Wealth Management
Real estate investment trusts (REITs) offer an appealing option for investors seeking steady passive income, though dividends are never guaranteed. They are required to distribute at least 90% of rental profits as dividends, often yielding attractive returns.
Additionally, REITs diversify risk by owning numerous properties across various sectors, including industrial, commercial, and residential, which investors might otherwise find inaccessible.
Segro, a REIT specializing in warehouses across Europe, benefits from high demand and low supply, driving strong rental growth and a projected 4.2% yield for 2025. Grainger, the UK’s largest listed residential landlord, leverages the rental housing shortage to deliver robust earnings growth, offering a reliable 3.6% dividend yield with expectations of further increases in the coming years.
Finsum: With tenants locked into long-term contracts, rental income from REITs tends to be stable and predictable.
The U.S. economy remains robust, with Bank of America economists projecting annualized growth of 2.4% in 2025, surpassing consensus estimates. Despite uncertainties tied to President-elect Donald Trump’s proposed policies, including tariffs, tax cuts, and immigration restrictions, the U.S. is seen as better equipped than other nations to handle potential economic shocks.
Trump's tariff agenda, while inflationary and potentially disruptive, would likely have greater global repercussions than domestic ones, reflecting the U.S. economy's resilience. Key indicators, such as high consumer confidence, strong retail sales, and moderated inflation, highlight the country's economic strength.
Bank of America maintains optimism, predicting that any tariffs implemented will be less severe than campaign promises and that a full-blown trade war can be avoided.
Finsum: We are not seeing the same resilliance around the globe and this could draw additional investments.
Annuities in IRAs can provide surprising benefits for required minimum distributions (RMDs), particularly with fixed index annuities (FIAs) or variable annuities (VAs).
While annuities often draw criticism for fees and opaque structures, they can sometimes be the best tool for specific retirement planning needs. FIAs, despite their bond-like returns with added stock beta, can offer secure lifetime income to meet critical retirement cash flow needs.
When paired with goals-based planning, annuities excel in providing inflation-hedged, lifetime income that’s challenging to replicate with other investments. For flexible retirement expenses and longevity protection, the mortality pooling aspect of annuities often delivers payouts surpassing self-built solutions.
Finsum: While not without flaws, annuities can play a crucial role in comprehensive retirement planning strategies.
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Switching to a new broker-dealer is a pivotal decision for financial advisors, impacting both their practice and long-term growth. Many advisors consider changing broker-dealers when their current firm no longer aligns with their goals or business model.
Key factors to evaluate include payout structures, which balance competitive earnings with robust support services, and the technology suite offered for streamlining operations and client engagement.
Advisors should also assess portfolio management flexibility, ensuring alignment with their investment strategies, and compliance support to navigate regulatory requirements. Transition resources, such as a dedicated team to assist with onboarding, can help minimize disruptions during the switch.
Finsum: Don’t forget cultural alignment and long-term growth opportunities in the transition.
Actively managed ETFs combine the flexibility of active management with the tax efficiency of ETFs, making them a compelling option for taxable portfolios. Unlike mutual funds, ETFs often use in-kind redemptions to minimize taxable capital gains, helping investors defer taxes and achieve greater compounded returns over time.
While tax efficiency is a significant advantage, investors should also evaluate the manager’s skill, market opportunities, and the cost-effectiveness of these strategies when selecting active ETFs.
Incorporating active ETFs into a portfolio can be a strategic way to balance the potential for alpha with reduced tax drag, particularly in equity strategies where minimizing distributions is key.
Finsum: A thoughtful approach to selecting active ETFs can enhance after-tax returns and align portfolios with long-term investment goals.
Value investing has long been a cornerstone strategy for successful investors, offering opportunities to buy undervalued stocks poised for long-term growth. While value stocks lagged behind growth stocks during the era of low interest rates, they staged a notable comeback in 2022 before once again underperforming in 2023.
For those seeking to capitalize on value opportunities, ETFs like Vanguard Value ETF (VTV) or iShares Russell 1000 Value ETF (IWD) offer broad exposure to undervalued companies at a low cost. Smaller-cap-focused options, such as the Vanguard Small-Cap Value ETF (VBR), provide diversification with higher growth potential.
ETFs focused on high dividends, like the Fidelity High Dividend ETF (FDVV), also combine value strategies with consistent income streams.
Finsum: Investing in value ETFs, you can diversify your portfolio and tap into opportunities across industries without extensive research required.