"RULE NO.1: NEVER LOSE MONEY.
RULE NO.2: NEVER FORGET RULE NO.1."
- WARREN BUFFETT

INTRODUCTION
 Assets are less ideal than income when you
need money to spend in the short-term.
 Investment strategies that focus on income
make more sense as one nears retirement age.
 The main component for determining the
amount of that income is risk. The greater risk
one is willing to take on, the greater the
potential for a high-income stream.

3 TYPES OF INVESTMENT INCOME
• Combines stocks as
Variable well as fixed income
instruments
• Income that can be
Predictable expected but is not
guaranteed
• Income guaranteed
Guaranteed by a government or
insurance company

VARIABLE INCOME INVESTMENT STRATEGIES
 Can outpace inflation and grow wealth over
time
 Allows for consistent and reliable stream of
income
 While the income will be less than that
generated by a 100% income strategy, there
will still be some income while providing asset
growth as well.

PREDICTABLE INCOME STRATEGIES
 Predictable income strategies are generally
safe and reliable investments, but all of these
investments are on a sliding scale with regards
to risk.
 For example, some bonds are very low-risk
investments, but there are also very high-risk
bonds.

EXAMPLES OF PREDICTABLE INCOME
STRATEGIES
Dividend income Dividend income
from stocks funds
• Portion of profits • Focus on stocks
that a company that consistently
earns and pays pay dividends to
back to investors investors
• Look for stocks • Managed by
that pay good investment
dividends over professionals
time.

EXAMPLES OF PREDICTABLE INCOME
STRATEGIES (CONT’D.)
Corporate Bonds Bond Funds
• Individual loans • Invests almost
money to a exclusively in
corporation bonds and other
• Businesses in a riskier debt instruments
financial situation • Different funds
pay more for the have different
privilege of rates of return
borrowing your depending on
money. the quality of the
investments.

GUARANTEED INVESTMENT STRATEGIES
There are three (3) types of guaranteed investment
strategies:
Treasury bills
Fixed annuities
Certificates of deposit
(CDs)

GUARANTEED INVESTMENT STRATEGIES:
TREASURY BILLS
Short term – less
than a year
Purchased in
denominations of
$1,000 and
maximum is $5M
Maturities are
typically 4, 13
or 26 weeks
Do not pay interest

GUARANTEED INVESTMENT STRATEGIES:
FIXED ANNUITIES
 A fixed annuity is a contract issued by an
insurance company that makes fixed
payments over the term of the contract.
 The contract typically ends when the person
receiving the payments dies.

GUARANTEED INVESTMENT STRATEGIES:
CERTIFICATES OF DEPOSIT (CDS)
 Saving certificate issued by commercial bank
 Pays interest to the purchaser
 Maturity typically 1 month to 5 years
 Interest rate is fixed and compounded daily
 Guaranteed by the federal government

WHICH STRATEGY IS RIGHT FOR YOU? ASK:
• How long are you
looking into the
future?
• Longer time frame
What is my time allows for greater
horizon? risk.
• Shorter
investments: Be
more
conservative.

WHICH STRATEGY IS RIGHT FOR YOU? ASK:
• Higher worth
allows riskier
investments.
What is an
acceptable risk? • If risk makes you
uncomfortable,
invest
conservatively.

WHICH STRATEGY IS RIGHT FOR YOU? ASK:
• There are some
investments that
are better left to
What is my the experts, like
expertise? junk bonds.

INVESTING IN BONDS
 The basics of investing in bonds are really quite
simple.
 Remember that you are lending money to a
company or government that issues the bond.
 The bond is simply an agreement to repay the
face value on the bond plus a specified interest
within a specific period of time.

THINGS TO CONSIDER WHEN INVESTING IN
BONDS
Bonds are rated for Sold over-the-
1. Risk and bond ratings
2. Buying bonds
risk. counter (OTC).
AAA bonds are the Sold in $5,000
safest. increments.
BB or below are Quoted as a
'risky‘. percentage of the
face value.
Risk is based on
growth potential,
financial stability
and current debt.

THINGS TO CONSIDER WHEN INVESTING IN
BONDS (CONT’D.)
3. Interest
Typically paid every six months
Interest rate is based on the
face value of the bond.
Bonds with longer maturity
dates tend to pay higher
interest rates to take into
account the unpredictability of
the future.

INVESTING IN BOND FUNDS
 These funds are similar to stock mutual funds.
The only significant difference is the type of
investments the fund manager utilizes.
 Bond funds and dividend funds are frequently
less volatile than stock funds and can also
provide the investor with a steady stream of
income.
 As with all mutual funds, there are different
levels of risk and return. Ensure the fund you
choose is a good match for your risk tolerance.

THINGS TO LOOK AT WHEN ANALYZING
BOND FUNDS
1. Expenses
Avoid funds with over-
average expenses.
Expenses are more important
with lower risk funds.

THINGS TO LOOK AT WHEN ANALYZING
BOND FUNDS (CONT’D.)
2. Fund’s Credit Risk
Mutual funds invest money in
companies with differing degrees
of credit worthiness.
Higher risk bonds and dividend-
paying stocks can sometimes lose
intrinsic value, which would lower
the value of your investment and
reduce your income stream.

THINGS TO LOOK AT WHEN ANALYZING
BOND FUNDS (CONT’D.)
3. Interest rate risk
People are willing to pay more for
a bond that pays more interest
than one that pays less.
Long-term bonds are more
sensitive to the potential rise in
interest rates.
Interest rate risk is frequently higher
when interest rates are low.

“Money isn't the most
important thing in life,
but it's reasonably close
to oxygen on the
„gotta have it‟ scale.”
-Zig Ziglar

GENERAL INVESTING TIPS
• Know where your money is
going so you can allocate more
money to investments.
Have a • The more money you can invest,
Budget the more investment income
you can generate.

GENERAL INVESTING TIPS (CONT’D.)
• The more your investment
activities can be put on autopilot,
the more likely you are to invest
money consistently.
Invest • This includes 401(k)s, automatic
automatically withdrawals, and investing first
before paying your bills.

GENERAL INVESTING TIPS (CONT’D.)
• People have a natural knack
for moving their money at
exactly the wrong times.
Avoid moving • Once you’ve found a good
your money place for your money, try to
around too leave it alone.
much

GENERAL INVESTING TIPS (CONT’D.)
• Even if you have professionals
investing your money for you,
it's important to stay on top of
things. It's your money.
Stay on top of
your • Don't be afraid to ask
investments questions.

GENERAL INVESTING TIPS (CONT’D.)
• Even if you're not investing
your money yourself, the more
you know, the better off you'll
Keep learning be.

POINTS TO NOTE
 There comes a time in most people's lives
where income is more important than the value
of one's assets.
 As with any other type of investing, it's
important to be aware of your goals.

CONCLUSION – QUESTIONS TO ASK
YOURSELF
How much investment income do you
need to have each month?
When do you need the income?
How much risk can you subject your
investments to?
How much can you afford to lose in the
near future?

CONCLUSION
 If you lack the expertise to invest in fixed income
investments, don't hesitate to get professional assistance.
There are many experts out there waiting to help.
 Always continue to learn more about money and
investing. The more you know, the better decisions you'll
make.
 Don't wait to get started. A strong, steady stream of
income can be yours if you take the right actions and
get busy!