The Real “Wealth Effect” – Three Ways to Make It… And Keep It

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As good as the first half of the year has been (the S&P 500 is up nearly 20% even as we speak), I believe the second half of the year could be even better.

That’s a good problem to have.

But as Platinum member Richard Y. wrote in to ask, “What are the best ways to ride along? And what’s the best way to keep what you make?”

Great questions, Richard.

Building wealth is crucial — I mean, you can’t manage what you don’t have.

And when you know you’ve got a great window of opportunity to make money, you don’t want to be left on the sidelines (like so many investors are doing — as evidenced by the record $5.7 trillion that was sitting in money-market funds earlier this year).

Once your net worth really spools up — even as you continue to invest — it’s crucial to protect what you’ve built. You need to outmaneuver the ruinous effects of inflation, plan around taxes and inheritance fees, and avoid the mistakes that can set you back.

That’s why I’m sharing three “wealth tips” to help set you up for the second half of the year — and beyond. Here they are…

You’ll want to come back and thank us…

💰 Wealth Tip No. 1: When You See an Opportunity, Take It 💰

My bullishness for the last part of this year is fact-based. Indeed, where most of the pundits are handwringing about “uncertainty,” I see growing clarity.

First, the inflation inferno is subsiding. That means the end of the U.S. Federal Reserve’s interest-rate-increase campaign.

And those trillions of dollars sitting on the sideline? They’ll start flowing into stocks — especially because of the big earnings rebound I’m predicting for U.S. companies.

You can be ahead of the crowd on this.

Two exchange-traded funds that are perfect for the environment are:

• The Pacer US Cash Cows 100 ETF (COWZ), which uses the quality factor of free-cash-flow yield.
• And the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), the only ETF that focuses on that index’s “dividend aristocrats” — companies that have boosted dividends for 25 consecutive years or more.

I shared a stock here with you all last week.

Another stock that intrigues me right now is Garmin Ltd. (GRMN), the Swiss company known for its watches and other “smart” devices. A brand-new report by Zacks Investment Research says Garmin is seeing strong revenue growth in its fitness business — especially its richly featured watches. And Zacks says the company’s push in its aviation unit — which makes navigation and communication devices for pilots — could see top line growth of more than 7% during the current quarter.

Here’s why I like Garmin.

You’re looking at a company whose return on assets (ROA) has averaged 18% over the last five years — and that has an S&P quality rank of “A.” The dividend yield on its stock is an alluring 2.8%, so it checks the all-important “income” box for me (more on that in a moment).

All this… and the stock trades at a mere three times sales.

💰Wealth Tip No. 2: Income Is Essential 💰

It’s not enough to just buy stocks that go up.

You also need income — now more than ever.

For the bond component of a portfolio, I prefer fixed-income ETFs because they are low-cost and already diversified.

Sure, bond funds don’t pay much interest these days. But bonds can provide valuable diversification, often zigging when the stock market zags.

Real estate investment trusts (REITs) and utility stocks are two more income generators.

But don’t limit yourself to “passive” income.

Here at TradeSmith, we’ve developed “active” income strategies — investing approaches that generate steady streams of cash, but without taking undue risk.

My service, Constant Cash Flow, targets exactly this strategy.

Once you make it, you need to keep it.

💰 Wealth Tip No. 3: Keep What You Make 💰

The whole “DIY” (do-it-yourself) movement is big here in America.

And here at TradeSmith, we fully support that spirit of independence.

Under the stewardship of CEO Keith Kaplan — and aided by his global team of software developers — we’ve developed a suite of investing tools that outclasses anything I’ve seen… anywhere.

We’ve applied a liberal helping of machine learning and artificial intelligence — technology equalizers that put a true investing “edge” in the palm of your hand.

If you want a “guide” to help you use these tools to navigate today’s unruly markets, we’ve got that, too: Advisory services like the white-hot Predictive Alpha and my own Constant Cash Flow service have the trading tools, and experts to help you along.

But there are times to ask for help — indeed, where help is mandatory.

I’m talking about true professionals — experts who include certified public accounts (CPAs), estate-planning attorneys, and other wealth advisors.

There will be a “cost” here in a monetary sense. But viewed through a different lens, we’re really talking about an “investment” with a payoff.

If you “ante up” to work with true financial professionals, the money and assets you’ve accumulated will more than “stay alive” so that you can pass them along to your loved ones when the time comes.

You won’t have to worry about loopholes that tie up your estate in legal battles or unknowingly passing along extra taxes for your children or grandchildren to pay for their inheritance.

You’ll have the peace of mind that your loved ones will receive the maximum possible slice of what you worked so hard to make.

Mike Burnick’s Bottom Line: Accumulating wealth is only one step in your investing journey. You need to protect that wealth from eroding away. The three tips I’ve shared here today will get you on your way. Keep the great questions coming.