Say I have a portfolio where I invested $100,00 into t-bills that would mature after 30 days. Every 30 days, my bills mature and I reinvest the principal of $100,000 in a new batch of t-bills. If I wanted to maintain a constant standard of living by living off of the investment income, would my portfolio be risk less?
2007-03-06 14:38:54 · 4 answers · asked by Cherry_Fire 3 in Business & Finance ➔ Investing
Your money wouldn't be at any risk because you're making a "loan" to Uncle Sam by investing in the T-bills,and it's guaranteed by the Dept. of the Treasury.
2007-03-06 14:44:10 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Usually the coupons of the bonds are paid quarterly, so you cannot get any coupon payment in one months time to live out of it. You should hold it minimu 3 months for the coupons to come into your hand. When you sell you don't get appreciation equivalent to the coupon.
You can try zero coupon bonds. It gives appreciation on a discounted bond. When it appreciates in a month you can sell it and get another one and so on and so forth. So for a 10000 bond you might be paying only 7000 initially which appreciates till maturity say 5 years from purchase and what you get in a month will be very small amount. You have to raise your stake. Then these zero coupon bonds are not risk free like T bond issues.
2007-03-07 12:57:33 · answer #2 · answered by Mathew C 5 · 0⤊ 0⤋
I live off my investment income gut you will need a lot more money invested in income investment's to live off of. So lets say you get 5% you need 1 million dollars to earn $50,000 a yr. And then you have to pay taxes on that income..So you see how much you need to live on and need to invest enough money to earn that amount of div.
2007-03-07 01:41:32 · answer #3 · answered by ? 6 · 0⤊ 0⤋
Hi Na_me,
As long as the US Government is alive & well you are taking no risk.
Norm
2007-03-06 22:46:37 · answer #4 · answered by Anonymous · 0⤊ 0⤋