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IPS INCOME STRATEGIES
With the average 1-year CD paying less than one percent, bonds paying zero, and the highest 10-year fixed annuity at 3.55% (which locks up your money for 10 years with heavy penalties if withdrawn), is it possible to still generate income while maintaining a conservative portfolio and liquidity? Using dividends as an income generator has long been a popular strategy, but without hedging, it does not protect investors against market volatility.
IPS Income Strategies combine the advantages of owning dividend stocks with the protection made possible by our expertise in hedging market volatility. Rather than attempting to diversify by investing in bonds, an extremely unreliable hedge with substantial risk exposure, the IPS Income Strategy adds downside insurance to a dividend portfolio, which eliminates most of the market risk and 100% of the default risk and interest rate risk associated with bonds.
By investing in a basket of dividend stocks, which greatly minimizes the risk of any one company cutting its dividend, while simultaneously owning downside protection on the portfolio at little to no cost, you are able to rely upon defined income while protecting against the wealth destroying dangers of a market crash.
What this means to you is that by investing with our strategy, you can collect 3-5% income annually with extremely low exposure to downside risk in the underlying stocks. Historically the income strategies have been shown to deliver 3-4% annually.**
This strategy is designed to harvest (scrape) the dividends from a basket of dividend stocks, while protecting against as much of the price volatility of the underlying stocks as possible, which allows investors to add or withdraw money as desired with the security of knowing that the value of their account will remain stable.
* The above chart presents a comparison of investing in the IPS Income Strategy vs investing in CDs, assuming a 10-year CD rate of 1%, over a period of 12 years.
** Based upon ex-post data of how the strategies would have performed historically.
This strategy is designed to harvest (scrape) the dividend from a basket of dividend stocks while capping both the upside and downside.
It offers a higher return in exchange for slightly more exposure to price movement.
* The above chart presents a comparison of investing in the IPS Income Strategy vs investing in CDs, assuming a 10-year CD rate of 1%, over a period of 12 years.
** Based upon ex-post data of how the strategies would have performed historically.
Disclaimer
Please note that the information contained in this piece is intended for investment professionals. This information should not be misconstrued as an offer to buy or sell, or a solicitation to buy or sell securities. Any performance contained in this article is strictly informational and is not necessarily indicative of the future performance of investments. Past performance is not indicative of future investment performance and investors should always consult a financial professional prior to making any investment decisions. The results shown here are strictly for informational and educational purposes. All investments have the potential for profit and the potential risk of loss. Changes in investment strategies, contributions, or withdrawals may cause the performance results of one’s portfolio to differ materially from the reported composite performance. No client, current or prospective, should assume the future performance of their investments will be profitable based on historical performance. Any backtest charts and data presented are purely hypothetical and do not represent the performance of accounts managed by IPS Strategic Capital. The results were obtained by applying a rules-based investment process to historical data. All investments have the potential for profit and the potential risk of loss. Changes in investment strategies, contributions, or withdrawals may cause the performance results of one’s portfolio to differ materially from the reported composite performance Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s portfolio. One should always consult an investment advisor before making any investment decisions.
