Traditional Income Investments
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Traditional Income Investments
Several types of securities are income-oriented.
Things To Know
- Many stocks and mutual funds are income producers.
- Bonds and money market securities are generally reliable sources of income.
Stocks
Income stocks are stocks that pay dividends on a steady basis. Remember that stocks are not designated "income" when they are issued. Instead, they are so called only as they acquire a track record of paying steady dividends.
Bonds and money market securities
Bonds and money market securities are also income producers. They pay stated amounts of dividends on a periodic basis. Money market investments are similar to bonds in that they constitute loans to other parties. They differ from bonds in that their maturities are very short. Both types of investments pay dividends or interest regularly or when they mature. Money market securities include certificates of deposit (CDs), Treasury bills, banker’s acceptances, and commercial paper. Mutual funds that invest in the money market are also income-oriented.
Mutual funds
Other kinds of mutual funds may be income-oriented as well. To obtain an income objective, the managers of an income fund will deliberately choose investments that pay high dividends or interest, the income from which will be passed on to the shareholders of the fund. Mutual funds that seek income state this fact in their prospectuses.
