​Who Doesn’t Love Mailbox Money?

Rodney Johnson  |

Bill McBain via Flickr

Mailbox money is the kind of cash that you earn while doing a bunch of nothing. It simply shows up in your mailbox every month. I like the sound of it.

This is different from simple monthly income programs, which can include rental properties. Anyone who has been a landlord will tell you, there’s nothing easy about that life.

No, I want the kind of money that rolls in without additional effort. Musicians, songwriters, authors, and others that create content are familiar with the concept, since they can get paid for many years on a single piece of work. When you buy an album (or, OK, a digital file with 11 songs), a small piece of the proceeds goes to the artist, songwriters, etc., in the form of royalties, no matter how old the songs are. On a recurring basis, all of their royalties are gathered up and mailed to them in the form of a check.


We buy songs, they get money in their mailboxes.

What a life!

I’d like to sign up for this deal, but I have a problem. I can’t sing. I don’t think I’d be a good songwriter. And the content I produce mostly centers on current events.

I’m honored that people read what I write, but let’s face it, no one’s looking up my articles from seven years ago. (But, if you are, shoot me an email and we can chat, royalty-free.) And while I appreciate those who own and rent houses, I’m not up for the landlord game right now.

It might seem like I’m out of luck, but I do have another avenue… and so do you. No matter how well or badly you sing, you can always buy an investment that pays monthly income. And there’s a secret with such investments… they’re not just for retirees!

Every month I get a pop in my investment account from funds that can trade at a premium or discount to their intrinsic value, and often pay a higher yield than a regular bond fund. The difference is these types of funds are leveraged, which pushes up their returns in sideways markets, or even when rates are falling, but acts as a drag when rates are climbing.

About a year ago, many of these investments were very undervalued, with tax-free funds paying more than 9% on a taxable equivalent basis. That was awesome! And they once again appear to be a smart buy right now. Our resident retirement guru, Charles Sizemore, is just about ready to reveal all the details. Stay tuned to this space for that.

And as I said, you don’t have to be a retiree for them to make sense.

I enjoy the steady income these funds produce, and typically they act as a stabilizer in my account, compared to the volatility of other investments. But at the moment, I don’t exactly need the income.

Unlike bonds though, these investments allow me to elect through my brokerage account that all income be reinvested. So instead of capturing cash every month, I can simply build a larger position in the fund. Since this feature can be turned off and on whenever I want, I’ll be able to flip the switch at some point in the future and turn these investments into cash cows.

And to collect the money, I won’t even have to go to the mailbox. Maybe I’ll write a song about that...

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