High Income Investment Strategies | Steven Bavaria

The Buffett Indicator currently stands at almost 200%, one of the most extreme readings of overvalution in its history.

With stocks so richly valued, prudent investors worry that stretching for further gains here may not be worth the risk. 

Which is why more and more of them are starting to prioritize investing for income over appreciation.

A few months back, I interviewed Steven Bavaria, creator of the Income Factory framework about the merits of constructing a lower-risk portfolio of income-generating assets that include: high dividend stocks, senior bonds, high yield bonds, covered call funds, Master Limited Partnerships, closed-end funds, and more.

Today, Steven returns to drill down on the specifics of credit investing, an area that many investors don't have much personal experience in, but offers attractive returns and relative safety in today's market environment. 

#incomeinvesting #creditinvesting #bondsinvesting
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[CliffPrice-febl]

I think Thoughtful Money is arguably the best financial podcast for retail investors currently on the net . The breadth of guest knowledge about the market, financial instruments and investing is truly comprehensive. Well done Adam, this channel just keeps getting better 👍

[vaughnmcguire]

Steven rocks. I bought his book the last time he was on here. Super helpful + I appreciate his thinking and process

[guayaquilhook]

What I’ve learned from Steve Bavaria is that he doesn’t recommend buying individual junk bonds but rather etfs that hold many, many such bonds, thus mitigating the credit risk. One I like for its diversification is SJNK.

[greghall]

My math. 4% default rate, immediately lose 2% of capital and 4% of your income. Future income will be determined by whatever rate you get on 98% of capital. I’d also bet that the borrowers paying the highest interest rate would be first to go bankrupt…. never the less, I have been investing with Steve for about 3 months as an alternative to fixed income via bond portfolio. I got burned badly in 2022, now self-managing.

[mtanner]

Most influential guest I have listened to on your program. Would love to hear deeper dives into the types of private credit and what is doing well and struggling.

[ziluthangirala]

Thank you Adam and Steve. As a result of your last interview with Steve I joined his Seeking Alpha grouping and am learning so much. Steve is wonderful with sharing his portfolios and responding to questions. I feel very lucky.

[keithbaxter]

I was hoping for some new content compared to your first interview with Stephen - no such luck. This was essentially a recap of the first interview. Next time please drill down on, say, half dozen specific tickers and why we should consider adding them to our portfolio.

[michaelaiello]

I realize Steven Bavaria will be presenting at your conference but please have him on soon afterwards to discuss diversification within the CREDIT markets. He has mentioned that he is more invested in credit than equity markets. Please go in depth with opportunities in credit rather than retelling the premise of the income factory. What has his years of experience taught him about risks within credit. THANK YOU Adam for wealth of information you provide on Thoughtful Money!

[BIgBass]

Adam you have some great questions for your top tier guest, Bravo. 💯

[mattanderson]

Brilliant discussion, thanks or having Steven back!

[SuperBomberman]

This helps me fast from news and social media. Income factory doesn't depend so much on headlines. So my mental health is much better this way.

[holycameltoe]

Addem you're gold just for interviewing Steven. I always leaned towards this type of investing but I had many doubts because of all the noise. But then your previous interview with Steven made me read his book and it completely cemented my resolve to build an income factory. and yes Steven thank you very much, I cannot thank you enough for fighting the noise, writing about it and just keep shoving the evidence in people's noses. I myself probably wouldn't have been able to go trough that. So again thank you very much, you probably saved my retirement.

[oscarbizzozero]

Excellent interview. Thanks Adam & Steven

[jamesgoodman]

Part of an Income Factory is investing in Covered Call funds too.

[rett]

I love the portfolio vs factory analogy.

[robgerety]

Very interesting. I would love to see data showing how the typical fund holding these kinds of assets performs in good and bad economic circumstances and demonstrating the 8-10% income performance. Some might say this is too good to be true? Why would the world of investment managers be so focused on equities.

[UltimateStaredown]

Good point... you must do what the masses are NOT doing in order to (possibly) outperform them: buy individual corporate bonds and hold to maturity

[ParkSloper]

Always good to hear from Steve. Practical action versus economic theory.

[brettcherry]

This is an amazing channel and I tune in several times per week. As an income investor, I'm always the most excited when Steven Bavaria makes an appearance. This being the 3rd time Steven's been on, I feel like this time Adam really "caught on" and verbalized the soul, spirit, and long-term strategy of our way of investing. Many thanks to both Adam and Steven!

[adyear]

Very helpful in my situation; thank you! In Canada one might end up having a locked in pension account [LIRA]: can't pull more than half out at once until the age of 72, where I reside currently. Once one does take 50% out that one time - if age 72 is not what you wait for - the remaining 50% is forced into an annuity. The annuity is locked in with minimum mandatory withdrawals each year. That here is called a LIF: long term by definition if you're not near age 72, with required withdrawals out of about 2% to 6% per year. An investment income stream like discussed here makes vg sense ASSUMING one understands the volatility enough. 👍