Monthly income that rises when stock-market volatility is high can help you ride through financial storms
There’s one thing in common when it comes to the various approaches to investing: What should always be foremost on your mind is your set of goals. Is long-term growth most important? Do you need income now? One particular diversified strategy for stocks is designed to provide you with a relatively high level of monthly income while capturing less downside when the broad market tumbles. There is a price for the combination of income and lower risk, but you might find it worth paying.
Getting back to goals, if your objective is to build a nest egg over decades by pouring money every pay period into diversified equity funds within a tax-deferred retirement account, broad declines for stock prices can enhance your long-term returns. When the market sinks, you pay lower prices.
It’s not fun to wait through down periods for stocks, but you need to expect them. The reasons for the declines will vary. Examples have included the dot-com bubble that began to deflate in 2000, the financial crisis of 2008, the early phase of the COVID-19 outbreak in 2020, the broad decline in 2022 driven by the Federal Reserve’s aggressive interest-rate increases to fight inflation, and now President Donald Trump’s broad array of tariffs. But the market has recovered from every previous decline.
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