In the low interest rate environment we live in we have run webinars (watch it here), and spoken directly to clients about different ways to earn income in a zero rate world. The options are high yield bonds, private mortgages, rental properties, private debt, structured notes and dividend paying stocks. However, these investments are not created equal in terms of accessibility, liquidity, and transparency, making some easier to manage than others for investors.

In our strategies we have focused mainly on utilizing high yield bonds, dividend paying stocks and other forms of investment grade bonds. In addition, we have also been allocating clients to our Income Note Strategy where we look to target a 6% to 8% monthly income that is paid in sideways and down markets. The dilemma today is that many investors are reluctant to hold cash for their near-term needs in that it pays a return of near zero (and actually below zero after taxes and inflation). Often forgotten though, is that cash does pay another return in the form of a “peace of mind dividend” or a “sleep at night return”. This cannot be discounted and should be kept in mind so we do not chase yield for short-term and mid-term monies.

Recent stories in the Canadian financial media have focused on a private debt fund in Canada where investors funds have been locked up due to alleged improprieties that have triggered an investigation by the Ontario Securities Commission - there may be some pain here once it is all said and done. There are certainly well run debt funds in Canada and we have researched a number of them as investors have flocked to them as a replacement for a 0.5% yield as cash seems very unattractive. We share this story with you only to keep you aware, we do investigate many investment solutions and we usually pass on most of them and we try to keep things transparent and in the best interest of our clients. We think the bottom line is to keep it relatively simple: don't chase yield, invest capital for the time frame when you need to start accessing it, make sure you have enough true liquidity, keep your debt at serviceable levels, and invest long-term capital for exactly that, the long-term.

We sincerely thank you for your trust.

Randy, Ian, and the team at R&R Investment Partners