Where can you get a good income?

When the typical investor thinks of income they usually think of bonds.  And much of the time they would be right.  Bonds produce income by way of interest payments.  But sometimes things are turned around.  These are one of those times.  The 10-year US government Treasury bond, a benchmark for many other rates is only paying 1.90{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93}.  In contrast, the S&P 500 has a dividend yield of 2.14{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93}.  No one buys the S&P 500 for income, but it’s instructive that an un-managed stock index produces 13{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} more income than a benchmark bond.

Of course the value of the S&P500 fluctuates from day-to-day, but so does the value of the 10-year US Treasury bond, just not as much.  

A lot of people are looking for a better income than their bank, credit union or the US Treasury can provide.  It’s one of the reasons why so many people who are looking for income are looking to stocks rather than bonds.

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