Income Investing
Finding income in a low yield environment
With interest rates at historic lows, it pays to explore the full range of income producing investments if you’re on the search for yield.
As with all asset classes, income investments provide a range of risk and return options.
INVESTMENT | DESCRIPTION | AVERAGE RETURNS | RISK PROFILE |
---|---|---|---|
Government bonds | Debt issued by the government, both federal and state. | 1.6% - 1.8% | Very Low |
Cash & term deposits | A fixed-term cash investment with a bank. | 2.0% - 2.9% | Low |
Corporate bonds | Debt issued by a company to raise funds. | 2.9% - 4.6% | Medium |
RMBS (Residential mortgage backed securities) | A debt security that pays income based on a large pool of diversified residential mortgages | 3.9% - 7.1% | Medium |
Authorised Deposit Institution (ADI) Sub Debt | Bonds issued by a bank or credit union that rank lower than deposits but higher than shares. These bonds trade in the "over the counter" market and are purchased via specialist fixed income brokers. | 3.8% - 6.3% | Medium |
Hybrid securities | A security that is made up of a combination of debt and equity. Hybrids generally pay a fixed or floating rate of income and are usually ASX listed | 4.0% - 8.0% | Medium - High |