Customer Reviews

Income Investing Today: Safety & High Income Through Diversification

5 star:		(4)
4 star:		(4)
3 star:		(0)
2 star:		(0)
1 star:		(0)

 

 

In this low interest rate environment investors need to work harder to maintain a high level of income from their investments. Add to this that author Lehmann sees low interest rates for the "forseeable future". This means that an income portfolio needs to diversify across an expanding variety of financial instruments, maturities, and even credit (risk) quality to achieve its goal. The key here is to recognize that some income investments respond to "drivers" (viz. circumstances) other than interest rate moves which in turn insulates them from this traditional risk.

It follows that the diversified income investor will consider some non-traditional or out of favor (relatively cheap) assets such as REITS (driven by real estate cycles), Canadian Energy Income Trusts (the demand for energy), dividend paying common stocks (affected by broad economic cycles), near investment grade junk bonds (discounted by fear but subject to credit upgrades), and beleaguered automotive bonds. Closed end funds also get the nod because they generate high income and can often be bought at a discount to their underlying values. Given that the retail investor is the focus of this book and that new CEFs are rolling-out monthly, I would have liked more discussion of their trading strategies and risks.

Among the investments to avoid are unit investment trusts, collateralized mortgage obligations (CMOs), packaged equity hedges marketed under cutesy acronyms as Sequins, Elks, etc. and hedge funds ("rarely has so much money been entrusted to so few people with such limited talent"). Lehmann is decidedly ambivalent about mutual funds due to their internal costs, tax inefficiencies, and focus on short term performance. No surprise his preference is for individual securities which are also less sensitive to interest rate changes as they move their principal to date certain maturities.

The serious do-it-yourself income investor will find some good ideas in these pages, but I question Equipment Trust Certificates as a retail investment. Good luck if you need to sell them. A section on Direct Access Notes is in intriguing, but again, I wonder about their liquidity. Lehmann is a strong proponent of preferred and convertible stocks, but there is a confusing amount of information on their structures. A discussion of the bankruptcy process, advice on when to sell your positions, and useful information that can be gleaned from prospectuses and financial statements might have gone to an Appendix with more direct focus on securities in the main text.

The reader will find author Richard Lehmann witty and thorough as he discusses the key to building a steady, growth-orientated income portfolio. He states that in investing, "very little is highly predictable and nothing is certain." In the investment process both fear and greed are facts of life and Richard explains that both must be kept in check. Whether you're a buy and hold investor, total return investor, a desperate investor or a scared investor Richard's book on Income Investing will enlighten you and provide tools for action.

He states, "My basic premise is that the key to building a steady, growth-orientated income portfolio is to diversify over a variety of securities that depend on a different drivers (ie., portfolios that are not vulnerable to any once specific economic factor such as interest rates." The reader will learn of many new investment products in the income investment market with acronyms to catch the investor's attention. Mr. Lehmann suggests many that are interesting to use for income and others to avoid. Years of experience are at the reader's fingertips as Richard leads the reader through both the new and more conventional income products.

Unexpected and welcome gifts are Richards insights and discussion associated with retirement investment, managing tax in the fixed income portfolio, buying and selling securities and what to ask your broker when buying an income security. His discussion about default and bankruptcy are most informative and provides the investor with background not often seen in investment books. What to pay for a security and when to sell are questions of high concern to investors and Richard provides some insight to this problem.

This book provides an informative look at some of the actions of the Federal Reserve Bank and the various credit rating services. For the non-accountant Mr. Lehmann with his CPA hat on discusses key financial statements that you need to understand.

Income investment includes certain income stocks and mutual funds such as bond, Exchange Traded Funds and closed end funds. Mr. Lehmann addresses these securities in some detail and offers up some very experienced arguments of how they can be used in building an income investment portfolio.

Certificate of Deposits are considered very low risk products, Richard suggests that is you have saved enough to build a monthly payout ladder of CD's and live comfortably that God had surely blessed you and you no longer need to read his book. Of course that would be a big mistake just think of what you will be missing.

The reader will find his book entertaining and informative. It provides income investment strategy, product description, portfolio make up, brokerage discussion, managing risk and uncertainty and a super Glossary.

A worthy text on the desk....for even the equity investor.

Herbert Ridderbusch- Investor

If you're looking to become active in your own retirement saving, but are frightened by the volatility of the stock market, and put off by the low returns of the bond market, Richard Lehmann offers a sure fire alternative in Income Investing Today. Income Investing Today chronicles in great detail an alternative investment universe that provides the high returns of the stock market with the minimal risk of the bond market. New hybrid securities like preferred stock, convertible bonds and ETFs are his weapon of choice and you need only look at the track record to be convinced. Lehmann outlines a step-by-step plan of how to build wealth on your own without paying outrageous management fees or gambling away your nest egg on Wall Street. Simply put, Lemann shows you how to make big returns without the big risk, on your own. This book is certain to become the investment bible of baby boomers tired of paying pointless management fees and eager to become involved with their own investment portfolio or retirement savings. Lehmann, a Forbes columnist, puts his three decades as an authority on fixed income investment to good use and knocks one out the park. Income Investing Today is an invaluable tool to the independent investor with an eye on retirement savings.

The book does a great job of explaining income possibilities for those of us who have limited knowledge. Like a previous reviewer stated, I would have also liked more information on Closed End Funds and the structure of the book is a little fragmented but it is definitely readable and is a good introduction to his style. I have been an avid reader of his newsletter for four years and his recommendations are very well thought out. To my knowledge, it is the only publication that does this kind of work and it is the only proper way that I can think of to actualize the book. I am a very fearful investor and this style has worked very well for me. I have managed to set up an income stream of approximately 10% per year, I have made some nice gains at times, specially with the Canadian Trusts, and I have been able to recover from recommendations that have not worked out. The fluctuations in the securities that I have selected do not seem to have been more or less drastic than the market in general with the exception of the Closed End Funds. They do not seem to have done as well but the dividends have kept me in the game. Happy returns!

This book informs the reader/investor about a solid and reasonable approach to safe income investing. The examples and explanations are good (I will save your time by referring you to the other reviews for more detail). The author disappoints by advertising his investment letter. Nothing wrong with that if either the book or the investment letter were free of charge, but they are not.

For those of us who need income to live on--this book is the process manual . The author is skilled in evaluating and executing trades in areas most of are not familiar with, with minimal risk. If you are in or close to retirement----moving deeper everyday into "Geiserdom", this book is your toolbox for the future.

I have followed Richard Lehman for years. He has competed competently using income instruments with stocks. He opens up a new perspective for non-professional income investors both with his publication and this book which helps understand his Forbes monthly newsletter.

Worth the money.

Income investing has never been more difficult. Richard Lehman has shown the way to a more comfortable means to get a real return for your investment. Particulrly helpful for retirees and those that recognize growth investing is not the best means for them. Excellent book to start one on the way to more income and security.