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Episode 3160:

Wanderer explains how incorporating preferred shares into a retirement portfolio can mitigate sequence-of-return risk by boosting income during the vulnerable early years of retirement. By swapping part of their bond allocation for these higher-yielding, bond-like assets, early retirees can increase cash flow while strategically managing volatility and cost.

Read along with the original article(s) here: https://www.millennial-revolution.com/invest/yield-shield/the-yield-shield-preferred-shares/

Quotes to ponder:

"A Preferred Share is kind of a mix between a stock and a bond."

"When you retire, you basically take a portion of your bond allocation and swap it for Preferreds."

"Our longer term plan as our portfolio grows (and our dependence on our Yield Shield decreases) is to exit these positions and pivot back towards a normal bond ETF."

Episode references:

iShares S&P/TSX Canadian Preferred Share Index ETF: https://www.blackrock.com/ca/individual/en/products/239832/ishares-sptsx-canadian-preferred-share-index-etf

Risk Parity Radio: https://www.riskparityradio.com/

iShares U.S. Preferred Stock ETF (PFF): https://www.ishares.com/us/products/239826/ishares-preferred-and-income-securities-etf

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Behind the Sequencing Bench with Dale Yuzuki