Earning income with ASX listed products

Investors have different investment goals like generating a regular income or achieving capital growth. Either usually requires the use of certain investment products and strategies.

Investment products that attract income

In terms of products, there are many that can help you generate a regular income stream such as term deposits and interest rate securities. Dividends provide income in much the same way that an interest rate security pays interest. One obvious difference however is that unlike the reliable nature of income from interest paying investments, a company can vary the amount they pay (or not pay) in dividends if business conditions deteriorate.

Shares, listed managed investments and some types of warrants, such as instalments, offer exposure to dividends and the franking credits. The benefits of receiving dividend income is its potential to pass on franking credits to you - to the point where imputation credits entitle you to a rebate on tax already paid by an Australian company. Other structured products offer the ability to generate income with the benefit of a capital guarantee at expiry.

Investment strategies that help generate income

You can also engage in strategies that help you achieve your goal of maximising your return from dividends. Instalments are a popular way investors accelerate their dividend returns, using strategies such as dividend yield plays (DYP). Unlike other forms of gearing, instalments are eligible investments within Self Managed Super Funds.