What to Invest In
Joshua Kennon Updated January 27, Do you need to build a portfolio that will generate cash? Are you more concerned with paying your bills and having enough income than growing richer?
If so, you should consider using an older investing technique—income investing. Although income investing went out of style with the general public, the discipline is still quietly practiced throughout the mahogany-paneled offices of the most respected wealth management firms in the world.
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Income investing is the practice of designing a portfolio of diversified investments to achieve a passive income to live on.
These investments can include real estate, stocks, mutual funds, and bonds.
Most of this income is paid out to the investor so they can use it in their everyday lives to buy clothes, pay bills, take vacations, or whatever else they would like to do. The mess was not from the lack of instant news, video chats, music-on-demand, hour stores, and cars that could drive further than ten miles per gallon.
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In that time-frame, if you were Jewish or Irish, most companies wouldn't hire you. If you were gay or lesbian, you were prescribed electroshock therapy; Black men and women dealt with the constant threat of mob lynching and rape.
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If you were a woman, you couldn't get a job doing anything more than typing, for which you would be paid a fraction of the amount offered to a man for similar work. Add in the fact that there weren't any social security or company pension plans, resulting in most elderly people living in abject poverty.
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What does all this have to do with income investing? These are the circumstances that caused the rise in income investing—when you peel back the layers, it's not difficult to understand how. The Rise of Income Investing For everyone except for well-connected white men, the decent-paying labor markets were effectively closed. One notable exception: If you owned stocks and bonds of companies such as Coca-Cola or PepsiCo, these investments had no idea if you were Black, white, male, female, young, elderly, educated, simple earnings on the Internet in kazakstan, attractive, short, tall, thin, fat—it didn't matter.
You were make money on investments dividends and interest throughout the year based on the total size of your investment and how well the company did.
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That's why it became a near-ironclad rule that once you had money, you saved it and the only acceptable investing philosophy was income investing. Up until the s, you would often hear people discussing a portfolio designed for income investing as a "widow's make money on investments. These investments would generate enough monthly income for her to pay the bills, keep the house, and raise the children without a breadwinner in the home.
Her goal, in other words, was not to get rich but to do everything possible to maintain a certain level of income that must be kept safe. Today, we live in a world where women are just as likely to have a career as men, possibly making more money. If your husband died in the s, however, you had almost no chance of replacing the full value of make money on investments income for your family.
That's why income investing was such an important discipline that every trust officer, bank employee, and stockbroker needed to understand.
Today, with pension systems going the way of the dinosaur, and wildly fluctuating k balances plaguing most of the nation's working class, there has been a resurgence of interest in income investing.
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By the time you retire, you probably own your own home and have very little debt, so absent any major medical emergencies, you should be able to meet your basic needs.
If you're willing to risk running out of money sooner, you can adjust your withdrawal rate. This would be exaggerated if the market collapsed and you were forced to sell investments when stocks and bonds were low.
The answer to that is a resounding, "Yes. Before you dive in, there are some mindset principles that you need to adhere to. Moving beyond the scarcity mentality is crucial. That's just a belief system.
These include: Dividend-Paying Stocks.