5 Ways to Rebuild Your Nest Egg

As the market continues to be highly volatile, more and more would-be traders are starting to pay attention to such things as yield, safety, and steady cash flow.

These ingredients are the life-blood of an investment strategy practiced by one of Forbes’ most successful editor/partners, Richard Lehmann. You may recognize Richard as Forbes Magazine’s Fixed Income columnist and resident bond expert. He is also author of fixed income bible Income Investing Today and editor of monthly newsletter Forbes/Lehmann Income Securities Investor.

Richard’s portfolio of safe, conservative, high-yield fixed-income securities has beaten the stock market for years. Given the market pullback, some of his recommendations are now providing yields as high as 17%. And if you had invested $100,000 in Richard’s high yield model portfolio in 2000, it would have been worth $266,000 in mid 2008 compared to only $85,000 for a similar investment in the riskier S&P 500.

That means his readers have been able to more than double their capital while protecting themselves from the looming threat of more market volatility.

With Richard’s fixed-income securities picks and portfolios, you can build or re-build your retirement nest egg generate the income you need to live after you stop working and preserve the wealth you worked your entire life to accumulate.

In a recent interview, Richard shared with Forbes 5 portfolio strategies to help you ensure a financially secure retirement for as long as you live.

1. Forget tax-free munis.

Tax-free municipal bonds are the most widely advertised income investment � promising safe, tax-free returns.

But even at today’s attractive yields, forget them, advises Richard, who says they’re a terrible value. They are only for the super-rich, who are interested in preserving their capital. And now as the bond insurance industry implodes we are discovering that safe munis aren’t so safe after all. A much better alternative is corporate preferred shares.

These essentially allow individual investors to buy corporate bonds equivalents once available only to institutional investors � as preferred shares on the stock exchange.

While they aren’t tax-free, the income generated by many preferred shares is taxed at the reduced 15% rate for dividends.

So they actually generate a superior return compared with tax-free munis.

Depending on their rating, preferred shares are yielding between 8% and 14%.

Even after the 15% tax on dividends, that’s still a heck of a lot better than the measly 3.8% that AAA-rated munis yield.

In his monthly advisory Forbes/Lehmann Income Securities Investor, Richard Lehmann offers a wide choice of preferred shares ranging from AAA-rated to below investment grade. Some of these pay dividends as high as 250% of Treasury yield!

To find out which high-yielding preferred shares Richard is currently recommending, click here to subscribe now.

2. Canadian energy royalty trusts you can take to the bank.

Despite the recent decline in oil and natural gas prices, don’t give up on Canadian oil trusts. The best income play on crude oil prices is still to invest in select Canadian energy royalty trusts. Unlike U.S. energy royalty trusts, which stop paying once the trust runs out of oil.

Canadian energy trusts can acquire and add more reserves to replenish depleted supplies � and as a result, pay off perpetually.

Traditionally, these Canadian energy trusts have been exempt from corporate tax.

In November 2006, Canada announced its intent to tax these trusts � sending investors scurrying.

But what many don’t realize is that the earliest this tax would go into effect is 2011.

Also, while the tax rate in Canada is 35%, the effective tax rate for Canadian corporations is a mere 7%.

So even if the tax on Canadian energy trusts actually starts in 2011 � and it may not, since the party in power does not hold a majority in parliament � the effect on dividends is negligible.

Richard’s 3 favorites are among the largest energy royalty trusts in Canada � and in Canadian energy trusts, size does matter.

These trusts have 9 years of reserves as well as vast acreage of undeveloped properties.

So they are likely to pay increasing dividends for a long, long time. Right now, they pay yields of up to 30%.