Skip to content

Investing For Income – is a super power.

Imagine making an investment now, in something. Doesn’t matter what. But, in the coming few years that investment matures to produce some capital growth and in the mean time it has produced an income of 4% or per year or more and is continuing to do so, on an ongoing basis.

Over ten years – the return is 40% of your initial investment and over twenty years you get your money back – or close to it. You still have the original investment, and that continues to grow at 5% every year.

This means you actual returns are going to be close to 10% a year.

Put in £1000 get back £100 a year.

Ok, I know at the moment that interest rates and inflation are worse than we would like and with some market volatility of late there is some uncertainty there. But still 10% a year over the longer term has some attractions, surely.

Especially when you compare with –

Cars going down in value.

Inflation eating away at any money you have in the bank or building society.

Not Sexy

Investing in a supermarket or widget maker.

Investing in a concrete plant or mining company.

None of these things are exciting, certainly not sexy. If anything quite a bit boring.

And that is the key. Making money, getting investment returns on your money shouldn’t be sexy or exciting. I should be boring and it is. You should be placing your money in long term homes, investing in businesses (or quite a few businesses) that are boring – but grind out the cash flow and profits day after day. None of the supermarkets are sexy businesses- they sell stuff we all need, and we need them everyday. This is what they are good at – this is how they generate very specific and quantifiable cash flow.

This is what makes them very unsexy. But stupidly stable or investable. Which is the word I would use. Now, I am not telling you go an buy Tesco or Sainsburys shares, nor McAlpine or some other construction services firm. But you do need to look outside of your current bubble and see what is available. There are options, there some things you can do to make your money work for you.

A great example of this is the FTSE 100.

Image from Google Finance

As you can it has done not a lot for a few years. Making an investment now and hoping it will pan out would have been a bad idea. But making an investment decision to buy on all of the dips means you would have some reasonable returns. And, with the right plan you would have received good levels of income during the investment period.

Can you imagine saying to yourself – “markets are down today, what a great time to invest” and this is exactly what you should be doing. Let me apply another analogy. If you knew something was going to be cheaper tomorrow or the day after. Would you buy it now or wait?

Well investing for income is just that.

£100 investment – £5 income

Day after, that £100 investment buys you more shares. So £100 becomes 102 or 103 shares but the income is still the same meaning £5 of income is multiplied because you now own more shares than you could have purchased yesterday for the same £100 investment.

This is not complicated.

Sure, the markets go up and down every day. Sure sometimes the markets go down and stay down for a while – but there will always be market, the market always returns because we are dealing with humans, as long as we have humans on the planet, there will always be a market.

When you are ready to get a shimmy on with some of this stuff. Get in touch. I can offer you some one to one help or post Covid workshops at your office.