Show BUSINESS and Ind the STOCK MARKET by BABSON'S REPORTS INC o Copyright 1 1873 1073 73 INVESTMENT ADVICE FOR 1 THE BE SOON SOON TO BE RETIRED The following remarks remarks' are addressed to the individual who is on the thresh thresh- hold of retirement but not adequately prepared for it Upon retirement one is naturally confronted with many changes changes chan chan- which are destined to alter ser sere seriously a heretofore normal daily daDy routine These alterations alterations' can represent burdensome burdensome burdensome bur bur- challenges to those who have neglected to plan carefully for the day when withdrawal from active business or professional life becomes a reality The major financial requirement for comfortable retirement is of course a dependable income substantial enough to maintain a living standard consistent with that to which one is accustomed As regards the source retirement Income in In- income come can can be divided into two types portfolio p revenues and 2 funds derived from interest or and-or dividends ie i.e. portfolio income Portfolio Non Income Such things as pensions social security security security sec sec- sec sec- annuity all allotments and rental income income in in- come would fall faU under the first non non- portfolio classification Essentially it itis itis itis is that income which will be in some fixed predetermined form to be received received received re re- in periodic installments Accurately Accurately Accurately figuring the extent of this type of income will considerably ease the complexities complexities complexities com com- of drawing up a workable retirement re se- budget Several other possibilities possibilities possibilities could perhaps be exploited in an as effort to buttress your income structure For example apartment living might conceivably enable you to rent your home at an attractive rate or the purchase purchase pur pur- chase of a duplex home could serve the same purpose If U you are the owner of industrial industrial commercial commercial property machinery machinery ma chinery or equipment investigate the possibility of renting or leasing such holdings thereby putting idle assets to work advantageously Portfolio Income As for the investment portfolio preservation pre of capital must be a primary objective followed closely by as good gooda a yield as can safely be obtained We view the safety factor as especially important because the retired individual in most cases has no no noway way to recover security losses should they occur by investing investing investing in in- vesting additional funds due to the absence absence ab ab- sence Bence of salary or wages The retiree should certainly avoid risky speculative situations Thus adoption of the safety safety- income objective at the outset of retirement retirement re reo re- re is essential With these ideas in mind we recommend recommend mend that approximately half of ones one's portfolio be invested so as to provide an assured income Savings deposits and quality high-quality corporate bonds and pre pre- would be appropriate income producers Examples include May Department Department De De- De Stores Credit 8 7 1976 Texaco Texaco Tex Tex- aco S F Deb 5 3 1997 General Foods S F Deb 8 7 1990 and Pacific Pac Gas Electric 6 percent Cum 1st Pfd One could also include some convertible con such as Woolworth Cv Pfd or Foremost McKesson Cv Cv Pfd These convertibles offer both attractive yields and capital gain opportunities Quality Common Stocks Despite the higher yield on most bonds and as compared with common common com com- mon stocks strong equities should continue continue con con- to provide a defense against the continuing inflationary trend Accordingly Accordingly Accord Accord- Accordingly a reasonable amount in common stocks seems justified But the common stocks selected for purchase should be beyond reproach in terms of quality We have in mind such issues as Chemical Chem ical New York American Electric Power Pow Pow- er General Motors International and Southern Pacific Common Com mo a stock yields have improved considerably this year largely because of price declines Even so if stock losses losses los lOSe ses continue thereby further hiking yields then consideration could be given to switching some funds from fixed in come come assets to additional common stock Essentially we recommend a strategy of revolving flexibility which constantly constan constan- seeks good income returns |