This Is How Yield-Chasing Can Wreck Your Retirement Portfolio

Roberts Berzins, CFA14.01K FollowersFollow5ShareSavePlay(11min)Comments(6)SummaryChasing ultra-high yields above 15% often leads to capital erosion and unsustainable income.This is what we can see right now (aggressive yield instruments falling) when the market sentiment has shifted in favor of risk-off assets.In the article, I provide more details on why investors might be better off by staying in the 10% and lower yield zone.I also share select exceptions, where prudent and above 10% yielding detours can be made, while complying with NAV and dividend sustainability criteria. Mininyx Doodle/iStock via Getty Images Investing for income is, arguably, one of the most popular capital allocation strategies among private or individual investors. It is straightforward, measurable, and provides benefits that tend to go well together with simple retirement (or financial independence) objectives.This article was written byRoberts Berzins, CFA14.01K FollowersFollowRoberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.Analyst’s Disclosure: I/we have a beneficial long position in the shares of KBDC, BTI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.