How to Build an Investment Income Portfolio

Include gold in your investment portfolio.

Many people don't feel they can rely on Social Security and other retirement funds to get through the bulk of their retirements. If you feel this way, you should consider building an investment income portfolio, which is a financial portfolio made up of different types of investments that can yield you income for the duration you are invested in them. The key to successful investment income portfolios is to diversify what you invest in and how much you allot to each type of investment.

Instructions

1. Invest in a high-yield savings account. Many banks offer special savings accounts that pay out high-interest rates to investors for choosing to park their money at that institution. Usually, these type of accounts require that you have a minimum account balance in the account, and you may be charged fees if your account ever drops below the minimum balance.

2. Research mutual fund options and invest accordingly. Mutual funds provide a way to pool your money with other investors in a multitude of different investment vehicles, including stocks, bonds and forex. Mutual funds are usually run by highly skilled fund managers who employ teams of investment research analysts to ascertain where investments should be made. Fund rating services such as Morning Star (morningstar.com) and Lipper (lipperweb.com) outline the pros and cons of most mutual funds and can help you decide which fund to choose.

3. Diversify your portfolio with real estate. In your investment portfolio, real estate may take the form of houses, condos, duplexes or commercial property, among other things. Real estate may be one of the more expensive investments you make due to increased lending standards by banks and whether or not you need mortgage insurance, but the payoff can be substantial, depending on how long you hold onto your property and whether you can fill it with tenants.

4. Invest in precious metals. Rare metals, including gold, silver, platinum and palladium, often rise in value when investments such as stocks decline and can be a good hedge for your portfolio against a declining market. Business news writer Constance Gustke recommends investing in gold and silver before other metals and to hold onto gold and silver investments for at least three years. The best way to buy gold and silver, according to Gustke, is by investing in bullion coins not meant to be used in daily transactions.

5. Allocate a portion of your portfolio toward stocks. Playing the stock market can be rewarding, but it can also be a very risky endeavor that takes many hours of research and learning to understand. Even after years of stock investment training, investors can still lose money because of an array of economic factors that may push stock prices down. If you do not feel you have enough experience in the stock market or lack sufficient knowledge of math, then investing in mutual funds run by professionals may be your best bet.

References

• Fox News; How to Invest in Precious Metals; Constance Gustke; October 2011
• Carney Properties; Investment Properties: Building Your Passive Income Portfolio
• The Street; How to Invest in Gold; Alix Steele; February 2011
• CNN Money: Stock Investing

Resources

• J.P. Morgan; Building a Diversified Fixed Income Portfolio: An Analysis of the Availability and Correlation of Excess Returns; Mark Huamani, et. al.