Yesterday we looked at what may now be the single greatest risk to your retirement dreams - a seemingly benign 1% move in the 10-year Treasury yield. (See Part I.)
So now I'm going to show you what to do about it...
Remember, if we're going to keep increasing our wealth at a significant pace, we need to make a big adjustment.
Only a handful of companies can grow your money by 10% or more a year now. I'm going to show you three of them.
But please, before you buy these shares...
Sell your "dead money."
There are three brand-new forms of it.
The first one is obvious, but I'm going to cover it anyway. Any cash you have tied up in this asset will be in "zombie zone" far longer than anyone thinks. And millions of American investors own the other two investments.
Perhaps you own some of these companies, too.
Either way, beware...
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Meet the New "Masters of the Universe" and Profit from Them
When I first got into the financial industry some two decades ago, the hottest career was in investment banking, the home of the financial "Masters of the Universe."
Hedge funds in particular were all the rage.
A good gig at a company like Goldman Sachs (NYSE: GS) was the place to be, so I joined Goldman in their hedge fund group to learn the business from some of the best and brightest minds.
Working for a hedge fund quickly became Wall Street's glamor job, the new address for the Masters of the Universe.
Then, after the financial crisis hit and many hedge funds took their licks, the smartest minds and smartest money moved elsewhere -- and unlike investment banking, this isn't off limits to you, the retail investor.
How to Find the Best Sources of Retirement Income
Yields on most of today's fixed-income investments are at or near historic lows.
Money market funds are generating little if any return. Certificates of deposit aren't doing too much better.
Even 10-year Treasury bonds are only yielding around 1.75%. A slow recovery, ongoing debt problems in Europe and uncertainty about future economic growth have sent many investors rushing to the safety of Treasury bonds, driving down yields.
And the problem isn't going to get better anytime soon. In mid-September, the U.S. Federal Reserve Bank announced its latest round of "quantitative easing" or QE3. Designed to stimulate the economy, the move is expected to keep interest rates low through at least the middle of 2015.
This is a dangerous environment for those searching for sources of retirement income.
Low Rates Kill Retirement IncomeLow interest rates are a problem for virtually all investors, but are particularly troublesome for retirees, who need their assets to generate income to supplement Social Security and private pensions to help pay for day-to-day living expenses.
This is just another obstacle facing Americans, who have already not saved enough, in assuring themselves a secure retirement.
According to the Employee Benefit Research Institute 2012 Retirement Confidence Survey, only 14% of workers say they are "very confident" that they have saved enough money to live comfortably in their retirement years.
While part of the problem is due to simply not setting aside enough money, the difficulties are compounded by the changing retirement landscape. A generation ago, our parents and grandparents depended on Social Security, a private pension and a small nest egg to pay for retirement.
Not so today.
According to an ING retirement survey, Retirement Across the Ages, only about 47% of those over age 65 are receiving payments from a traditional pension plan. For younger workers, that number drops significantly. And the promise of receiving a significant amount of money from Social Security weakens with each passing year.
That means that people who are retired today, or those who plan to retire soon, need the money they have accumulated in 401(k) plans, IRAs and private savings to work even harder for them. Otherwise, they risk not having enough assets to fund a retirement that could last for 20 to 30 years or more.