Money market mutual funds are also an integral component of income-investing portfolios. They generate a periodic inflow of income in the form of dividends, interest payments, etc. In addition, interest-bearing accounts with banks, including savings accounts and money market accounts, provide the lowest-risk and safest means of ensuring a constant inflow of cash.
Real estate is a very popular and a highly attractive investment option, especially for an income-investing portfolio. Real estate investments can generate a constant stream of income in the form of rental income. It also offers prosperous long-term capital stock growth options, in addition to certain tax benefits.
Corporate bonds are similar to government bonds, except, in the former, investors lend their money to companies instead of the government for a specific period of time. The only other difference between the two bond types is that compared to government bonds, corporate bonds carry a relatively higher level of risk. However, given the associated higher level of risk, corporate bonds generally provide higher bond yields than government bonds.
Shares as an investment instrument for an income-investing portfolio include company stocks that pay regular, increasing dividends. They can be both common stocks and preferred stocks. Dividend payments help generate constant returns over time.
Government bonds are considered a very safe means of investing one’s money and generating income. They are low-risk instruments, making them attractive investment options. They can be loosely described as an investor lending their money to the government for a specified period for a low-risk exposure and a bond yield in return.
Income investing is an investment strategy that is centered on building an investment portfolio specifically structured to generate regular income. The sole objective of the income investing strategy is to generate a constant stream of income. The constant income can be in the form of dividends, bond yields, and interest payments.