Author Topic: A different investment instrument  (Read 1493 times)

actonyourown

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A different investment instrument
« on: February 26, 2018, 07:03:29 PM »
I have a small Roth IRA that I have invested a small amount in over the last few years.  It's usually just some money from my tax return I put into it, so it hasn't amounted to much.  A while ago (pre-MMM) I bought into the iShares U.S. Preferred Stock ETF (ticker: PFF).  I was wondering what the community thinks of this investment vehicle and if it has any place in a long-term investment portfolio or if I should sell and just put my money elsewhere?

I like the fact that it pays dividends monthly since I don't have a lot of extra money to put into this account, however, I could see this being better for someone in or near retirement using a small piece of their portolio to increase their returns.  There is no Vanguard equivalent I could find to this fund.

Dividends: paid monthly
Yield: 6.07%
Expense ratio: 0.47%

Radagast

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Re: A different investment instrument
« Reply #1 on: February 26, 2018, 07:47:37 PM »
I'll let you judge. Do you prefer a fund that has returns like bonds, but crashes and burns much worse than stocks?

PaulMaxime

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Re: A different investment instrument
« Reply #2 on: March 01, 2018, 10:01:28 PM »
I'll let you judge. Do you prefer a fund that has returns like bonds, but crashes and burns much worse than stocks?


Just curious, does that chart include reinvested dividends? That makes a big difference.

Radagast

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Re: A different investment instrument
« Reply #3 on: March 01, 2018, 10:47:17 PM »
Morningstar defaults to including automatic reinvestment of dividends when the first fund you enter is a mutual fund (but not an etf or a stock), so it should. You could double check with portfolio visualizer.

triangle

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Re: A different investment instrument
« Reply #4 on: March 02, 2018, 01:18:56 AM »
I think PFF is better suited to someone older who already has a large stash of money saved and is just looking to generate income from it.  If you are young and investing for 20-30 years down the road then I would probably avoid it, or only keep a small position. My understanding is that banks and other financial institutions make up a large portion of that index and banks are predicted to do well in a rising rate environment, where the common stock is expected to outperform their preferred shares.

clumlee

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Re: A different investment instrument
« Reply #5 on: March 06, 2018, 12:18:56 PM »
I LOVE prefs! I have it in my brokerage account, except I use $JPS. My investment philosophy is different than most in that I believe you want to live off your dividends/interest instead of using a SWR. If you crave dividends like I do, then prefs are a good tool in your portfolio- just don't make it your only one, though.