As many Baby Boomers begin the journey into retirement, finding sources of reliable income becomes ever more important. Nevertheless, with interest rates at unbearably low levels, many traditional sources of income such as certificates of deposits and money market funds like the PIMCO Enhanced Short Maturity ETF (NASDAQ:MINT) are paying next to nothing. What's worse is that financial obligations are usually owed monthly. We pay our mortgage, cable bill and utilities each month. Most bonds pay semi-annual interest and stocks pay quarterly. Finding good sources of monthly income is paramount.
Adding monthly dividends has other benefits besides paying your car loan on time. For those reinvesting the income, compounding occurs quicker. Money you can reinvest immediately compounds at a higher rate. This allows portfolios to take advantage of better dollar-cost scenarios. In addition, waiting six months for your money reduces the true yield on your investment. Monthly payments also help smooth out erratic income associated with semi-annual or quarterly payments. Furthermore, a monthly paycheck can help with budgeting and prevent overspending.
Source: Investopedia
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