I don’t know about you, but if my advisor had a strategy that would allow me to go on vacation without the stress of how it will affect my retirement income, I’d sign up in a heartbeat, as would most anyone. Vacations have never been more popular than they are today; couple that with a worry-free portfolio strategy and you will have your clients and prospects diving into the turquoise waters of the ocean, as well as singing your praises. I recently learned of just such a strategy from Andrew Dodds, founder of Dodds Wealth Management Group. He calls it the “Caribbean Strategy.”
Dodds makes sure his clients have confidence in this plan by telling them that their dividends and interest (plus any outside pensions or Social Security) will pay the bills. As he explains, “The Caribbean Strategy invests in quality companies with high dividends and earnings, which is far different than the ‘Total Return Strategy’ that can give a false certainty that someone can stay retired in a flat or down market. A retiree simply won’t earn enough to stay retired.”
For example, if the stock market remained flat for 10 years (which is very possible), a client on the Caribbean Strategy would have maintained her principal, spending only dividends and income. Using the Total Return model, the principal would be substantially spent down and the retiree could potentially have to return to work.