Our first Separately Managed Account (SMA) strategy launching soon - Strategic income balanced with principal appreciation

My wife and I are selling a condo which we've owned for 9 years (and rented for the last 5). Overall, this is a good thing — the Seattle market has led to large price appreciation that we're going to be able to bank. So why sell instead of just keep renting it? Basically, our life requirements are much different than they were when we bought the condo. For starters, we have two kids now, a boy and a girl, and our house has two bedrooms. We're making do while our baby lives in the master bedroom with us, but eventually the kids will probably want their own rooms (we can hardly even fit our son's books in his room as it is). Secondarily, we're also hoping to upgrade a bit on location and move off the neighborhood arterial we live on (our son thinks the fire engines passing by are much cooler than we do).

So we plan to eventually consolidate our 2 properties into one "forever house," but we're not keen to do it immediately, especially given the crazed Seattle real estate market. We plan to take the proceeds from the condo and invest it while we wait for the right opportunity — some confluence of house or timing (we prefer to buy when nobody else is). 

This brings us to the strategy we're going to launch here at Prospero. I want less principal risk than investing purely in equities, with higher income streams than putting it straight into government bonds — so we're building a portfolio of closed end income and preferred equity funds and then layering in some dividend producing stocks to try to keep pace with inflation on the principal side of the equation. This type of strategy could be great for anyone with fixed income needs, or for people biding their time while they wait to do something with a pile of their money. The idea is to lessen the market risk on equities (by having lower share in those instruments) while pairing with more fixed income instruments. One place this type of strategy could be a great fit, for instance, is if you're a member of the FIRE (Financially Independent, Retire Early) crowd. Rather than look at the standard 4% draw-down recommended by most advisors in retirement, you could potentially live off the income while maintaining principal that keeps pace with inflation over the long haul. Obviously, there are no guarantees, but that's what we're going for.

So stay tuned, we should have more to share once we've launched the strategy in the coming weeks. In the meantime, feel free to reach out if you have any questions.