An income investing strategy can be pretty powerful. It can be a nice way to pull money from the stock market without having to consistantly monitor your account.
So what is Income Investing? Well income investing is the process of going out and buying high dividend ETFs. This way you receive a monthly income from the dividend that those stocks give off.
The strategy does sounds like it is pretty easy, and can be if you are doing it right. The biggest problem people make when income investing however is simply buying all dividend stocks. This can fire back at you and cause you to lose money.
In fact there are a few companies which will actually raise their dividends after their stock has been dropping for a while in order to lure unsuspecting investors to their stock in order to try and raise the price of the stock. In other words many dividend paying stocks are just bad investments.
In order to make sure that the company is actually a good investment it is much safer to check out their fundamentals beforehand. Doing some research may be a bit more work, but it can also set you in a position where you are in a stock that you do not mind staying invested in for the long term.
Another thing that income investors tend to overlook is that dividends are not the only way to pull out a monthly cash flow from the stock market. One powerful way of increasing your returns is by writing covered calls. When you sell calls what you are doing is selling someone else the right to buy the stock from you at or before a certain date at a certain set price. It can potentially limit your gain if the stock makes a big move but it can be worth the risk to many investors.
Income investing can be a much easier way of getting an income from the stock market then having to take the time to learn stock market trading and spend a lot of time monitoring your positions, but it is not for everyone. Others may like spending more time watching their account, or trying to find small companies they believe will grow. Everyone is different and so is their investing strategies.
Tags: dividend investing, income investing, investing in dividend stocks