If you need investment income for retirement spending, here are some of your options:
- Treasuries. They’re safe and liquid. The interest is exempt from state and local income tax so they work well if you live in a high-tax state.
- Corporate bonds. These may pay off if you’re in a low-tax state. You probably should invest through a bond fund because analyzing corporate bonds can be tricky. Thanks to mutual fund diversification, you can stretch for greater income in high-yield bonds. Fidelity High-Income Trust (800-544-8888) and Vanguard High-Yield Corporate Fund (800-662-7447) both may have the ticket and both rate five stars from Morningstar Inc., for long-term performance.
- Stocks and stock funds. You can withdraw cash as needed by selling shares. Keep track of your portfolio so you can sell shares at a taxable loss or at a gain taxed at 20% (10%, if your retirement income is modest). The money you don’t withdraw can stay in stocks, where you may get the benefit of untaxed appreciation.