dividend paying stocks

How to Ensure Sustainable Return on Investment

March 31, 2014

March+Blog+4+-+Image+-+ROI-ol8tiFor the typical investor, generating a sustainable return on investment (ROI) that meets the investor’s needs, without withdrawing from the principle is considered good enough. Regrettably, under today’s economic climate that can be a challenge. As interest rates have been historically low since the Global Financial Crisis (GFC), the typical investor is likely meeting his or her needs from a mixture of capital gain income from interests and dividends, as well as liquidating some of the assets from the existing portfolio.

Therefore, the key question now is how to ensure a sustainable income from investments that will not deplete the portfolio. In order to find out how much an investor can withdraw over a sustained period, several factors need to be considered. Such as the current interest rate environment, portfolio volatility, and the time horizon of periodic withdrawals. Investors, who would like to maintain the value of their portfolio and earn a reasonable return, have only two viable options, investing in bonds or dividend paying stocks. (more…)