Growth-and-income describes an investment strategy that aims to provide both capital appreciation (growth) and a steady stream of income. This approach typically involves a diversified portfolio including a mix of stocks (for growth potential) and bonds or dividend-paying stocks (for income). Investors employing this strategy prioritize a balance between long-term growth and current income generation, suitable for those with a moderate risk tolerance and a longer investment horizon. It attempts to generate consistent returns while providing some protection against market downturns.
Growth-and-income meaning with examples
- Aunt Mildred, nearing retirement, opted for a growth-and-income portfolio. She wanted moderate gains but also needed the regular dividend payouts from her stock holdings and bond interest to supplement her pension, ensuring a comfortable lifestyle while her investments matured over time and diversified her holdings. This gave her peace of mind.
- The financial advisor recommended a growth-and-income fund to the young couple saving for their first house. This strategy would offer moderate growth over the longer term and some interest to help offset the risks of investing. The stability of bonds combined with stock market growth potential would suit their risk profile.
- Many retirement plans incorporate a growth-and-income allocation for participants, as it's seen as a balance. This approach seeks to maximize wealth but also provides reliable payments, which is more suitable than riskier strategies. This enables diversification of risk with an eye toward steady returns over the long term.
- The fund manager created a growth-and-income fund focused on established companies with consistent dividend payments, and also growing companies to allow capital appreciation. By blending these two segments, it aimed to offer a stable and well-rounded portfolio. It was seen as an effective means to accumulate wealth over time and provide regular returns.