Income Investing

To me, one of the biggest arguments against investing for capital gains is not what happens when the market fails to deliver price increases (as is true as I write, when the Dow is still stuck at a level it first reached in the spring of 1999), but what happens when your stocks do go up in price.

First of all, it sets up a vicious, internal war between your greed and fear.

Do you sell now so you guarantee the gains? Or wait, and risk losing them? (The Dow was over 14,000 in October 2007. Nobody knows when it will reach that peak again.)

Wall Street -- especially your broker who wants to see you trade often -- will tell you that you can't lose money by taking a profit.

Others will advise you to invest for the long run. How long is that? Most people think twenty years is "long." But if you're now retired at age 65 you could well live another 30 years or, especially with improvements in medical technology, many more.

Warren Buffet says to hold stocks "forever," but if they don't pay dividends and you never sell, what's the point? Because you'll never receive an actual return you can spend.

Secondly, if you do sell at a profit, you must pay capital gains taxes to the government, depleting your capital.

Thirdly, unless you need that money for another purpose, you must buy another stock. You have to read your annual reports, or find a guru, or study charts, or repeat your method to find winning stocks.

With no guarantee that the new stock will actually make you money. It might lose you money.

If you're retired and must sell of stocks to pay bills, you'll feel that empty churning in your gut. You're not working, and the number of shares you own is going down. That can't feel good unless you own so much stock that your lifestyle is immune to market up and downs. (And if you're that wealthy, you should be enjoying your money, not reading this lens!)

The conventional answer is to simply buy the market -- an S&P 500 or broader index fund.

I personally think this is terrific advise for anyone who refuses to invest for income. It's optimizing the dysfunctional strategy of investing for capital gains.

I love to read John Bogle on the subject, and he gives credit to dividends as an essential part of the market's overall return, yet still assumes that at some point an investor will want to sell their fund shares.

Isn't it easier to just buy, hold, reinvest (while accumulating wealth) investing incme, and live on the income after retirement? Knowing that your portfolio remains secure?

Here are additional articles on income investing:

Free 7 part email course on income investing.

Income Investing - Predicting The Unpredictable Future -- the immediate future is cloudy, but there's little sign of dawn.

How to Invest Like Grandpa Did -- Funny MSN used this title for their article. I did learn income investing from MY Grandpa, though it took me many years to understand the lesson.

Income Investing Can Make Young People Rich Beyond Their Dreams -- how I wish I could go back in time and start investing for income when I was young. You young folks, pay attention!

income investing info -- a sitemap to a site about investing for income.

Income Investing for Beginners - a 10 Part Guide to Successful Income Investing -- some advice on getting started on your retirement portfolio.

Income Investing Helps Protects Your From Economic Problems -- during a bear market other investors get shot down. The 2008-2009 did reduce some dividends, but not all, and so income investors still had some money coming in -- more than many other investors can say.

income investing goals -- what is the purpose of investing for income.

Stock-Picking Strategies: Income Investing -- I disagree that income investing is "stock picking" strategy, but never mind.

Income Investing, A Legacy To Pass Down To Your Family -- teach your heirs how to invest for income, so they'll be financially secure.

The Best Stock to Own Probably Pays a Dividend -- Why would you want to own a stock that doesn't pay you?

income investing basic information -- basic information on investing.

Income Investing Builds Retirement Wealth Faster -- reinvested dividends and interest build up.

Bonds Online -- I have a tendency to forget that bonds pay income too!

fixed income investing -- leads into information on investing for a fixed income.

Income Investing: Avoiding A Retiree's Worst Nightmare -- when you're too old to work, you're scared for your health and scared you'll run out of money before you do die.

Income Investing: Don't Come Up Empty-Handed -- I also wish income investments were paying higher yields than they, but it's better than waiting for capital gains that may never come at all.

Income Investing -- Put Your Fear And Greed To Work For You Now -- investing for income puts your normal emotions to work for you, not against you.

Just so we're clear, I do believe that if you buy stocks now you'll eventually see them go up. If you're twenty years old, you shouldn't worry about the immediate future. You should view low stock prices as the opportunity to buy more.

But I want to buy more with reinvested income from investing, as well as from a paycheck or business.