In my early days of wholesaling, we were marketing a net lease program and launched a campaign titled “All Roads Lead To Income”. It is just as true today as it was those many years ago.
According to Bob Rice
IOn his book The Alternative Answer: The Nontraditional Investments that Drive the World’s Best-Performing Portfolios, 2013, well designed investment portfolios should include the following attributes:
- Producing current income;
- Broadening the base for Risk Reduction;
- Providing for the opportunity for long-term growth enhancement and
- Facilitate purchasing Power Protection.
But all these attributes must ultimately lead to income.
Income today or income tomorrow. Every investor whether individual or institution, ultimately requires income to pay its bills or make distributions to support operations.
Hence, regardless of whether an attribute does not result in current income, income will be the eventual requirement. You don’t pay the mortgage, put food on the table, or clothes on your back with Growth!
If an investment strategy is in the form of value add, hedge, tax mitigation, maintaining purchasing power, etc. the ultimate result must be the ability for that investment to produce or convert to some form of distribution (income or cash flow).
Today, investors are searching even more to find durable sources of income.
It is more important today to find multiple sources of income, investments that will eventually produce income, diversifying the risk of that source of income, and preparing a portfolio not only for today, but also for the future.
Getting down to basics, only two things produce income: labor providing earnings and Capital at work providing distributions. People at work or money at work. All Roads Do Lead to Income!
Mark Petersen is a Managing Director for Concierge for Advisors, Inc. He has served in a number of capacities as a leader and spokesperson for the Alternative Investment industry for over 30 years.