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It seems like a bygone era and it is: Fewer than 15 years ago, cash yields were at 5% and bond yields were even more robust.
But yields plummeted over the subsequent decade, owing to the financial crisis and persistently sluggish economic growth. While yields have increased recently, pushing up cash and bond yields, it has still been a challenging environment for retirees. How can they extract income from their portfolios in an era of incredible shrinking yields?
For some retirees, a pure income approach is still the most appealing answer; they re allergic to touching principal. Yet other retirees can t afford to subsist on income alone; they need to tap appreciated positions in order to generate a livable cash flow. Indeed, as the equity market has enjoyed a sustained rally and yields have remained quite low, I ve argued that retirees best source of cash flows is hiding in plain sight: trimming appreciated equity positions.