When stock markets are soaring, investors look for more ways to generate income. Income generation is a never-ending quest. Investors can generate more income if they have diversified their assets rationally and have a proper strategy in place.
When it comes to generating more income, everyone has their own strategy, which sometimes works and most of the time does not.
Strategies to generate more investment income
Generating more income from investment is not as difficult as it seems. How you want your plant or investment income to grow is up to you. Meanwhile, here are the strategies that can help to generate more investment income.
Think out of the box
Investments are not just confined to equity stocks; there are other ways as well as mutual funds, bonds, CDs, and treasury bills, which have good potential to generate steady income. Treasury Inflation Protected Securities (TIPS) give investors a cushion against inflation with a yield of around 0.91% for five years. One thing certain with TIPS is that though it does not give good returns like other investments, and it has the advantage of rising interest rate with inflation. Then there are REITs (Real Estate Investment Trusts), where you can invest in real estate without actually buying one. You can invest in REITs through Vanguard Index Fund, which gives the yield of 3.38%.
Reduce active trading
When you are looking for ways to generate more investment income, think from a long-term perspective. Draft your portfolio in such a way, that you receive good returns on all investments. When you trade in stocks, you become a short seller. This way you cannot generate lifelong income. The best way to reduce your investment expenses is to reduce active trading and focus on long-term investments. Do not just stick to equity. Spread your wings to other areas too, where returns are the maximum.
Opt for dividend ETFs
Exchange traded funds (ETFs) are a good way to invest in dividend-yielding stocks. Dividend-yielding stocks can come in handy to generate more income as they provide guaranteed steady income. They also provide stability in a volatile market condition. Sometimes, fund houses even give a double-digit dividend yield to their customers.
Cut out on investment fees
Investment fees come in the way of generating more income. Start with a low-cost brokerage service for transactions. Fund Investment costs as high as 0.25% to 1% per year of the investment amount. Instead, the money saved on the investment fees can be used to invest in other investments. Though these investment fees may feel small to some, overall that can cause a substantial dent in your portfolio.
Invest in real estate
Real estate investment has always been on the rise. Property prices never tend to fall. Taking advantage of this, invest some of your earnings in real estate or rent out a property. That way, you can get a monthly rent as an income.
Generating income requires extensive research and planning. There are many ways to generate more investment income, but sometimes planning can go wrong if proper research is not done before investing.
