Income vs. Growth Investing

Shawn Plummer

CEO, The Annuity Expert

What is Income Investing?

Income investing focuses on generating consistent revenue, primarily through dividends or interest payments. It’s favored by those seeking a steady income stream.

Examples of Income Investments:

  1. Dividend-Paying Stocks: Companies known for regular, substantial dividend payouts.
  2. Bonds: Government or corporate debt instruments paying fixed interest.
  3. Real Estate Investment Trusts (REITs): Entities that own and manage real estate, distributing a high percentage of income as dividends.
Income Vs Growth Investing

What is Growth Investing?

Growth investing aims at capital appreciation. Investors buy assets they believe will increase in value over time.

Examples of Growth Investments:

  1. Growth Stocks: Stocks of companies expected to grow at an above-average rate compared to other market segments.
  2. Technology Stocks: Companies in the technology sector often exhibit high growth potential.
  3. Emerging Market Investments: Investments in developing economies with potential for rapid growth.

Comparing Income and Growth Investing

FactorIncome InvestingGrowth Investing
Primary GoalSteady income generationCapital appreciation
Risk LevelGenerally lower riskHigher risk
Investment TypeDividends, bonds, REITsStocks in fast-growing companies
Investor ProfileConservative, income-focusedRisk-tolerant, looking for long-term gain
Return CharacteristicPredictable, regular incomePotential for significant capital gain
Market PerformanceBetter in slow-growth or volatile marketsOutperforms in bull markets

Growth vs. Income Stocks

  • Income Stocks: Typically established companies with a history of distributing a portion of profits to shareholders.
  • Growth Stocks: Usually younger companies with potential for rapid expansion and higher returns, reinvesting profits into the business rather than paying dividends.

Growth vs. Income Funds

  • Income Funds: Focus on securities that pay dividends or interest, offering regular income.
  • Growth Funds: Invest in growth stocks, aiming for capital appreciation.
Investing For Income Vs Growth

Investing for Growth and Income

Some investors blend both strategies, balancing the stability of income-generating assets with the potential of growth-oriented investments.

Annuities with Guaranteed Lifetime Withdrawal Benefits

This is a specific investment product designed to provide a contractually guaranteed income for life, aligning more with income investing strategies.

Investing For Growth And Income

Conclusion

Choosing between income and growth investing depends on individual goals, risk tolerance, and investment horizon. Each strategy has its merits and can be combined for a balanced portfolio. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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