Risk and Two ways to generate an income are by investing in equities, that is, company shares, or in bonds where you lend money to a government or company. Both involve more risk than keeping your money in cash. If a company does well reward continued and is profitable, equity holders usually receive a share of the profits in the form of a dividend. If the company does not do well, shares may fall in value. Bond holders expect regular interest payments and for the loan to be repaid to them at the end of the fixed term. However, there is a risk a borrower might get into financial trouble and be unable to pay interest or repay its loan. An income strategy One way to make decisions about income investing is to ask yourself three simple questions: What level of income do I need? How often do I need to be paid? How much risk am I willing to take on to achieve the income I want? Investing with an expert Rather than managing your own investment portfolio, you may choose to invest in a fund. A fund is an investment vehicle where the money of many investors is pooled to buy a portfolio of equities, bonds or other assets – which is managed by a professional fund manager – to achieve a particular investment objective. Some funds pay income to their investors in the form of distributions. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. 5