Income Investing - Why is not this easy?

Most people (myself included) would insist that equity investing is the most difficult to master. After all, this is the place to erratic price fluctuations caused by an endless supply of varying social, economic and political standards of Wall Street misinformation, corporate malfeasance, self-serving gurus and financial product sales people, a myriad the popular and the market moving speculations from IPOs Option and Margin strategies; thousands of media talk shows and their experts in the financial markets. When you think you understand the stock market's brother, was in serious trouble.

But most devastating of all that has been done to transform equity investing in a commercial center of the product of some kind, is the brainwashing that has taken bottom-line/market-value calm, confident and smiling face of the investment world income and turned upside down. I get more phone calls and emails from investors on income confused that I have ever received by a simple dip in stock prices. Of course, few investors get to share that special place, shouting "Eureka!" As the first to realize that the corrections in the market "shock" are just as lovable as rallies. But not knowing that a slight increase in interest rates is as much an advantage to investors for fixed income and variable as it might be a temporary set back for a struggling economy ... well, this is just another example of irresponsible investor counter-education by our enemies too respected in financial institutions.

Income investors must learn to hold these truths to be self evident:

(1) More interest on your dollars invested is simply better for you than less income for your dollars invested, and the amount that you assigned to the Investment income should not change due to market factors.

(2) A change in market value of fixed income securities you already own has absolutely no bearing on any hypothesis that can be done about the creditworthiness of the issuers of such securities.

(3) A change in market value of your fixed income holdings will rarely have a negative impact on regular recurring income that is received and, after all, was purchased these securities for income in the first place.

(4) fixed income securities purchases in a rising interest rate environment has a positive effect of capitalization of the portfolio returns and at the same time, plants the seeds for future appreciation interest rates recede.

(5) Many fixed income securities and variable can be added as interest rates rise is to increase the average yield and decrease the average cost of securities.

Why is not this easy? It is not easy, because the pseudo-professionals and financial professionals in the same way do not let it be. If you have an investment portfolio designed properly, you need to view each segment separately and with an understanding of the purpose of each. Avoid consultants who consider the line of low market value of a portfolio as something other than a "corroborator expectation" (and just going to call me if you do not know what that is). The market value of your portfolio should not be a surprise and, especially, should never be seen as something to be particularly concerned ... at least not immediately. For example, you had to live in a cave somewhere and smoking something really special to think that your interest rate-sensitive portfolio (investment grade or capital) would be in market value from June 2007 until mid-January of 2008.

You really have to learn to love the simplicity of Income Investing. Sensitivity to interest rates is a matter of fact (and, among other things, expectations about interest rates are sensitive to inflation expectations). Price movements are both predictable and meaningless. We actually have a condition of investment that approaches certainty. This is an investment nirvana, people! Do not let these guys in pinstripes make you confused. Do not panic, do not change, and stop crying your beer. Look at the number of income on your bank account and go "hmmmm" when you see any significant change in either direction. (Actually, if you're doing it correctly, because the year-over-year income base must be increased.)

So the recent bad news (all) is really good news for investors and yes, just as higher interest rates are actually better than the lower ones to a certain extent, in order to lower stock prices should be greeted with more smiles than tears. Only the speculators who have taken their profits from the rally are not satisfied with the corrections ... and this is true both in income and equity securities Markets. Dealing with both events at the same time can make your bottom (line) a little 'uncomfortable, but only to recognize that smaller numbers are better for the purchase and that their larger cousins ​​are best appreciated with sell orders.

During all types of corrections, some investment professionals will play on your fears, encourages you to cut your losses and moving on to something else ... generally something that is cycling upwards. You did not fall for this advice LESS loss switching. Do not be pushed into these decisions no matter how clever the arguments seem. All fixed income investments (with the exception of open end mutual funds) are created equal, and the step is not working. An unhappy investor is Wall Street's best friend, so as not to allow movements of interest rates in both directions of investment affect your mood .......