Wednesday, June 12, 2013

Investment Style Series: 4) investing for income

An acquaintance of mine has a very simple asset allocation, that is 80% rental apartments and 20% cash. He is clearly investing for income. To recall one of our conversations, he said that he knows the construction industry well being a civil engineer by profession. He is also quite suspicious of paper investments so he has no exposure to stocks and bonds. Most importantly, he says that his goal as an investor is to earn an income without him working all the time. We may have different views but I totally respect his investment style. If you prefer investing for income, it doesn't have to be limited to rental properties. Interest from bonds were made for this, so are blue chip companies who regularly pay dividends. Be warned though of seeking the highest yields. The investor I described earlier lost a significant amount in the scam that was Legacy Group banks. Bonds that pay higher interest would also mean higher risk of default. For most investors, its a matter of preference but for retirees, its a necessity to have most of your assets in conservative, income producing investments. This group, which includes my dear parents, simply do not have the time to recover from a bad investment  decision, nor need to worry unnecessarily. They also need to live off the income from their investments. Happy investing!

1 comment:

  1. Yeah, I'm really torn on this.

    I could choose to buy TEL, which is blue chip and enough and pays a decent enough yield for me to slowly build an income producing portfolio.

    But then that's so far away from being useful. On the other hand, I could buy something like MEG, with a big upside.

    Do I go for the slow and sure way or chase growth to quicken to fatten my purse and start with a bigger position on TEL?

    I've already made my move, but what do you think I should've done? I'm 32 and I get enough salary to pay the bills and invest on the side...