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Important Note:

June through November our agency may become prohibited from binding coverage should a “Tropical Disturbance” enter the Gulf of Mexico or Caribbean Sea.

In these cases we may be unable to bind new coverage quoted in open proposals until the storm leaves our area and our binding authority has been restored.

Please arrange your coverage protection early to avoid this type of delay. While we regret any inconvenience, the carriers impose these restrictions on all agencies.

Three Ways to Increase Portfolio Income

If you need to generate income from your portfolio, you’ve likely found the last few years rather frustrating. Interest rates have remained near historically low levels since the financial crisis of 2008—and any improvement in yields during the recovery are hardly worth a mention. Traditional sources of dependable payouts—from money market funds to U.S. Treasury notes and government bonds—are generating very little. And when yields eventually increase, the value of fixed income investments will take a hit. This can feel like a lose/lose situation.

Fortunately, there are still ways to generate income through investments. Though the best will depend on your situation, foreign stocks, municipal bonds and a strategic selling strategy can all be helpful.

1. Invest in Global Dividends

The stock game is much bigger than the U.S. alone. In fact, more than 66 percent of the world’s stock dividends originate outside the states—making looking into foreign companies a smart move. While you may have to pay additional fees when purchasing foreign securities (such as currency conversion charges), foreign companies often pay a higher percentage of their portfolios to shareholders than U.S. companies do.

Investing in foreign stocks, mutual funds and exchange-traded funds can also help you increase the diversification of your portfolio, though you will likely have to trade quarterly dividend payments for annual or biannual ones. And offshore investments are not without risk. Political shifts, economic uncertainties and fluctuations in currency value can all impact the amount of income you receive.

2. Invest in Municipal Bonds

If you’d prefer to take on less risk, look to municipal bonds. Issued by state, county and local governments to fund public works, they’ve historically ranked among the most stable of investment vehicles. In fact, according to Moody’s Investors Service, no AAA-, AA- or A-rated municipality has defaulted on released bonds in more than 40 years. Among BAA-rated municipal bonds, only 0.01 percent has failed to make the payments promised to bondholders.

Municipal bonds carry additional tax benefits as well. The interest income generated is generally free from federal income taxes and often free from state and local income taxes. Additionally, municipal bond income is exempt from the 3.8 percent Medicare surtax on net investment income—a new tax that may affect you if you’re a high-income investor.

3. Sell Your Portfolio Strategically

Bond interest coupons and dividend checks don’t have to be your only form of investment income. The strategic sale of your holdings can help you capitalize on interest, dividends, capital gains and principal to generate more cash flow. This requires a disciplined asset-allocation plan using cash and short-term bonds to generate a foundation that allows you to take on more risks in other parts of your portfolio.

You’ll reap tax savings as well, even when you sell at a profit. While you have to pay federal capital gains tax on sold investments you’ve held for more than a year, it tops out at 20 percent. This is lower than the personal income tax rate of 39.6 percent that could apply to your taxable bond income. Harvest losses to offset the gains, and you’ll reduce your tax burden even further.

If you’d like to learn more about any of the topics above, or need other investment or financial planning advice, we’d love to help. Contact us with your questions at any time.