Dodds
Wealth Management Group
Caribbean Strategy
Have you ever taken a vacation and been completely relaxed? No worries about the future? Our "Caribbean Strategy" is designed to provide retirees and pre-retirees with this kind of confidence about their money*. It comes from answering such questions as "How can I stay retired for 30-40 years and not run out of money?" "How do I invest for the long term, covering inflation and future surprises?"
Using our "Caribbean Strategy", portfolios are invested in high yield instruments and the retiree spends only the dividends and interest. This is far different than the "Total Return Strategy" which relies on harvesting and spending capital gains and sometimes principal to stay retired. Spending principal for several years can be devastating to a portfolio especially in the early years of retirement, and may result in a retiree not being able to stay retired.
For example, if a client needs $100,000 per year to stay retired and they have $20,000 of Social Security and $30,000 in pensions, then we need to send them $50,000 per year from the investment portfolio. Ideally we would design the portfolio to have net dividends and interest equal to or greater than $50,000. If this represented a net 4% return, then the client would need $1,250,000 of investment capital to stay retired using our "Caribbean Strategy".
Simply put, if we can earn all the clients’ needed distributions for retirement from fairly secure dividend and interest payments, then the client can "cruise the Caribbean," feeling confident about the future.
Remember that no strategy can guarantee success or ensure against loss.