I just sold my flat, and I am planning to leave in 1 1/2 years, and semi-retire somewhere nice and cheaper. I have two small children and I plan to spend more time with them, while doing a part-time job I enjoy. My ability to retire will depend on me not losing my money by buying the wrong shares. I am fine with some ups and downs (I don't need to buy treasury bonds), as long as I keep receiving a regular, fairly predictable dividend.
I recently came across LON:IEMB, which is a etf with "Direct investment in emerging market government and quasi-government bonds" issued in USD. The etf has a dividend currently of about 4.9%, distribution monthly (so I could treat it similarly as a regular income from work) and relatively stable price. In 2009 it did drop, but "only" by 30%, compared to SPY that dropped by 50%, and it recovered in less than a year, as opposed to SPY that recovered in 2 years. And when the price of the etf dropped in 2009, it kept paying the regular dividend, so I would still have had my income.
The price of the etf seems to have by about 5% from the average over the last 10 years, so it seems to have a very stable price. Although I can't become billionaire with it, I think the risk of losing all my money is quite small.
The credit rating of the bonds it buys is 52% BBB or above, and 48% below BBB. The etf is made up of about 480 government or quasi-government bonds, which I think make it safer and more stable. It is unlikely that so many government and quasi-government entities would suddenly go bankrupt.
Looking at the last 11 years, I think this etf did very well. If it continues like this, it's what I am looking for. But is this due to the very low interest rate during these years? Would one expect the etf to do less well if interest rates increase over the years to come? What do you reckon? Unfortunately I am not smart enough to answer this question.
I think I would invest about 40% of my money in this etf, 25% in a municipal bond index, 30% in SPY, and 5% in REITs (such as STOR, O, OHI, etc.). Any comment and advise is very welcome.