Eat the Apples—Stay Away from the Trees

A Smarter Way to Build a Safer Retirement 

Market corrections are a normal part of investing. Since World War II, markets have experienced a 10% correction roughly every 19 months and a bear market (a drop of 20% or more) about every 7–10 years. While these pullbacks can be uncomfortable, they are a natural and even healthy part of market cycles, helping reset valuations and prevent bubbles.

But where volatility becomes truly damaging is when income investors panic. Selling shares for income in the middle of a downturn not only locks in losses—it cuts into the very foundation of your portfolio. And that’s where the “apple tree” analogy comes in.

At ACM Wealth, we like to say, whenever possible: “Eat the apples, but don’t cut down the trees.”

The “apples” are your dividends and interest income—what your portfolio naturally produces year after year. The “trees” are your principal—the stocks and bonds that generate that income. A retirement plan that can satisfy your income needs by harvesting the apples (dividends and interest) rather than cutting down the trees (selling shares) is a far safer and more sustainable approach to weathering market downturns.

Why Income Investors Sleep Better

Clients who can live off the growing income from their portfolios—without selling shares to fund their lifestyle—can navigate even prolonged market downturns with greater confidence. They don’t need to panic when markets fall because typically their income remains intact. They can stay invested, allow their trees to continue growing, and avoid the permanent loss that comes from selling principal in fear.

Meanwhile, those who rely on selling shares for income face a tougher challenge. When markets drop 20%, you must sell a greater number of shares to generate the same income. That depletes principal, reduces future income potential, and makes it harder to recover when the market rebounds.

The Advantage of ACM Private Portfolio Management

Unlike pooled investments such as mutual funds and ETFs, ACM’s private client portfolios don’t sell indiscriminately across all holdings to generate monthly distributions. In a mutual fund, when cash is needed for redemptions or distributions, the fund manager is often forced to sell portions of every holding—regardless of whether it’s the right time to sell or whether the security has embedded gains. That process can be especially inefficient in taxable accounts, triggering unnecessary capital gains and taxes for all shareholders.

In contrast, our private portfolios can distribute income directly from the interest and dividends your specific holdings generate. We control when and what to sell, allowing us to manage gains, harvest losses when beneficial, and design distributions that align with your tax situation and income needs. It’s personalized, intentional, and far more tax-efficient.

A Predictable and Sustainable Retirement Strategy

By designing portfolios that focus on growing dividends and reliable interest, retirees can achieve a level of predictability that markets themselves can’t guarantee. Interest rates and dividend policies may fluctuate over time, but high-quality income streams tend to remain remarkably consistent compared to share prices.

It’s also more tax-efficient. Qualified dividends and municipal bond interest can often be taxed at lower rates than realized capital gains, allowing you to keep more of what your investments produce.

The Takeaway

In retirement, peace of mind often comes from knowing your income doesn’t depend on the market’s daily mood swings. Building a plan around the apples—your investment income—means you can let your trees grow, your portfolio recover naturally from market downturns, and your wealth endure for the long run.

At ACM Wealth, we seek to help clients structure portfolios designed to produce sustainable growing income—so you can enjoy retirement without worrying about whether the market cooperates this year.

Eat the apples whenever possible. Stay away from cutting down the trees.

Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.