It’s entirely possible the next big shoe to drop in retirement planning is the average retiree chasing yield to boost their retirement income. This may come in many forms, including investment in longer term and/or lower quality bonds, limited partnerships, etc.
Chasing yield can be a very dangerous game. While many stated rates look attractive, anything that seems too good to be true probably is!
Take for example teaser rates, fixed annuity guarantee rates (which come with many stipulations), or excessively high dividend payouts. They all sound so attractive, but the fact is they’re anything but!
FINRA warned investors recently about chasing yield through largely illiquid and highly confusing REITS (real estate investment trusts). These are NOT to be confused with the REIT ETF’s (exchange traded funds). These are distinctly different securities which have many confusing nuances.
Here’s the full news story from FINRA.
The moral of the story is be wary of any yield that sounds too good to be true!