How the Income Investing Strategy Works?

Are you looking forward to building a portfolio which in return will generate the cash for you? or paying bills and having good income is a priority than getting richer? If you answer in affirmation then, income investing is something you should focus upon.

Meaning of Income Investing

Income investing, or you may also call it investing for the income, it means structuring the investment portfolio of yours in a way that you may receive the regular income through it.

It could be through bond yields, income payments or dividends. If you are aiming to get the regular investment from your investments and simultaneously wants to get the capital growth in long-term, then income investing is what you should do right away.

Suitability of Income Investing

Investors are attracted towards the income investing, specially the ones who do not want to get the regular payments combined with the capital growth in their bank accounts. Pensioners could also be interested to make the investment here, as they could easily receive the best investment income.

How to do Income Investing

To get the income from the investment, firstly you have to put your money in some asset, a specific one, because not all investments generate the income. Let’s have a look on few such assets that can allow you to get the income.

  • Government gifts and bonds: By purchasing any of the government gifts and bonds, you are making the effective money lending to government for some fixed period of time. These investments do not have high risks, as government would not want you to withdraw the money, hence it will keep on paying you the regular income.
  • Corporate bondsThis income investing is same as investing in the government bonds, the only difference here is that you are investing with a company instead of a government, for a fixed period in return of a regular income. Risk related with the corporate bond is bit higher as compared to the government bonds, because chances of the company facing loss is more. Amount of risk taken by you on a bond is reflected through yield, like, high risk results in higher rewards, so with the big yield comes the bigger risk.
  • Shares: If you are buying shares with the purpose of income investing then make sure that you choose the company paying the healthy and regular growing dividends and willing to continue the same.
  • Investing in Property: Income investing in property could prove to be highly beneficial for you as you can easily ask for price of your choice, in case you want to sell it or by giving it on rent you can get the regular income. If you want to earn regular income through a property, then invest either in property fund or in buy-to-let property. 
  • Opting for Collective investments: Choosing individual stocks and expecting to get the regular income from there could be of high risk and time consuming as well.If your dividend is reduced from the stocks you chose, then completely stop the dividend. You can minimise the risk by opting for the collective investment, for example, investment company or unit trust. Funds that are there to generate the income on regular basis, could be chosen by you for the investment. Funds invested by you will be further invested in various assts such as gifts, bonds, stocks and gifts etc, so that you may receive the income on regular basis.

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