What is income investing?
Income investing involves structuring your investment portfolio to focus on generating regular, consistent income. There are many different types of investments that can deliver regular income. These include term deposits, investment property, certain shares and bonds.
Many investors use income-focused funds like ETFs (Exchange Traded Funds) to meet their income investment goals.
Explore some income-focused ETFs.
What are the best investments to generate income?
The best investment to generate income depends on your personal goals and risk profile. Income-focused investors typically value investments that are easy to access and can be relied upon to pay a specified amount, regularly.
Bonds are synonymous with income investing because they are relatively low risk compared to shares and pay a fixed amount at regular timeframes. That is, the payment is “fixed”. For example, the payment could be 5% of the value of the bond, paid every month for the life of the bond. Bonds are part of the asset class known as “fixed income”.
Many investors also generate income by buying shares in a company that has a track record of paying its shareholders dividends.
Investors can build a portfolio of dividend-paying companies or bonds by investing directly or via ETFs.