Nick O’Connor – Capital and Conflict (Great Britain) –
The Capital & Conflict mailbag is brimming with your letters again. And this time, I’ve been forced to do something radical. When you get a letter like the one below, there’s only one thing you can do…
Before I explain what that is, let me share the note itself. It arrived Monday evening, in response to my letter on collecting a decent income and retiring rich:
It’s one note… of hundreds that I’ve received (and indeed publisher Dan Denning has received too). They all detail the same problem. We’re in the middle of the worst possible time to be an income seeker.
Finding a way of getting paid in today’s world is extremely difficult (and pretty worrying). Unless you want to eat into your capital – and most of us don’t – you’re left with very few options.
Or so most people would think.
See, this is such a big problem among our readership that I’ve decided to try and do something about it. It’s all a part of our drive to make the ideas we share with you more urgent, actionable and valuable. Sometimes that’s easy: you go out and try and solve problems.
So today I’m pleased to announce a new dimension to our investment research. It’s called the “30-Day Income Challenge”.
In the simplest terms, it aims to help you bank a big income without touching traditional income payers – like FTSE 100 stocks, gilts or savings accounts. It could help you earn as much as 7% per year (though we’re aiming for 5.5% as a target).
So, if you’re one of the hundreds of people who’ve written to me – or you read letters like the one above and think, “That’s me” – I have good news. You’re not alone! Help is at hand! All the information you need is here.
How can I be sure I’ll get paid when I need it most?
It’s certainly true we’re doing this against an awful backdrop for income seekers. It’s the kind of situation that can keep you up at night worrying. No one wants to resort to selling assets (like your house) or eating into your capital for income.
Yesterday I looked at annuities. But the low interest rates paid on savings are horrible reading too.
As my correspondent above put it, once upon a time you could expect 5%-6% on your savings. These days that’s more like 1%. Those numbers really add up.
Let’s say you have £250,000 set aside. At a 1% interest rate, you make £2,500 a year.
Perhaps you can deal with that if the situation is an “emergency” – as record low interest rates were first described eight years ago. But what if the emergency lasts decades? What if rates take another ten or 20 years to normalise? What then?
Over a decade, you’d earn £25,000. Over two, you’d make £50,000. Now compare that to what you’d make if interest rates were at 6%. Over a decade you’d earn £150,000. Over two decades, you’d make £300,000 in income.
In short… you make a quarter of a million pounds more long term earning 6% compared to 1%.
OK, you don’t need me to tell you that earning 1% is a hell of a lot worse than 6%. That’s obvious. But sometimes seeing the numbers in black and white makes you realise just how much it is costing you. And if numbers like that don’t make you wake up and want to do something about it, nothing will.
Which is what our Income Challenge is all about. There are ways of earning 6% today. Not by trading, using options or anything like that. But by taking advantage of a specific (and rarely covered) kind of income opportunity. I’ve prepared all the information you need to make your move on it here.
Welcome to the “new normal”
Because here’s the thing:
There’s a very good chance that interest rates won’t normalise any time soon. The “wait and see” approach can be very dangerous. You could be waiting a long time. It’s already been eight years.
How long do you think it’ll be before rates get back to where they were before the financial crisis?
Our income expert David C Stevenson tried to figure that out. As he put it:
Ask yourself: how would I fare if interest rates stayed close to rock bottom levels for the next 30 years?
Would your portfolio pay you enough? Or would you be forced to seek out alternatives like selling assets or eating into your capital?
It may not be a pleasant thought. But you need to figure out what you’re going to do about it. You didn’t create this situation, but you need to deal with it. You need to fight back! As of today, I declare the fightback officially on!
You need to get out on the front foot, be positive and take control of the situation.
How can you do that?
Associate Publisher, Capital & Conflict