Growth vs Income Portfolio

Remember that there is a big difference between a growth portfolio and an income portfolio. As investors grow closer to retirement, they should begin transferring assets to more conservative holdings in an effort to preserve investment gains achieved during the accumulation phase. As we have recently witnessed, once again, a sudden and significant market decline can reduce a retiree’s principal to the point where he has less base from which to withdraw income over a long retirement. This could result in running out of money too soon.

The key to building a broadly diversified income investing portfolio is to generate reliable income streams that are not likely to be impacted by the vagaries of stock market performance. In addition to ongoing income, it is critical for retirees to maintain a liquid savings account for emergency expenses.

Transitioning from a growth to income portfolio requires careful planning and analysis. It should be conducted in stages so that gains are preserved and, if necessary, have time to recover from temporary market losses. Consult with an experienced financial advisor to discuss the best way to invest for income for your particular circumstances