Investing for income

Category: 

This may not surprise you, but the reason most people talk to me is about investing for income. A diversified investment portfolio has the potential to generate income you can use now or in the future. To achieve this income, I work with you to set realistic goals & clear plans for how you’ll achieve this desired investment income. While the bulk of your income will most likely be earned through employment, this doesn’t mean you should delay your investment plans. While the obvious appeal is that this investment income will support you in retirement, by starting early, you could bring forward your retirement or explore opportunities that otherwise may not be available to you. So, how do you invest in a way that can deliver this desired income?

 

Setting expectations

 

When investing to generate income, I’ll structure your portfolio based on your objectives, risk tolerance & capacity. These risk discussions reflect the type of investor you are & the level of risk you’re comfortable taking in order to achieve your income objective. Your risk capacity & tolerance help dictate the type of investments you pursue, so it’s important you have a clear understanding of what they look like from the outset. Your risk tolerance is the more emotional measure of how comfortable you are with the potential for loss, while your risk capacity is a more financial view of what you can put at risk. If your objective is to rely solely on dividends & interest from your investments, you need to be sure your expectations are realistic & achievable, given your appetite for risk. I can help you measure whether your expectations are achievable & if not, help you refocus your goals.

 

Investing in line with your investment objectives, risk tolerance & capacity

 

If you’re a lower risk investor, you may prefer to keep it simple, such as investing in cash & / or fixed interest investments. Whereas someone interested in asset classes with a higher degree of volatility & potential returns may choose to invest in managed funds with exposures to both Australian & global shares. I can explain the qualities of different asset classes, working with you to build a diverse portfolio that aligns with your financial goals & work with you to determine your appetite for risk. Generally these discussions include your liquidity requirements, investment experience, ability to take investment risk, comfort with market volatility, concerns about inflation & concerns about taxation.

 

Your collective responses then guide you & me on what investments are appropriate to meet your needs & objectives. There’ll be discussions around the likelihood your needs & objectives will be achieved, given your levels of risk tolerance & capacity. Sometimes your needs & objectives cannot be easily met within your acceptable risk tolerance & capacity. In these cases, I’ll work with you to find the best solution, given your constraints.

 

Achieving a regular investment income isn’t reliant on you investing in highly volatile asset classes. It simply means that you need to be aware of your limitations & map out your wealth plan accordingly. There’s no cut-off age when it comes to structuring a portfolio that can generate an income & we’ll work together to develop & implement an investment action plan sooner rather than later. The payoff can be significant; opening up options for you now & in the future.

 

Article provided by Aspire SRS Pty. Ltd. Aspley