Rose's Income Garden (RIG) portfolio, an investment strategy focused on income generation, dedicates approximately a quarter of its total value to financial sector assets. This allocation encompasses various investment vehicles, including mortgage real estate investment trusts (mREITs), business development companies (BDCs), and cash equivalents like bonds and interest-bearing exchange-traded funds (ETFs), alongside cryptocurrencies and preferred shares. This diverse approach aims to capture income opportunities across different financial instruments while managing risk.
A key component of this investment strategy involves identifying attractive closed-end funds (CEFs). For instance, DFP and NPFD are highlighted as compelling choices, primarily because they are currently trading below their net asset value (NAV) and provide consistent, or even increasing, monthly distributions exceeding 6%. This strategy underscores a preference for undervalued assets that offer robust and reliable income streams to support the portfolio's overall objectives. Additionally, the portfolio incorporates six specific preferred shares, namely AGNCN, DLNG.PR.A, NLY.PR.F, RITM.PR.D/E, and SEAL.PR.B, which are recommended for their high yields. Careful consideration of their call dates is paramount to mitigate potential risks associated with early redemption.
Preferred shares play a crucial role in the RIG portfolio, acting as a strategic alternative to traditional cash holdings. The portfolio maintains a disciplined acquisition strategy for these shares, coupled with a readiness to divest them if market conditions, such as declining interest rates or heightened call risk, become unfavorable. This proactive management ensures that the portfolio remains agile and responsive to market dynamics, prioritizing both income generation and capital preservation. This careful balance between yield and risk management is fundamental to the RIG philosophy.
Embracing a well-structured and adaptable investment strategy, particularly in volatile financial markets, empowers investors to achieve sustainable income and foster long-term financial stability. By strategically diversifying across various asset classes and actively managing risks, individuals can confidently navigate economic shifts and enhance their wealth-building journey.
