35% of Americans Dissatisfied with Savings: Income-Focused Investing Strategies for a Better Future

In today's low-interest-rate environment, many Americans are struggling to meet their financial goals. According to a recent survey, 35% of Americans are dissatisfied with their savings, citing low yields from traditional safe-haven investments and the challenges of finding income-oriented investments that balance risk and return. However, income-focused investing strategies can help address these concerns and provide a more satisfying investment experience.



Income-oriented model portfolios have gained popularity in recent years, with over 100 reported to Morningstar as of March 2022. These portfolios aim to maximize income by combining multiple higher-yielding asset classes, such as dividend-paying stocks and high-yield bonds. While these portfolios have stayed true to their name by providing high levels of income relative to the interest-rate environment, they often come with higher income volatility.

To evaluate income consistency, Morningstar calculated a "raw income Sharpe ratio," which indicates better income consistency relative to risk. The Vanguard Core models, despite having lower overall income, had more consistent income distributions than the average income model over the period evaluated. This consistency gives investors confidence in setting and maintaining regular spending habits.

Income-focused investing strategies can help address investor dissatisfaction with low yields by offering higher income potential through a diversified portfolio of assets. By combining multiple higher-yielding asset classes and evaluating income consistency, investors can create a more satisfying income-focused portfolio.

However, it is essential to consider the risks associated with each investment and maintain a diversified portfolio to manage risk effectively. Income-focused investors should also be aware of the potential for higher income volatility and the need to balance risk and return in their investment strategies.

In conclusion, income-focused investing strategies can help address the dissatisfaction of 35% of Americans with their savings by offering higher income potential through a diversified portfolio of assets. By combining multiple higher-yielding asset classes and evaluating income consistency, investors can create a more satisfying income-focused portfolio. However, it is crucial to consider the risks associated with each investment and maintain a diversified portfolio to manage risk effectively. Income-focused investors should also be aware of the potential for higher income volatility and the need to balance risk and return in their investment strategies.