This investment strategy typically involves a portfolio of exchange-traded funds (ETFs) managed by BlackRock and offered through the Betterment platform. The portfolio aims to generate regular income for investors while mitigating risk through diversification across various asset classes, such as bonds, dividend-paying stocks, and real estate investment trusts (REITs). A hypothetical example could include allocations to short-term government bonds for stability, corporate bonds for higher yield potential, and preferred stock ETFs for consistent dividend payments.
An income-focused strategy can be crucial for investors seeking a steady cash flow, particularly those in or nearing retirement. Historically, income-generating investments have played a significant role in portfolio construction, providing a balance against market volatility and offering a predictable income stream. The potential benefits of such a strategy include mitigating the impact of inflation on purchasing power and providing consistent returns for everyday expenses or reinvestment. However, it’s important to remember that all investments carry inherent risks, and the actual returns can vary.