Boost Your Retirement Funds With Convertible Securities And Preferred Stock

Preferred stock and convertible securities can be a great way to boost your retirement funds, especially as you probably won’t be able to live well if you only count on the interest your regular savings account accumulates. Add the gradual increase of living expenses to the equation, and without alternative income sources, you might end up being penniless sometime in retirement.

Investments such as these can help your fund cope with the times. These two investments are kinds of fixed-income securities that give investors regular payouts per year. Despite the unpredictability of the resale value of these investments, they pay fixed amounts from interest, so you can depend on consistent and periodic payouts.

Corporations offer these securities to help raise capital without resorting to sales of stock shares. These securities may be swapped for other stock at certain rates within a specific period. People who invest in these tools get the benefits of fixed interest bonds at the onset of the investment period while being able to eventually swap them for other stock that may have appreciated in price.

Utility providers and big international banks are some groups that usually sell preferred stock. This type of stock gives the investor an open-ended ownership similar to common stock. These stocks also pay out fixed or constant dividends, which corporations must pay before giving out dividends for common stock. Also, there are provisions that prioritize dividend payments for unpaid investors before dividends are given to holders of common stock. These two types of stocks are the same in that investors can take advantage of the appreciation of capital gains when stock is resold.

There are not hard-and-fast rules to investing with preferred stock and convertible securities, but if you’re thinking about buying into these investments, consult with your retirement planner to find out if it fits the rest of your retirement strategies.