Safety and Income: Introduction

By Brian Perry

Broadly speaking, there are three main reasons why an individual might wish to save and invest. The first reason is to protect their hard-earned money and ensure its safety. The second reason is to generate current income with which to meet expenses and the third is a desire to grow their principal and achieve capital gains. This tutorial will examine investment strategies designed to meet those first two goals: safety and income.

The tutorial will begin with a discussion of why an investor might wish to focus upon safety and income, followed by important caveats regarding this investment approach. The tutorial will then move on to examine various asset classes that might be able to meet the investment goals of principal safety and income generation. The asset classes discussed will include dividend paying stocks, bonds, various bank products, guaranteed income products, and real assets such as gold or real estate. Following this discussion of available asset classes, the tutorial will conclude with an examination of the role of safety and income within the larger portfolio management process.

Having read this tutorial, individuals will have a better understanding of the importance of principal safety and income generation in their overall investment program. Readers will also better understand asset classes that are available to them and how they can be used to structure a diversified portfolio. While a focus upon safety and income is not appropriate for all investors, many can benefit from such an approach and even individuals primarily focused upon capital appreciation may find that incorporating the principles discussed in this tutorial will enhance their overall investment program.