Income investing is a foreign concept to many people these days, thanks to decades of propaganda from Wall Street and the mainstream financial press.
However, the investment authorities never explain what good it does you to put your money into so-called "growth" investments unless you someday sell them -- hopefully for a profit called capital gains.
The whole idea of investing is to place your money into some sort of security that pays a return. If it pays no interest or dividends, and you never sell it, you never receive a return. Frankly, a lot of people would be better off putting cash into a mattress.
Fear of Loss and Greed Gang Up on You
When you buy with the intention to sell at a profit sometime in the future, you put yourself between a rock and a hard place -- more commonly known as Fear and Greed. And it's a tight squeeze.
If the market price of your investment goes up, you remember that handy dandy Wall Street maxim: "You can't go broke by taking a profit." Fear of losing that loss eats away at you. You think about rising unemployment, the weakening dollar, taxes, terrorism, the predictions of economists about the next quarter's GDP, the company's competition, whether it'll meet its quarterly earnings estimates or not, and many other stock market factors you can't control but you hear about continuously through the media and while you're online.
But another part of your mind is dreaming about how much higher the investment can go. Another two years of such growth and you'll be able to retire early, go on a cruise around the world, buy a second home in Florida, and look down your nose at people not smart enough to buy that stock when you did.
Warren Buffett's favorite holding time is "forever," you remind yourself (forgetting that if you hold this investment "forever" you'll never have the cash to pay for those things you want.)
When the stock market in general is going up, greed normally wins out, and you hold your investment until the price plunges.
When the Stock Price Goes Down, the Fear Factor Multiplies
Fear of loss is one of the most powerful emotions in the heart of human beings. When you invest $10,000 in a stock and watch its market value go down to $9,000, you're sick at heart.
And you imagine losing the entire $10,000. If you can lose $1,000, you can lose $10,000.
Greed doesn't go away, however. You may listen to commentators arguing the stock is "undervalued" and bound to go up soon. They know more than you do, don't they?
After all, that's why they're on TV, writing for magazines and have their websites -- and you don't. You'd better listen to them. So you hang on.
And maybe you're lucky and see the price go back up, or maybe you lose a lot more money.
If the stock market in general is going down, you'll likely sell as soon as you decide the chances your investment may go up in value is not worth the sleep you're losing worrying about it.
Of course, as soon as you do sell, you just know the investment's price will start going up. It acts contrary, just to spite you, and you alone.
Whether Fear or Greed win the battle for your heart, and whether the stock market rises or falls . . . in the end, you wind up making poor investment decisions that cost you a lot of money.
The vast majority of investors buy too late and sell too early -- or hold on too long. They don't get the optimum profits they need to retire at all, let alone early.
And it's not because they're ignorant. They're highly educated. They're overwhelmed by either fear or greed, and then select the facts and rationale to fit the emotion that's in control of them.
What's the solution?
Investing for Income Puts Your Emotions on Your Side
When you place your money into a financial security that pays you an income, such as quarterly stock dividends or semi-annual bond interest, you now have an incentive to never sell.
You put your greed in your favor, because you want to continue to receive those checks, and see them go up in time (which generally happens with stock dividends).
You put your fear of loss on your side, because now you don't want to stop getting those checks.
It's now easy to hold that security "forever," because you're receiving a cash return that can be spent or re-invested to make an even higher investment income.
Income investing is therefore the psychologically easiest way to invest.
Author Information: You can escape the clutches of Fear and Greed. Click here to get the information you need to effectively make money from your investments whether the markets go up or down. If you're ready to discover how income investing can help you retire with financial security, visit this page, enter your email address into the form and click on the Submit Button. Then go to your inbox and verify that. It's free for the taking. http://www.incomeinvesthome.com/. hostgator
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