As our good friend Jim Dahle at The White Coat Investor explains in this post, there are plusses and minuses to the income investing concept and methodology, so it’s best to go into your decision making with eyes wide open and a full understanding of the process.
The basic idea behind income investing is that you only spend the income from your investments. Seems like a great idea, right?
The first problem is that many income investors do not realize that a high yield does not necessarily equal a high return. You want cash flow? I can give you 10% cash flow. Give me $100, and I’ll give you $10 a year for the next 10 years.
While a mortgage loan has significant benefits over a margin loan, there are many different ways to leverage up your stock market investment. In fact, you can even borrow against real estate to do so.