Income investors are not concerned with the growth of their capital through rising stock prices. Instead, income investors are looking to boost their income through dividends payments or bond payments.
Income investing is usually associated with older people that have retired, as they are looking to boost their pension income. However, income investing can be used by people that have a low-risk tolerance.
As income investing is less risky, the returns that an investor can expect are lower. When investing for income, investors can expect an annual return of anything from 1.5% to 7%.
With returns being low, income investors need to have a lot of cash in savings to make it a meaningful income stream. This is why it is suitable for retirees, as they often receive lump sums in their pension.
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