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Income Investing

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Income investing is an investment strategy which involves creating an investment portfolio designed to generate regular income. The goal is often to have a portfolio of safe and secure investments that guarantee stability.

The founding concept of Income Investing is to ensure that an investor gets passive income from buying investment instruments such as securities and assets like dividend-paying stocks, bond yields, and interest payments.

Things to consider before becoming an income investor

Diversification is key

Having multiple income streams will help your portfolio deliver income across different market conditions.

The higher the yield, the higher the risk

Higher yielding assets tend to have more risk for investors willing to invest in them.

The impact of inflation

To avoid inflation affecting the real value of an income portfolio, it is advisable to have a balance between income and growth assets in your portfolio. Tip Read about Growth and value investing 

Total return matters

Robust Income portfolios tend to have a good balance of capital stability and income growth. This will help you to maintain and grow your capital base, which also helps increase the level of real income that you receive.


Income investing options

Property

Property offers income through direct investment in a buy-to-let house or flat but also through property funds. In both cases, rents can be raised in line with inflation.

Equities

By investing in equities, investors back companies with potential to pay out significant dividends to shareholders. It is advisable to invest in companies which have a track record of growing profits and improving on dividend payments. Read about equities on i-invest here

Government securities: Bonds offer a fixed income from money loaned to the government or companies who need to raise cash for their operations. Also read Treasury Bills and Eurobonds 


Advantages of income investing

Supplements fixed income

Income investing is a great way of earning additional support income out of assets one owns, which can be used for daily spending needs.

Potential capital stock growth. Income investing offers the potential for capital stock growth in the long term, which can help build wealth.

Reduces portfolio risk. In most cases, the prices of income investments generally do not move in tandem with other asset classes, so they help spread your risk.

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