With even the youngest members of the Baby Boom generation nearing or already having reached retirement, many are looking for new passive income streams that will not only supplement their retirement portfolio, but that will help them keep up with inflation and the decreasing devaluation of the dollar.
One of the easiest and most effective ways to supplement your retirement income is to apply for a reverse mortgage loan. If you’re 62 or older and have owned your home for decades, you can tap into all that equity you’ve been building up which can run in the hundreds of thousands of dollars depending on your home’s location and condition. If approved, you can take your proceeds in one lump sum payment or equal monthly disbursements.
But the best part about a reverse mortgage is you never need to pay it back until you move, or you die. To find out how much money you qualify for you can calculate a reverse mortgage here.
But what about other investment opportunities that can offer you a monthly income without actually having to go back to work? According to a new financial report by Seeking Alpha, the U.S. has traditionally been the greatest place to create wealth in all of history. The country’s growth and economic output have been outstanding in terms of its youth plus its historical and global context.
Investing in the USA
One of the key drivers of this is what’s called the American Dream. That is, if an individual works hard enough, he or she can better their living situation and overall circumstances. This includes owning a chunk of property.
Maybe the government has attempted to take on a more active role in influencing and controlling the overall economy, one of the hallmarks of the United States of America is its steadfast belief in the open market and capitalism—a place where anyone, no matter their circumstances, can participate in the open market based on equality.
What’s one of the most powerful motivators of succeeding in the open market? Greed. While this might sound like a bad word, it can be a powerful motivator when it comes to one’s desire to better their situation in life. It’s their driving force. If an individual does well and produces more, so does the overall economy.
When it comes to retirement, you don’t bet against the U.S. economy. You invest in it. Despite recent setbacks the stock market has become increasingly available to anyone who owns a smartphone (just about everyone) and has a little cash put aside. This is the primary place where retirees tend to invest most of their assets.
The best stocks and investments are those with high annual yields and in the case of some real estate investments, a monthly passive income. Here are just a couple high quality investment opportunities for retirees:
BRSP: Yield 11.1%
Says Seeking Alpha, BrightSprire Capital, Inc. (BRSP) specializes in REITs or commercial real estate investment trusts. The trusts invest mostly in floating rate senior mortgages. With the Federal Reserve hiking rates on a monthly basis, some investors assume that the interest rate increases would provide great earnings for BRSP. That assumption turns out to be true.
Since September 30th of 2022, the one-month LIBOR is up 4.4 percent which means rates are up 1.2 percent. That means interest rates are contributing $0.08 to $0.09 positive growth to BSRP’s annual earnings.
However, despite the earnings spike, the actual share price of BSRP has declined upwards of 50 percent, making it a bargain for seniors who wish to pick more of the asset at a discounted rate. This is said to be its lowest price since 2020 when it wasn’t producing any dividends whatsoever.
ECC – Yield 15.8%
ECC or Eagle Point Credit Company is a closed-end fund or CEF. It invests in specialized sector of Collateralized Loan Obligations or CLOs. ECC is said to place most of its capital in equity.
CLOs invest heavily into Senior Secured Loans which provides the business’s capital structure. This is said to place the CLO at the top of the capital structure for borrowers looking to invest in real estate.
CLOs are said to have their own unique capital structure. It borrows money and uses the loan as collateral. For the uninformed, these borrowings are referred to in the industry as “debt tranches,” which means the CLO agrees to pay the proceeds to the debt tranches prior to anything else.
When the reinvestment period comes along, the CLO will be paid back in par dollars. If a company chooses to deleverage their position by paying the entire loan off, the CLO will receive par dollars and in turn, will reinvest in the loans at the going market price.
In simpler terms, if the loans are trading below par, it’s a good thing for CLOS that are presently in their reinvestment period. It means more money for the senior investor who’s still looking to cash in on the American Dream.
Get Your Retirement Set
With some of the options we’ve gone over above, hopefully you have some good ideas for your retirement and gaining a little more income to make sure you have a great future.