In the old days, reaching a safe retirement was a very different story than it is today.
Both my grandfathers worked at oil refineries in Houston, Texas. They also served in World War II. They retired in their late 40s with private and public pensions. And they died – 40 years later – with a lot of savings, despite never earning much money.
But those days are over.
Inflation has come down slightly, but it’s still up 6.4% over the last year alone. And over the past few decades, homes, college, and healthcare now cost a fortune.
According to Nasdaq, a third of Americans don’t even have $10,000 in savings. The same survey said most Americans expect Social Security to save their retirement. But estimates say the government will cut those funds 20-25% by 2035.
So for those seeking to retire, one of the toughest challenges is income. How do you get enough income without too much risk?
There’s one sector in the market that’s figured out exactly how to do that. While many individuals and market sectors struggled, it boosted its income.
Here at Intelligent Income Daily, we find the best income opportunities in the world to help our readers achieve a dream retirement.
Today, I’m going to explain how to make your portfolio work like this sector that continuously boosts its income.
You don’t need millions of dollars to get started. All you need is the information I’m going to share on a hidden part of the markets… And you, too, can learn how to reach your dream retirement safely.
Why the Banks Always Win
One of the most well-known instruments for earning safe income is through certificates of deposit (CDs).
A traditional CD pays a few percent in interest. The upside is it’s guaranteed by the Federal Reserve. But the downside is it’s a guaranteed disaster with high inflation.
All your other costs go up, but not the fixed income from the CD.
Meanwhile, when we look at one of the primary providers of CDs… their profits rose alongside inflation.
I’m talking about banks. They make money by charging interest. And interest rates are double what they were just a couple of years ago.
Take JP Morgan (JPM) as an example. While many companies struggled, its net interest income rose 54% in the past year.
It must be nice. Interest rates go up, and banks make even more money.
That’s the difference between interest earned from loans and interest paid to depositors like you and me.
But here’s the good news… You don’t have to be a loan or CD issuer like a bank to boost your income as interest rates go up.
There’s a financial vehicle you may not have heard of before… But which are the norm for sophisticated investors and Wall Street banks.
This surprisingly simple strategy is one you can use today to protect yourself from inflation, too.
An Inflation-Fighting ETF
They’re called floating rate loans.
These types of loans are tied to a benchmark. The most popular one, the Secured Overnight Financing Rate (SOFR), is simply the rate banks charge each other for short-term loans.
When interest rates go up like they have recently, so does SOFR.
Owners of floating rate loans have seen their income “stair step” higher since the Federal Reserve started raising interest rates last year. And as rates increased, so did the amount of income in their pockets.
While everyone else panicked, investors in floating rate loans were researching what sportscar or vacation home to buy.
There’s another benefit. And it may be even more valuable than the extra income.
Take a look at the chart below that shows the Vanguard Total Bond Market ETF (BND) – one of the most popular ways to invest in the general bond market – and the SPDR Bloomberg Investment Grade Floating Rate ETF (FLRN) – a similar way to own floating rate loans.
The Vanguard bond ETF is down over 15% in the past two years. That’s worse than many stocks. And you could replace BND with any traditional bond ETF. The result will be the same, or worse.
But the investment-grade floating rate ETF… is flat over the same period. The floating rate nature of the loans completely protected it.
If rates continue to rise, investors in floating rate loans don’t need to worry. In fact, they’ll earn more income.
Now, you should note that the opposite will happen, too. But loans must still be paid back in full just like regular bonds. This means they’re still robust even when rates decline.
Floating rate ETFs are good tools to fight inflation.
But at Wide Moat Research, we have even better options. In our Fortress Portfolio, we have one recommendation that has paid dividends without fail since 1857. And it’s supported by floating rate loans just like the ones I laid out above.
Many are worried about a recession in 2023, and understandably so. But this company survived the Great Depression and both World Wars. And never cut its dividend.
We think it has major upside from today’s levels. And while others fear higher interest rates, it’ll use them to continue boosting its income.
To learn how to get the name of this pick, click here.
Analyst, Intelligent Income Daily