I am still the guest host for Money Girl and this episode teaches about preferred stocks.
…Back in episode 26 of Money Girl there was a little shortcut discussed which is used in finance known as the “Rule of 72”. It states that dividing 72 into the interest rate you are earning will tell you how many years it will take for money to double. So if you have money invested in an account earning 2% and reinvest the income, it will take 36 years to double. Yuck! That is not going to get us anywhere fast, especially when inflation is running at 4% and taxes will take a piece out of it as well. If the bank pays you even as much as 4%, you still are swimming upstream!
Here is The Disciplined Investor’s “Preferred” way of investing for income. This a strategy that we use in our client’s portfolios regularly and offers a good deal of safety that is designed to help you with your investing sleep-factor. In fact, this idea helps you earn money while you are sleeping. Now that is is my kind of investing. It offers yields approaching 7 or 8 percent and even offers some tax advantaged. You like that don’t you! (I see you smiling…)