Which describes the Income investment objective?

Which describes the Income investment objective?

• A. Growth
• B. Income
• C. Preservation of capital
• D. Speculation

Answer: (B)

The income objective focuses on generating regular cash flow from investments. It prioritizes yield—through interest and dividends—so the portfolio aims to provide steady income rather than rapid growth of the principal. This makes it a good fit for someone who needs dependable income, such as a retiree, even if it means potentially sacrificing some upside in a rising market. In contrast, growth targets increasing the account value over time, preservation of capital aims to protect the principal with lower risk, and speculation seeks high returns with substantial risk. So, describing the Income objective means emphasizing steady income generation from investments like bonds or dividend-paying stocks to support withdrawals or annuity payments.

The income objective focuses on generating regular cash flow from investments. It prioritizes yield—through interest and dividends—so the portfolio aims to provide steady income rather than rapid growth of the principal. This makes it a good fit for someone who needs dependable income, such as a retiree, even if it means potentially sacrificing some upside in a rising market. In contrast, growth targets increasing the account value over time, preservation of capital aims to protect the principal with lower risk, and speculation seeks high returns with substantial risk. So, describing the Income objective means emphasizing steady income generation from investments like bonds or dividend-paying stocks to support withdrawals or annuity payments.