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Investing for income or growth?

  • 2 min reading time
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Are you looking for an investment that will provide you with a regular income, or are you looking to grow your money over time?.

What you will learn

  • The difference between income and growth
  • Why it’s important to decide on an approach
  • How your chosen approach will guide your investing

When it comes to investing, the goal is to make your money work harder so you can achieve your life goals. But, as your investments grow, do you need to take a regular income, or can you leave your money for a longer period?.

Deciding which approach is best for you will guide which types of investment you choose and for how long you invest.

Defining income and growth

Investing for income means you are looking for regular payments from your investment, which can take various forms – as we discuss below. This strategy can be an attractive option for people who are soon to retire, but can also appeal to those looking to top up their current income.

By contrast, investing for growth means you’re interested in increasing the amount that you have invested – often over a longer period of time.

How to find a regular income

The approach you choose will dictate the type of investments you pursue. If you’re investing for income, for example, you’ll be looking for investments that generate regular payments.

That could mean receiving dividends from shares or from an income-focused equity fund, or investing in bonds that pay a fixed income over a set timeframe. The focus of this style of investment is on stability and predictability.

Did you know?

Monthly income funds often aim to provide 11 payments of a similar amount, adjusting the 12th to allow for the fund’s performance.

Where to find growth

Growth investing, by contrast, focuses on investments that have the potential to grow over time. By nature, growth investments are typically seen as riskier than income investments.

For example, growth-focused income funds may include shares in high-growth start-ups, rather than focusing predominantly on mature companies that don’t need to reinvest in their businesses.

By retaining a clear view of your investment goals, which might include a need for both income and growth, you can create the right mix for you (read more about how to set investment goals here).

Risk notice

Any information provided should not be considered personal advice. Past performance is not a guide to future performance. You may not get back the full amount you invest. If you have any doubts about making your own investment decisions, seek financial advice.

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