• Income coming from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit that is made through an investment vehicle of any kind. Generally, most people earn a large portion of their total net income through employment income. However, disciplined saving and investment in the financial markets can grow moderate savings into large investment portfolios, yielding an investor a large annual investment income. In income statements of publicly traded companies, you will commonly see an item called investment income (or losses); this is where the company reports the portion of the net income that was obtained through investments made with surplus cash as opposed to being earned with the company's usual line of business. Types of investment income accounts: Certificate of Deposits (CDs) IRAs Savings Bonds Stocks and Mutual Funds Money Market Accounts (MMAs) Certificate of deposits mature at a fixed rate on a fixed length of time, so you know what you’re getting up front. Mutual Funds may give a higher return, but are risky because they rely on the success of the stock market and the choices of the firm doing the investing on your behalf.
  • Mutual funds is a pool of money collected from a large number of investors.This money is invested in stocks, bonds and other securities. The income earned from this investment is called the investment income. There is some risk involved.
  • Investment income could be from any source where you expect to eventually get more money back than you invested. It could be from typical investments like stocks, bonds, mutual funds and more speculative things like options, futures, forex (currency exchange rates), precious metals, etc. Or it could be investing directly in a business or rental property. Few things gain all of the time, there is even risk in fixed interest if it does not keep up with inflation. So the goal is to gain more overall than you lose. Diversification helps. If you put all your eggs in one basket and that drops you could break all of your eggs (lose all of your money). But it also helps to have a plan to know in advance when you intend to get out to limit losses or lock in gains while minimizing emotional decisions. For example I lost my job of the past 40 years Nov 2015 well before I planned on retiring or saved as much as I had hoped to in my 401k. But I got investor education, invested in ETF's, stocks (including dividends from both), and ETF/Stock options. My goal is to gain more than I withdraw without collection social security yet, and so far that is working.

Copyright 2023, Wired Ivy, LLC

Answerbag | Terms of Service | Privacy Policy