Book Review: "How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact," by Brett Owens and

Eric Franklin

Oct 16, 2019

This book is an incredibly practical guide to some frequently overlooked corners of the market, containing compelling strategies that individual investors, or boutique adviser shops, can use to provide higher income than is generally acknowledged, with minimal principal risk, through the use of actively managed closed end funds (CEFs) and income-producing stocks. I appreciate how the book lays out an approach to disciplined purchasing based on buying CEFs at a discount to NAV and harvesting gains when those NAVs become inflated and lower-cost options are available. I also enjoyed the points made on why these strategies are not employed by the large firms (hint: it’s because most of these CEFs are relatively small and cannot be leveraged by the large firms without adversely impacting NAV prices). The book also does a good job discussing why actively managed REIT and bond-funds still yield alpha over their indexed brethren.

There’s a couple additions that would make the book stronger:

1) The examples in the book are so specific and timely that they are already generally outdated. If you want to take action on what’s in the book, you’ll spend significant time researching each space to locate good options. It would therefore be helpful to have a high-quality filtered map of the space that individuals could dig through to see what is most compellingly priced in each area.

2) More thoughts on suggested asset allocations for the portfolios that generate the returns implied by the title. The book touches on this subject, suggesting 15-20 positions, 50% stocks and 50% bond CEFs, but I’d like to go a level deeper than that.

All in all, if you want to explore portfolios that generate much higher cash returns than conventional dividend-paying strategies and ETFs, this is a must read. It will open your eyes to opportunities that can greatly expand your playbook for when you need to transition to living off the proceeds of your investments.

If you are interested in discussing ways that we can help you generate income, please reach out!

Full disclosure: I was provided with a free review copy of the book and have invested some of my personal funds with Tom Jacobs, whom I have been an acquaintance of, for years.

This book is an incredibly practical guide to some frequently overlooked corners of the market, containing compelling strategies that individual investors, or boutique adviser shops, can use to provide higher income than is generally acknowledged, with minimal principal risk, through the use of actively managed closed end funds (CEFs) and income-producing stocks. I appreciate how the book lays out an approach to disciplined purchasing based on buying CEFs at a discount to NAV and harvesting gains when those NAVs become inflated and lower-cost options are available. I also enjoyed the points made on why these strategies are not employed by the large firms (hint: it’s because most of these CEFs are relatively small and cannot be leveraged by the large firms without adversely impacting NAV prices). The book also does a good job discussing why actively managed REIT and bond-funds still yield alpha over their indexed brethren.

There’s a couple additions that would make the book stronger:

1) The examples in the book are so specific and timely that they are already generally outdated. If you want to take action on what’s in the book, you’ll spend significant time researching each space to locate good options. It would therefore be helpful to have a high-quality filtered map of the space that individuals could dig through to see what is most compellingly priced in each area.

2) More thoughts on suggested asset allocations for the portfolios that generate the returns implied by the title. The book touches on this subject, suggesting 15-20 positions, 50% stocks and 50% bond CEFs, but I’d like to go a level deeper than that.

All in all, if you want to explore portfolios that generate much higher cash returns than conventional dividend-paying strategies and ETFs, this is a must read. It will open your eyes to opportunities that can greatly expand your playbook for when you need to transition to living off the proceeds of your investments.

If you are interested in discussing ways that we can help you generate income, please reach out!

Full disclosure: I was provided with a free review copy of the book and have invested some of my personal funds with Tom Jacobs, whom I have been an acquaintance of, for years.

This book is an incredibly practical guide to some frequently overlooked corners of the market, containing compelling strategies that individual investors, or boutique adviser shops, can use to provide higher income than is generally acknowledged, with minimal principal risk, through the use of actively managed closed end funds (CEFs) and income-producing stocks. I appreciate how the book lays out an approach to disciplined purchasing based on buying CEFs at a discount to NAV and harvesting gains when those NAVs become inflated and lower-cost options are available. I also enjoyed the points made on why these strategies are not employed by the large firms (hint: it’s because most of these CEFs are relatively small and cannot be leveraged by the large firms without adversely impacting NAV prices). The book also does a good job discussing why actively managed REIT and bond-funds still yield alpha over their indexed brethren.

There’s a couple additions that would make the book stronger:

1) The examples in the book are so specific and timely that they are already generally outdated. If you want to take action on what’s in the book, you’ll spend significant time researching each space to locate good options. It would therefore be helpful to have a high-quality filtered map of the space that individuals could dig through to see what is most compellingly priced in each area.

2) More thoughts on suggested asset allocations for the portfolios that generate the returns implied by the title. The book touches on this subject, suggesting 15-20 positions, 50% stocks and 50% bond CEFs, but I’d like to go a level deeper than that.

All in all, if you want to explore portfolios that generate much higher cash returns than conventional dividend-paying strategies and ETFs, this is a must read. It will open your eyes to opportunities that can greatly expand your playbook for when you need to transition to living off the proceeds of your investments.

If you are interested in discussing ways that we can help you generate income, please reach out!

Full disclosure: I was provided with a free review copy of the book and have invested some of my personal funds with Tom Jacobs, whom I have been an acquaintance of, for years.

Book Review: "How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact," by Brett Owens and

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Forms ADV & Registration

Business Continuity Plan

7724 35th Ave NE #15170

Seattle, WA 98115-9955

(971) 716-1991

hello@prosperowealth.com

Prospero Wealth, LLC (“PW”) is a registered investment advisor offering advisory services in the States of Washington, Oregon, and California and in other jurisdictions where exempted. We are conditionally registered in Texas.

© Prospero Wealth 2024. All rights reserved.

Designed by Slices.Design

Forms ADV & Registration

Business Continuity Plan

7724 35th Ave NE #15170

Seattle, WA 98115-9955

(971) 716-1991

hello@prosperowealth.com

Prospero Wealth, LLC (“PW”) is a registered investment advisor offering advisory services in the states of Washington, Oregon, California, and in other jurisdictions where exempted.

© Prospero Wealth 2024. All rights reserved.

Designed by Slices.Design