O'Neil particularly likes convertible bonds, because she says that they represent a marriage between fixed income and equities. Interest rates are extremely low. Jennings also has the luxury of being able to invest anywhere in the world he chooses, because the fund is categorized as global. Not too long ago, its portfolio contained more bonds than it does today. Another way to provide income is to sell stock holdings.
Portfolio managers do it all the time.
The catch, of course, for individuals and fund shareholders is paying the capital gains tax, which is due as a result of selling those securities for a profit. And the capital gains rates are typically less than your ordinary income tax rate. Older investors can't expect things to be as they once were, and today's new investors can't expect the current market trend to go on indefinitely, either. JWR contributor Dian Vujovich's most recent books include 101 Mutual Fund FAQs and 10-Minute Guide to the Stock Market .