is the mental health issue coupled with what I see as the rampant misdiagnosis of fake illnesses doctors can prescribe dugs for. Kids today are more medicated than ever for all sorts of things like learning disabilities to hyperactivity and anxiety.

In other words, everything is a disease now that must be treated with some sort of drug. And who knows what the real effects of these drugs are considering kids are still in their developing stages of life. Whatever they put in their bodies determines how they grow and what they grow into, and while I am no medical professional, I think that thought stands to reason.

Are guns an issue? Sure. I think we can all agree that guns make it easier to carry out these acts. But to say they are the problem is too easy. And the more we focus on that, the less likely we will be able to get at the root and have any impact on stopping these things from happening.

When I say people are missing things before these things happen, what I am referring to are the signs. Because I am sure there are always signs. The parents miss them. The administrators and teachers miss them. Everyone misses them and then when something does happen the only thing we focus on are the guns that do the consequential damage of what we missed in the end.

Was this girl on medications for anything? We don't know. Was she bullied? We don't know. Even still, at least in the case of bullying, how did we get to where we are now where the final decision is to kill people? Bullying has been occurring since the beginning of time, but while shootings are a regular occurrence these days, it's still a relatively new thing.

You can argue that's because access to guns is easier. But is it really? As I said before, for decades we have enacted more laws than ever to make it harder to obtain guns. Sure, it is still easy for the most part. But the point is that we have more laws on the books than ever and equally, we have more shootings than ever.

So, the question becomes, if the stricter laws haven't prevented or slowed these shootings down, but rather, since new laws were enacted shootings actually increased, what are we missing not only before a shooting event occurs, but what are we missing in finding the solutions to them?

It's yet another tragic event that will only go down as that. Something we can reflect on. Something we can point to when we discuss the need for more control over powerful weapons. But what it will accomplish in terms of getting down to what causes these things?

It will accomplish nothing at all because we will continue to miss the point. Meanwhile, the next shooter is simply waiting their turn.

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© 2024 Jim Bauer

 

Johnstown, New York Building Inspector Jeff Persch Says, "It's Unfortunate people have a 1st Amendment right."

Regardless of your opinions on the activities and demeanor of so-called 1st Amendment Auditors, popularized on platforms like YouTube, Facebook Reels, and TikTok, I believe they serve an important function.

Far too often, public sector officials seem to forget who they serve. The government does not operate independently of the People; rather it is dependent on the People who grant them the ability to serve, whether or not they are elected to their positions.

Indeed, these audits often provoke strong reactions, which in turn attract views. 1st Amendment Auditors essentially earn their livelihood from an engaged audience, many of whom harbor resentment toward their government and its officials. However, they also function as independent members of the press, something that can be argued, at a time when most major news organizations can no longer be trusted to deliver the news honestly and fairly, provides us with vital insights into the workings of our government that might otherwise remain hidden.

Consider that part of the reason these audits elicit certain responses is the lack of understanding among many government officials regarding their roles in the public sector, the rights of the public, and the significance of transparency within our government.

Mainstream media often ignores these stories, but 1st Amendment Auditors bring them to light. How do government officials act when the doors are closed, and no one is watching? And how do they feel about the importance of transparency? Or what about the importance of the Constitution? Do they understand it? Do they understand their role regarding it? Do they understand the rights of the People? Do they appreciate it? Do they fundamentally understand that their role is to serve the public rather than be in control of it?

Increasingly, I find myself writing about these audits and sharing my thoughts on the behavior of certain government officials within them. I believe it's crucial for people to understand the roots of the divide between the People and their government.

When public servants forget they work for us, they assume power and authority that rightfully belongs to the People.

Consider a recent audit conducted by 1st Amendment Auditor Auditing Erie County during a visit to the Town of Johnstown, New York. The auditor encountered building inspector Jeff Persch, who, although not excessively rude, clearly did not understand nor appreciate the auditor's rights. One particular comment Persch made to the Sheriff's Deputy who arrived on the scene, after police were called, stood out as especially appalling and worth highlighting.

"It's unfortunate that people have a First Amendment right," Jeff Persch remarked.

To me, it underscores a troubling mentality that seems deeply ingrained within our government and is frequently exposed during these audits. It conveys a sentiment of, "We are above the People." It's particularly concerning when public sector employees are unaware of fundamental public rights, to the extent that they call the police on someone simply for exercising their 1st Amendment rights. I find the lack of understanding regarding public access and the right to a free press quite alarming as well.

How many times does someone, when an auditor identifies himself as a member of the press, get asked to display credentials? All the time. Yet, there is no such thing as press credentials. Anyone can be a member of the press as is implicitly afforded by the Constitution, and the only credentials necessary is that document itself.

The question becomes, why are so many public sector employees and officials, many of whom take an oath to uphold the Constitution of the United States, so blatantly unfamiliar with the very rights they are meant to honor and protect in their duties to the public?

