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Income Investing – The Basics

by gbaf mag

Income investing is basically a wealth-generating strategy, which involves building up an investment portfolio consisting of specific assets that produce reliable, steady income payouts. For some investors, this means building up a series of high-grade, dividend paying stocks and bonds which are deemed to be an absolute safe investment by many investors.

The objective of income investing in this case is to secure a consistent income stream for future use. Income is what drives our lives and it is very important to ensure that it does not dry up. The key to achieving the best income possible through income investing is to make sure that you always have a steady source of income coming your way. This can only be accomplished by creating a diversified portfolio which has many different asset classes which may vary in terms of size, stability, and return potential.

There are two different sources of income that people have access to, namely fixed income sources such as a pension or annuity, as well as variable sources of income such as salary, interest, dividends, rental income and profit. Many people may opt to invest in all three of these sources of income.

Fixed income is usually provided by government sponsored retirement plans. This type of income is generally tax deferred until it reaches a certain age, usually at retirement, and is only taxable once the annuity has been paid out. This makes fixed income an excellent option for those who wish to build up wealth in the future without having to worry about paying taxes on it while they are still working.

On the other hand, an annuity is the most widely used of the fixed income source. This is because of the flexibility that it provides, allowing you to either build up a fixed income stream or use it for a number of different purposes.

Fixed annuities generally offer a guaranteed, fixed rate of return, whereas variable annuities offer a risk free variable return. This type of income is more flexible than the fixed annuity because you can adjust the amount of money you are paying every month according to your financial needs, which allows you to grow your account over time.

Fixed annuities come with an initial cost which is relatively low compared to the various variable rates of return available. There is also an option to convert it to a variable rate. However, this is usually done only by a very experienced investor or a professional.

Today, the Internet is also a great place to research an appropriate investment for your portfolio. By browsing through several websites which offer information on income investing, you can find a multitude of resources which can help you create a very diversified portfolio. This should provide you with the confidence and ability to make decisions based on sound financial planning rather than on impulse.

Another important aspect of the Internet is the wide variety of investment products that are available. There are also numerous different types of accounts to choose from, which makes the process of choosing one very confusing. Some investors choose a very simple account where their money earns regular returns. Other investors choose an account with several different investment options and can invest in different types of assets depending on their preference.

The Internet is a great tool for making sure that you have the correct plan in place when you are investing. You can get free reports from professionals on a variety of investment products, as well as free reports from other investors. so that you can get a feel for what some of them have to offer.

Different types of investments also vary dramatically in terms of cost. Some of them have lower rates of return but require larger amounts of money to purchase.

Some people might find a particular investment to be too complicated while others are not able to invest in something like stocks or bonds due to their lack of education. There are always a solution to this, as well as some investors simply prefer the safety and convenience of an index fund. As long as you have a solid understanding of the various aspects of the investing process, you can find an appropriate investment and reap the rewards.


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