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American Capital Agency Corp. Message Board

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  • onion1273 onion1273 Jan 18, 2013 10:15 AM Flag

    Does this rally have legs?

    I plan on retiring in 2 yrs. So no long term growth plays for me.
    My philosophy has been if I am getting enough in divis and interest on a monthly basis to live on, should I really care what the market value is?
    I looking for monthly income. So I try not to let the market value swings to bother me but like I said I am very giddy about 2012. Id love to see more of that + a rise in rates over the next 2 yrs.
    That would allow me to swap out of riskier divi stocks and back into less risky preffy's and bonds.

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    • "if I am getting enough in divis and interest on a monthly basis to live on, should I really care what the market value is?"

      Yes, you should care IF your dividend/interest income is barely enough to live on. Reason: when markets tank for an extended period (say, 12-18 months --- the typical bear market period), it hurts earnings. When earnings are hurt for 2 or more quarters, dividend cuts usually follow. If that happens, your income will drop below your comfort/living zone and you may need to sell some of your investments at distressed prices o augment your income for living expenses.

      If possible, avoid that scenario by aiming for initial dividend/interest income in retirement that is 25%-50% above your living expense level. Then, if dividend cuts do happen, you stand a good chance to weather that storm without having to sell your investments to augment reduced income. To do that, you may need to delay retirement a couple years to grow your bank account more for greater initial dividend/interest income.

      Don'tcha jus love it when a plan comes together?

      Sentiment: Buy

    • Onion !! low risk appeals to me. I stay 50%-65% Preferred, 15% bonds high yield and emerging markets, 20%-25% ETF Dow Dividend and S&P 500 and the rest trading cash for opportunities. Quality Dividend stock like J&J,PG,K,KO is not risky it will go up and down but not out. Always stay in your comfort zone so you can sleep well.

      To me AGNC is risky the hint by the FED of a Interest rate increase will tank MREIT's and also hurt Bonds and Preferred share price.

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