Investing for income

Income investments make payments of interest or dividends at set times. Before you choose a specific income investment, get the answers to these four questions.

1. How much risk is involved?

Some income investments are considered low risk. They guarantee you’ll earn some income. These include:

Other income investments, such as preferred shares, may grow in value as well as provide income. They can also lose value. And, the income stream isn’t guaranteed as it is with low-risk income investments.

2. How much income will you get?

This is often based on interest rates. Usually, the longer you investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition in one of these income products, the more you make. But this isn’t always the case.

3. When can you take your money out?

If you may need quick access to your money, you likely won’t want an investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition that locks in your money until a set date. For example, some guaranteed investment certificates (GICs) lock in your savings. Others let you cash in any time, but you pay a penalty for taking your money out early.

4. Are there any fees?

Some investments that pay interest don’t charge fees when you buy. Others do. Find out if there are any account feesAccount fees The fees you pay to a financial institution for transactions and other services related to the operation of an account.+ read full definition and other costs.

4 questions to ask

  1. How much risk is involved?
  2. How much income will you get?
  3. When can you take your money out?
  4. Are there any fees or penalties?
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