Investing for Income in 2007

With the interest rates hitting the lowest level in five decades, what are your options for investing for income? The questions now are what are your options and how safe are these options?

Investors once again are looking for options when their income seems to be going lower and lower each year with GICs and term deposits. I remember in the early 90s investors would come in and reinvest their GIC at 10% for one year and say Ill only invest for a year, rates are going to go higher. I have been hearing that argument for fourteen years and at low and high interest rates.

Why not take the interest rate guessing game out of the picture and develop a strategy and look at other options?

Learn a little about what else is out there. Let me give you some homework. Most investors know that they can spread maturing investments out over five years. But what is beyond GICs?

Look at bond funds that can invest in safe government bonds, (they will spread the maturities out for you) or corporate bonds where you may receive higher interest.

Consider income funds such as dividend income and dividend growth. There are a handful of investment funds that invest in preferred shares for income and common shares for growth.

Preferred shares are a conservative tax efficient investment option to explore. Then there is high income, in particular income trusts that invest into income producing companies and projects such as oil and gas and real estate income producing investments.

There are several income style funds that have been around for ten years and never lost money in a single year. While past performance is no guarantee of future performance, this low interest rate environment reminds me of 1994. Interest rates were low and there was not as many income options as there is today. The investment companies design these options with the income investor in mind.

Keep these options in mind next time your faced with waiting for higher rates.

Written by Grant Hicks

Grant Hicks, C.I.M., FCSI is a professional speaker, co-author and a Retirement Planning Specialist with Manulife Securities and Hicks Financial. A leader in the financial industry, Grant has been helping Vancouver Island residents plan and create their retirement lifestyles since 1989.

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