What does this say about someone like Jeff Persch in his role? Does he see himself as a servant of the People or as an authority figure above them? If he doesn't respect the right to free speech, how will he respond to any complaints or concerns from the public he serves?

Admittedly, Persch's remark about the 1st Amendment was in response to the auditor calling him a punk. However, the context does not diminish the significance of the comment itself. The fact that Persch took offense does not invalidate the auditor's right to call him a punk. When Persch mentioned this to the deputy, it seems as though he hoped it would lend credibility to his claim that the auditor was in the wrong.

It's important to note that the auditor's comment came after Persch had already been infringing upon his 1st Amendment rights. I think this is crucial to understanding the situation.

Whether or not Persch actually feels this way about the 1st Amendment, or any other part of the Constitution is impossible to know. I don't know Persch personally. But clearly, he does not fully comprehend his role, or the rights of citizens—camera in hand or not. 

I did reach out to the building inspector, as well as copied my correspondence to the town supervisor, clerk, and the Mayor of Johnstown, Amy Praught for comment. So far, I have not received any response regarding the matter. Usually, I don't. But I would be curious to know not only their thoughts on the Constitution, but on 1st Amendment auditors as well.

If nothing else, I think that anyone working in the public sector should, regardless of their opinions, uphold the rights of citizens afforded to them, and moreover, fully understand what those rights are that citizens have.

That being said, I have to give a strong round of applause to the Sheriff's Deputy who answered the call for doing his duty and honoring the rights of the auditor. In the early days of 1st Amendment auditing, police were far less informed about public citizen rights in public buildings, and thus, I think it goes back to the importance I alluded to in the beginning, of these audits in the first place.

Some auditors may be annoying in the way they approach things, but at the same time, they are serving to educate many people who clearly need to be educated. Perhaps Jeff Persch will have a different perspective of not only his role as a public servant, but also of the public at large he serves, going forward.

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© 2024 Jim Bauer 

Sifting Through the Implications of Biden's Pardon Decision

Following President Joe Biden's Sunday night pardon of his son, we can expect the left and the media to scramble to downplay the event as a "nothing to see here" moment. And really, that's pretty much what it is. Historically, presidents have exercised their right to pardon people across the spectrum of guilt and innocence. The good, the bad, the ugly? It's all fair game when it comes to pardons. Presidents have the prerogative to grant pardons, regardless of the circumstances or the individual's guilt.

The fact that President Joe Biden pardoned his son, Hunter, isn't something I take issue with—except for the context. In this case the context does matter. At least to my mind it does. 

To grasp the implications of Biden's decision to pardon his son, one has to reflect on the past four years and all of the narratives surrounding Trump. How many times were the tables pounded, telling us, "Donald Trump broke the law, and no one is above the law!"

I said many times it was never truly about the law. And I think many Trump supporters and even some Democrats, would agree. If nothing else, this pardon highlights that point more clearly.

What was it really about? Politics. That, and I think it was a historic and blatant attempt to undermine the American people's right to choose their leader. This was always more about eliminating a political opponent than upholding any laws.

What makes this clearer will be the entire reaction by the left and the media to Biden's pardoning of his son. And we already know what that will mostly be. A complete dismissal of the entire event. That's the tell, folks. That's the shiny thing in the darkness.

During his campaign, Biden repeatedly assured the American people that he would honor the law, even with his own son on the wrong side of it. "We respect the rule of law," he said with a smirk, subtly pointing to his opponent as if to say, "Unlike that other guy."

And how many times was that assurance even used as more means to convince people Trump needed to be held to account for what he allegedly was accused of? "See how important the law is," they suggested. "Even the president himself won't let his own son off the hook."

The left might argue tit for tat. I can already see that coming. After all, if Trump wasn't held accountable and was even elected, isn't pardoning Hunter now fair game? If Trump's election negated the law's importance, shouldn't Biden have the right to go back on his word?

Why should Hunter face prison time while Trump gets to hold the keys to the White House?

As I mentioned, I'm not concerned about Hunter being pardoned. It's the president's prerogative. What interests me more is the current stance on the law for those who once emphasized its importance. If they now dismiss it, just because, what does that say about their entire argument against Trump and the alleged travesty of justice he orchestrated?

Will Biden and Harris supporters claim Biden lied when he assured the American people he would follow the law? Will they have any misgivings about Hunter being given a pass? Can they be honest about it? Or will they simply go along with it, ignoring the context when compared to their arguments about Trump over the past four years?

This is the moment of truth. It's when true colors are revealed. It's where we see if those who claim to be committed to their convictions can step away from their staunch support and take an honest stand.

To me, the issue isn't just about Hunter Biden's pardon. It's about the consistency and integrity of those who loudly championed the rule of law against Trump. It's a moment of introspection and honesty, where actions speak louder than words. If justice was so important in the case against Trump, how could it not be in the case of Hunter, and how could the same people who called for justice in one case now openly advocate against it in another?

We'll see.

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© 2024 Jim Bauer

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