Deciding on investment strategies can be a difficult task. Are you saving for a home or for your retirement? Would it benefit you more to have income coming out from your investments now or later? There are many questions to ask when planning out a wealth management strategy or deciding on what you’d like your future retirement income to look like. One of the first steps to creating a healthy wealth management strategy is deciding on what’s right for you: a growth or income investment strategy. But what are they?
Here’s the quick and dirty defining difference: an Income Investment is one which pays out dividends to the investor. A Growth investment, on the other hand, is based on compound interest and is dedicated to growing the original sum as much as possible.
The focus of income investing is to look for stable investments that are paying out relatively reliable dividends to investors. These kinds of investments can include anything from dividend-paying stocks and bonds to Cooper Pacific’s MICs, which can be held as either income or growth investments and offer investors the option to supplement your income, while keeping the goal of preserving your capital. Some may see income investing as a kind of passive income, but many people end up re-investing the money paid out to them from their investments. The purpose behind this form of investing is to generate enough recurring revenue that you could live off of the payouts.
Growth investing is more focused on building an accumulated amount of the future. Instead of looking for investments that’ll provide a reliable payout, you’re looking for investments with a larger potential for growth at a more rapid pace. Growth investing is more dedicated towards a future income rather than acquiring a form of income now. Growth investments are considered to be higher risk than income investments because of this push for rapid growth rather than slow reliability. There’s a chance of loss in any investing, but it’s generally agreed upon that income investing carries a lesser risk.
There’s no easy answer to this. The kind of investing that’s right for you will depend on many things: your financial goals, your risk tolerance, your knowledge level of investing, your retirement income goals, etc. When it comes to wealth management strategies and planning your investment portfolio, you’re as individual as your unique fingerprint. There’s no quick, easy answer for when to focus on an income investment or a growth investment. Talking to an expert who can help you to decide what’s the right fit for you is the best course of action.
At Cooper Pacific, we offer a variety of investment options and a wealth of experience and knowledge. Cooper Pacific MICs can be held as growth or income investments. We allow investors the flexibility to change their payment option from either compounded interest earned or income interest and vice versa. If you’re interested in finding out the right fit for your goals, get in touch with Jordan today.