Income versus Growth

Decide if you need income, growth or possibly even both. Investments are divided into income assets and growth assets. One of the critical investment decisions you need to make during the planning stage is whether you require income, growth or a bit of both from your investments.

Growth Assets

These are designed to provide most of their returns in the form of capital growth over time. Growth assets include both UK and international equities along with property investments. Over the longer term, these assets can help to protect you against inflation.

Therefore, investors with a longer investment time frame tend to invest in a higher proportion of growth assets. Growth assets tend to have more volatile returns over the shorter term, but they also have the potential to produce much higher returns over the longer term.

Income Assets

These primarily provide returns in the form of income and include cash investments, bonds and certain equities. Income assets statistically do tend to provide you more stable, but lower returns.

If your primary need is for income you may benefit from holding a higher proportion of income assets.

Once you have decided whether you require more income or more growth from your investments, you can start to work with your financial advisor to develop your investment plan and start to secure your future financial stability.