There are 2 ways that you get money from investments – the income and the growth. With some investments you get more income and less growth and with others you get the opposite.
If you get 10% income return on the money invested and 4% growth of the money, giving a 14% total result, that sounds like the same as 4% income return on the money invested and 10% growth of the money, also giving a 14% total result.
However there is a difference, even if all the income is reinvested as well as the capital sum.
It’s not just a quick piece of arithmetic.
The simple fact is that where there is greater income, there is usually greater risk, and where there is greater growth there is usually lesser risk.
Either way there is a great deal of homework to do, because it too easy to get investment decisions wrong.
Another vital factor is the availability of funding to improve the “internal rate of return” of your money. In other words, how great a percentage return you earn for the cash invested.
And just because someone you know is doing well with their investing the same thing is not automatically the right thing for you to jump into.
Your financial and personal circumstances and goals must be taken into account before any advice is sound for you.
Ask Ian.
