Do you want to invest for income or growth?
- 2 min reading time
As you begin to build your investment portfolio, you'll need to consider if you are looking for a regular income or to grow your investment over time.
What you will learn
Investing is about making your money work harder so you can achieve your life goals. But, as your investments grow, there is a decision to make: do you need to take a regular income, or can you leave your money to grow over a longer period?
Deciding which approach is best for you will guide which types of investment you choose and how long you invest for.
The difference between income and growth
Investments which can provide a regular income 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 buy. 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).
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.
