What Is Portfolio Income?

What Is Portfolio Income? 1

A couple of days ago a reader asked me what profile income is. I love this question. At it’s basic level this is actually the income you are based on your portfolio. Pretty forward so far but let’s go deeper right. In order to really understand the term “portfolio income” we must understand additional concepts.

What is a profile? Your collection is the deposition of all your investments but depending about how you meet the criteria it, the term could refer to many possessions and asset classes. If you talk about your current portfolio, that would include all real estate (other than your residence), savings, retirement accounts, debts owed to you, collectibles, business interests etc. The complete ball of wax.

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If you discuss your investment profile that generally identifies all liquid investments in stocks, bonds, mutual funds, etf’s etc. That would include retirement accounts and non-retirement accounts. If you talk about your retirement-stock portfolio that would include all investments that you are using or are going to use to create retirement income. That might include real estate (including your residence), stocks, bonds etc. And if you talk about your business or real estate portfolio that could include any and all small business interests you own or any real property you own. Observe that your collection (overall, retirement, investment, real property or business) doesn’t include any personal debt.

So you might have a huge profile but if you also carry large debts, you could still have a poor net worthy of and a poor net income too possibly. What’s interesting about the size of your portfolio, is it generally indicates how much revenues you may be able to generate – and that leads us to another phase of our definition. This is really a remarkable question and it’s much less simply as it might seem.

“Income” could mean many different things as well. Revenues in the quantity you ingest. Net income is a lot more fun. That’s the total amount you get to keep. 40, years 000 in revenues a. 2, year 000 a. That’s not exciting. When you invest in bonds you make reference to the interest as the income usually. So, if you have a bond portfolio, the portfolio income would be the bond interest.

That’s pretty straight forward. The difficulty develops when you see a stock portfolio income from development or shares mutual money. When you own stocks (or funds that own stocks) some pay dividends and that certainly qualifies as income. But think about money and stocks that don’t pay dividends? Can you derive income from such a portfolio?

You absolutely can. So that as a matter of fact, this has been one of the best ways to generate income for people who want to have a secure retirement. People who use growth stocks or funds to create income simply take out a fixed amount of the profile each year – say 4% – it doesn’t matter how well the stocks or funds perform.