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Declare Your Independence from Lousy Yields & Lousy Investments!

07/03/2020 6:00 am EST

Focus: MARKETS

Mike Larson

Editor, Weiss' Safe Money Report

I love the Fourth of July holiday almost as much as I love Thanksgiving.

It’s a time to get together and celebrate America, shoot off fireworks, eat as much grilled food as possible, and most importantly, enjoy some quality time with family. The latter is especially important in 2020, considering how things have gone off the rails in the first six months of the year!

But this is also a good, holiday-shortened week to declare your independence ... from lousy yields and lousy investments!

Think about it. We’re in an environment where bank Certificates of Deposit (CDs) are barely paying 1% in annual interest – and that’s only if you agree to lock your money up for a half decade! The yield on the five-year U.S. Treasury just hit a fresh all-time low of 27 basis points (0.27%) yesterday, while yields on other maturities are also falling.

The Federal Reserve’s de facto takeover of the corporate and municipal bond markets is also driving yields down sharply there. This is happening despite underlying fundamentals and credit risks that mean you, the investor, “should” be earning more yield to compensate you for the risk in buying those kinds of securities.

All of this means you have to take steps to fight back – against lousy investment options that suffer in a “Ultra-Low/Zero Percent Forever” interest rate environment.

For starters, you want to avoid almost all banks and financial stocks. Their profit margins come under intense pressure in this kind of rate environment, and they’re underperforming radically as a result.

Instead, you want to add even more exposure to precious metals and mining shares. As I’ve been saying since late 2018, they’re among the biggest beneficiaries in a zero-rates-forever, money-printing-forever environment.

Sure enough, gold blasted through long-term resistance at $1,800 an ounce earlier this week. Silver and mining shares are also surging, with the latter handily beating the S&P 500 – and utterly trouncing financial stocks.

Look at the chart below. You can see that simply owning the SPDR Gold Shares (GLD) would’ve returned more than 41% in the past three years. Owning the VanEck Vectors Gold Miners ETF (GDX) has performed even better, with a return of more than 65%. During that same time, you would’ve lost more than 6% with the Financial Select Sector SPDR Fund (XLF).

Financial Select Sector SPDR Fund

What else should you do? Focus on high-quality, higher-yield, higher-rated income stocks. I’m talking about those that are in the sweet spot when it comes to yield – more than the S&P 500 but not too much more – and that pass rigorous dividend sustainability tests. That’s what I do in my Safe Money Report.

Finally, there’s one last way to fight back: Consider alternative, unique, high-success-rate strategies that are tailor-made for generating windfall income in this kind of environment. I’m talking about an approach that goes beyond just buying dividend-paying stocks to generate significant payouts week after week, month after month.

Above all, I hope you have a safe, enjoyable holiday – and that you enjoy the feeling you get from declaring independence from lousy yields!

I’m about to roll out my June issue of the Safe Money Report with new ideas and new recommendations designed to ensure you do. Subscribe to Weiss ratings' Safe Money Report here… You can check the Ratings on your investments using the search tool at the top of our website here.

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