Investing for Income

I've taken a crucial step towards financial independence.

On Tuesday, February 18, I started investing for income, not just retirement.

Every single blog or book about retiring early or being financially independent without exception talks about living off of revenue from one's investments.  And one day while glancing over our IRA statements, I noticed one fund was called "Capital World Growth and Income" and the light bulb went on.... Wait, you can have funds like these that generate income now, not just when you retire?

Which brings me to one thing I really like about our financial advisor.  He doesn't act like I'm wasting his time just because I haven't got a lot to invest. Everyone has to start somewhere.  Some of us just don't start with very much!.

So, my loyal readers, I will share all the details with you so if you are considering something similar you can see what it is like.  Spare me, however, the comments like, "You should invest in indexed stock blah blah more stuff I don't understand...."  I'm dipping a toe in.  This is my learning experience.  If I lose every last penny, well, it was cheaper than taking a class at the university.  And, yes, I'm sure there are better investments out there that involve lower fees, but I feel comfortable with this because it is similar to the mutual funds I am already familiar with.

I invested $250 in a mutual fund called "Balanced Portfolio" administered by American Funds.  This involved a chat with my advisor about my risk tolerance, filling out two pages of forms, and writing a check.  The fund is 60% stocks and 40% bonds.

There's a $10 fee to buy class A shares, plus I must have lost a little because my amount is $238.78.  Class A shares, though, mean that I can cash out in less than a year without paying a penalty.  I can add to the fund anytime I want.  There was a $250 minimum to start, but I can add $ in smaller increments.  Every quarter I get paid dividends, although right now they are set to be re-invested because they are so small.  Eventually, if the fund gets bigger, I will get a direct deposit into my checking account (or a check, not sure which) instead.  So at the end of March, June, September, and December I would have additional income.

This is going to take awhile before it amounts to anything.  But the journey of a thousand miles still begins with one step....