Interest Income, Dividends & Capital Gains

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Capital growth comes in the form of both capital gains and income from interest earned and dividends paid on capital. 

Investors, especially in "good markets," tend to overemphasize and over-invest in pure capital gains investments and often forget or minimize the value of a continuous stream of interest income and investment dividends. 

For the investor seeking capital growth, consideration must be given to developing a portfolio that has an appropriate amount of capital invested in capital gains opportunities as well as investments that provide a continuous cash flow from interest income and investment dividends.

A portfolio that has dividend and interest distributions can be comforting and valuable for the growth-oriented investor during slow or bad markets. 

Interest income and dividends are comforting because $100,000 invested in a portfolio of both bonds and dividend paying equities yielding dividends and interest of $3,000 to $5,000 year after year can make waiting much easier while there is a short-term decline in current market value of a portfolio. Both are

Interest income and dividends are valuable because reinvesting of interest and dividends, not needed for current income, can be used to lower equity cost in declining markets. 

Don't forget, interest and dividends!

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