4 strategies to generate more investment income

1. Emphasize dividend stocks.

Dividend stocks are the obvious first place to start looking. You aren’t abandoning stocks at this point, but looking for investments that also pay an above-average rate of return through dividends.

Dividend stocks have at least three advantages:

1. Above average income
2. Continued participation in capital appreciation
3. Some protection against price declines is afforded by the dividend yield

One of the caveats here, is that a stock isn't worth holding simply because it has a high dividend yield. Some stocks can yield well into double-digit percentage returns, but that is often an indication of underlying weakness.

For example, the stock may have recently had a bad run that depressed the price, dramatically increasing the dividend yield. Eventually, the dividend will have to be cut to accommodate the company’s weakened financial state.

If holding individual dividend stocks seems like a crapshoot, you always have the alternative of investing in a dividend index fund. One such fund is iShares Select Dividend ETF. The ETF invests in a wide range of mostly U.S. dividend paying stocks, and has yield of 3.58%.

Invest in real estate without the headache of being a landlord

Imagine owning a portfolio of thousands of well-managed single family rentals or a collection of cutting-edge industrial warehouses. You can now gain access to a $1B portfolio of income-producing real estate assets designed to deliver long-term growth from the comforts of your couch.

The best part? You don’t have to be a millionaire and can start investing in minutes.

Learn More

2. Cut investment expenses.

By default cutting investment expenses is a way of increasing your income. The most obvious way to do this is by working with the lowest cost broker that you can.

Stock transaction fees can really add up if you're an active trader, so you will want to look for a broker that has lowest transaction fees possible.

If you’re a fund investor, you’ll want to pay especially close attention to 12b-1 fees. These are fees that cover the operational expenses of a fund, and since they are charged within the fund — rather than as a direct charge to you — they are easy to miss.

These fees can range from 0.25% to 1% of your fund investment each year. You want to invest in funds that are on the lowest end of the range possible, as a difference of just 0.5% on your investment each and every year can make a substantial difference over a long period of time.

You’ll also want to do this within the framework of working with funds and brokers that do not charge load fees. While these are one-time charges, they can reduce your overall return, particularly if you frequently trade funds.

3. Minimize trading transactions.

One of the best ways to reduce investment expenses is to minimize your trading. If you are looking for your portfolio to provide greater investment income, you’ll want to stay with your investment choices on a long-term basis.

This is when it's important to stick with the investment strategy you've carefully planned out so you can reduce your transactions. The less trading you do, the lower your investment expenses will be, and the greater your investment income.

This 2 minute move could knock $500/year off your car insurance in 2025

OfficialCarInsurance.com lets you compare quotes from trusted brands, such as Progressive, Allstate and GEICO to make sure you're getting the best deal.

You can switch to a more affordable auto insurance option in 2 minutes by providing some information about yourself and your vehicle and choosing from their tailor-made results. Find offers as low as $29 a month.

Find the best rate for you

4. Consider non-traditional investments.

In recent years, many investors have become hyper-focused on stocks. But there are income opportunities outside the stock market, and now is an excellent time to investigate potential opportunities.

Not only is this a way of locating income sources for your portfolio, but it will also function as a needed source of diversification.

Treasury Inflation Protected Securities (TIPS). These are U.S. Treasury securities that come with interest, plus inflation adjustments. The current yield on a 5 year TIPS is 0.91%, which won’t exactly light your portfolio on fire, but not much in the fixed income sector will these days. The beauty of TIPS is that the yield increases with inflation — and that’s what usually precedes higher interest rates. Your yield will improve without you needing to chase higher-yielding investments in a rising interest rate market.

Income property. Depending upon where you live, you may find income properties available at bargain prices. Rental real estate is more risky (and more hands on) than paper investments. But in some areas, prices have been so depressed by the housing collapse that rental property is now a financially viable alternative.

A $150,000 property that can be purchased with a 20% down payment ($30,000) and a $120,000 mortgage at about 4.5%, will have a monthly principal and interest payment of about $608. With $250 added for real estate taxes and property insurance, that’s a total monthly payment of $858. If the house can be rented for $1,000 per month, you’ll have a net positive cash flow of $142 per month, or $1,704 per year. That will represent a return of 5.68% on your $30,000 down payment.

REITs. If you don’t feel like getting your hands dirty with direct ownership of rental property, you can always opt instead for a real estate investment trust, or REIT. We can think of REITs as mutual funds for income producing real estate, so when you buy into one you’re actually investing in a portfolio of properties (or mortgages on those properties).

You can invest in an index type REIT, such as the Vanguard REIT Index Fund (VGRSX). The fund has well diversified holdings and a yield of 3.38%. You can’t even get that on a 30-year Treasury Bond.