This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

PIMCO Strategy Offers Retirement Security

NEW YORK ( TheStreet) -- When the markets crashed in 2008, retirees watched helplessly as 30% or more of their savings vanished. Many savers faced the real possibility of running out of money well before they died.

To help retirees avoid such dire situations, financial companies have introduced a variety of vehicles.

Among the most intriguing is a new strategy developed by fund giant PIMCO and insurer MetLife (MET - Get Report).

It combines a mutual fund and an insurance policy to ensure retirement security. To avoid running out of cash, a retiree would start by buying a fund such as the PIMCO Real Income 2029 (POIAX). The fund would provide steady monthly income for 20 years. After that, an insurance policy from MetLife could provide income for rest of the investor's life.

The PIMCO Real Income funds rank among the most reliable offerings around.

To protect principal, the funds invest in a portfolio of Treasury Inflation-Protected Securities (TIPS). Some of the bonds mature almost every year. As the bonds mature, the investor receives back principal. By the termination date, the investor receives all the initial principal, and the fund closes. Besides receiving the principal, the investor also gets a steady stream of interest payments. In addition, the value of the fund rises along with inflation.

Say you put $100,000 into PIMCO 2019 at the beginning of 2010. During the first year, you would have received one-tenth of your principal back plus interest and inflation adjustments for a total payment of about $11,500.

That is a modest return, and investors could do about as well by investing in bank certificates of deposit. But there are very important differences between the fund and CDs.

First, the PIMCO investment is a mutual fund. That means investors can take all their money out at any time and not pay a penalty. If you withdraw funds from a CD early, you must pay a stiff penalty.

More importantly, the PIMCO fund protects against inflation, an important threat to retirees. If inflation rises sharply in coming years, as some economists expect, it will erode the value of CDs will be eroded. Retirees who invest exclusively in CDs will face declining purchasing power.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MET $45.10 -1.38%
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs