How to best Invest your Money for Consistent Income

Earning a consistent income from investments means getting a predictable income on a regular basis. Retirees and pre-retirees particularly seek consistent income from their investments to replace earned income.

The most risk-free way of investing your money that would provide a regular and consistent income is to put savings into interest bearing investments like savings accounts, guaranteed investment certificates (GICs), and term deposits. These savings investments are generally backed up by banks or credit unions and have the lowest risk of default.

Bonds are also interest bearing investments. However, they can be riskier than savings investments since a bond is really a loan you have given to someone else. Your income is the interest they pay you in return for the loaned money. At the end of the term of the bond, you get your original money back. If the party that received the loan goes bankrupt you could lose your money so it is best to check on the credit rating before investing.

Another way to invest to get consistent income is to buy stocks that regularly yield dividends. Dividends are generally not taxed as high as interest and thus your gross income from the dividends does not need to be as high as from interest bearing investments. However, the dividend yield depends on the health of the company and could change with little notice. If the company goes through a period when business isn’t good, then the value of your stock may decrease dramatically and the dividends could disappear.

Because of the favorable tax treatment of dividends, there are some authors who present strategies for retiring early by investing in dividend yielding stocks. Indeed, Derek Foster retired at the age of 34 by saving enough money and investing it in stocks and other investments that had a solid historical record of earning consistent dividends. His other secrets to success were to write and sell his book called “Stop Working: Here’s How You Can!” about his experience and to live frugally as well.

There are other ways to earn a consistent income through investments. You could buy real estate then rent it out to cover mortgage payments and operating costs and earn some profits after expenses. There are other fancier strategies like staggering interest bearing investments to average out interest payouts. This one is low risk, but other hyped up strategies could be very risky. You must make sure you understand the risks in particular investments and it is best to talk to a financial adviser before plunging in.