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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.

INVESTMENTDESCRIPTIONAVERAGE RETURNSRISK PROFILE
Government bondsDebt issued by the government, both federal and state. 1.6% - 1.8%Very Low
Cash & term depositsA fixed-term cash investment with a bank. 2.0% - 2.9%Low
Corporate bondsDebt 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 mortgages3.9% - 7.1%Medium
Authorised Deposit Institution (ADI) Sub DebtBonds 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 listed4.0% - 8.0%Medium - High

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