Income Investing: What it is And Why it is Important for You?
Does the idea that you are able to meet your daily expenses from the returns of your own investment appeal to you? This is called income investing. In income investing, you invest a principal, the invested principal is used by others and they give you interest for the usage of your money. When the principal amount is large enough and the period of investment is long enough, then you reach a position where your regular expenses are funded by the returns that you receive from the investment.
Let us look at some investments done in this category. One of them is bonds. By purchasing the bonds of an organization, you provide a loan to them and they give you interest for the loan. Another popular investment here is dividend stocks. The organizations share their profit with investors holding their stock by paying them divided. In peer to peer lending, you receive interest regularly after providing microloans.
Like most investments, income investment is also associated with some risk. It may so happen that the organization whose bond or stock you have purchased, is not performing well. Then you may receive less payment or may not receive any return at all. In some situations, you may lose your invested principal as well. However, with patience and intelligent investment, income investing can provide you good returns.
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