776 words Investing for Income -- How Much Do You Know Already? by YOURNAME With the stock market below its 1999 high and possibly going much lower, many investors are looking for alternatives, and thinking about investing for income. How much do you know about investing for income already? Here's a quick quiz for you. 1. Which of these special types of business structures are required by law to pay out 90% or more of their cash? a. Canadian income trusts b. Master Limited Partnerships c. Real Estate Investment Trusts d. All of the above The correct answer is D. All of the above are required to pay out large amounts of money to their investors. The details vary with each type of company, but all of them are allowed to not pay taxes on the money they pay out in dividends. This creates high yields for investors. 2. Which is NOT a current threat to the U.S. and world economy? a. Rising oil prices and Iran threatening to nuke Isreal b. Democratic presidential candidate Barack Obama promising to make the Bush tax cuts permanent c. 82 million baby boomers beginning to retire -- drawing Social Security withdrawing from the workforce and selling off stocks and bonds d. More subprime mortgage write-offs by major banks. The correct answer is B. No matter what political party you vote far, the Bush tax cuts helped fuel economic recovery. Whether you like him or not, Barack Obama has promised that if he's elected he's going to allow the 2003 tax cuts to expire. 3. Which type of income investment protects the spending power of your portfolio against inflation? a. Treasury Inflation Protection Securities (TIPS) b. Certificates of deposit c. A one time dividend from a high tech computer chip company d. Utility bonds The correct answer is A. TIPS were started in the 1990s by then-president Clinton, whom investors should thank for signing this legislation. Every year, the government adds to their value according to the Consumer Price index. Certificates of deposit pay a fixed rate of return for their life, which means they fall behind inflation. Same with utility bonds. Stock dividends often keep up with inflation, but usually only ones from companies that sell consumer goods. 4. What's the only proven way to safeguard your portfolio against risk? a. Buying only stocks recommended by a good guru b. Analyzing every company's balance sheet and income statement c. Diversification d. Keeping your cash in your mattress The correct answer is C. Since 1952 financial professionals have known that only buying at least 30 different kinds of stocks can protect the overall value of your portfolio. Buy one stock, and you go up or down with it. Buy a handful and still half of them could go out of business. You must buy enough so that the failure of one security is only a small part of your portfolio. Unless you're a trained accountant, you probably can't find anything in published financial statements except very obvious problems. And even the experienced auditors that had access to Enron's inside records and paperwork claim they didn't know about the frauds that company was comitting. 4. What is most true about investing for income? a. It's only for rich people who inherited their stocks and bonds. b. Takes too much money to get started. c. Is only for retired people and widows. d. None of the above. I hope you figured out that D is the correct answer. It does take some money to get started, as does all investing. But you can start a Dividend ReInvestment Plan (DRIP) at many high quality companies. These allow you to start small (some as low as $25), and they won't charge commissions for you to reinvest your dividends. The younger you are, the more time you have to reinvest your dividends, compounding your earnings so your portfolio gets bigger and bigger as the years go by, like a snowball rolling down a hill. 5. What is a good reason to invest for income? a. You want to get rich b. You're retired and you're afraid to sell 4% of your stocks a year, as your financial advisor tells you, in case you run out of money before you die. c. You'd like to quit working for other people someday, or just know that if you ever got laid off, you and your family would still eat. d. All of the above Of course, D is the correct answer. No, investing for income won't make you rich quick, but if you do it consistently and give it time, it CAN make you rich. Or at least self-sufficient. And give you the peace of mind that comes from NOT selling off assets when you're too old to work. 6. What's a good reason to NOT invest for income. Answer: None. Any more questions? SUMMARY With today's financial markets as uncertain and unstable as they are, traditional buy and hold, and pick winning stocks, strategies don't promise much return. You must rely on luck, and that's not reliable over the long term. Stocks have gone nowhere since 1999. Yet people who invest for income have received regular quarterly dividends. KEYWORDS investing for income, income investing, income investor, income investments, dividends, income investment, dividend, stock investing, dividend investing, stock dividends, invest for income RESOURCE BOX You don't have to wait decades for the market to go up before making money. By investing for income, you assure yourself of quarterly dividend checks whether the stock's price goes up or down. Learn the secrets to getting a high yield with maximum safety. Don't sit on your hands while your portfolio goes nowhere. YOURAFFILIATEURL (NOTE: Some article directories allow you to place hypertext links in this area and some don't. 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