The Utility of Growing Income

Let's carry forward the discussion on growing income. It's important to carefully review your current and future income needs and have a realistic understanding of how you can use your current assets and investments to create more income. The goal of long term income planning is to lessen the fear of outliving your money. Long term income planning can help you put contingencies in place and allow you to more quickly adapt to certain negative influences on your retirement savings, such as downturns in the stock market, low interest rates that reduce your income potential, rising inflation, required minimum withdrawals from your retirement accounts (each year beyond age 70 1/2) and other withdrawals to pay your bills. Let's look at one way of growing your income to meet your current needs and to help you minimize the impact of these potential problems.

Given that you have an investment portfolio, I would suggest looking at an alternative way to invest to grow the income stream you are currently getting from your investments. This complementary strategy is a way of investing for income that offers an alternative to bonds, CD’s and bond funds. One strategy for growing your income is to invest in utility stocks in a way that will pay a relatively strong dividend today and have the certainty of growing that dividend over the next 12 months. Over the long term, a growing dividend could help your income keep pace or outpace inflation. 

Utilities are a solid investment to consider because they are like mini-monopolies. When the light company raises its rates, what can you do about it? Who else can you go to for electricity? Utility companies have few competitors. Electric utilities, through their subsidiaries, engage in the generation, transmission, distribution and sale of electricity. They engage in most if not all of the components of the power field - nuclear, natural gas, solar, etc.

It is important to remember that this is a stock investment.  There is a risk of loss, and like any stock, you could lose money. It is important, therefore, to ensure you have reliable information concerning dividend payouts and financial strength of the company before you invest.

At the end of the day, your income strategy is an important part of your overall financial plan. Developing and implementing a well-constructed financial plan will go a long way to securing your family's financial security.