How often do you look at your retirement account statements and wonder if there are better options for your goals?
Investing is a challenge, no matter your financial picture. And it’s tough to know what makes sense for you and your goals. Growth and income funds are often separate entities that provide different goals. On one hand, growth funds provide aggressive capital appreciation. On the other hand, income funds provide monthly income. But what if you could combine the two?
The Allianz Growth and Income Fund might be the solution for you.
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In order to understand how the two funds combine to make a blended option. It’s important to look at what each brings to the equation.
Growth funds follow a more aggressive philosophy and focus on capital appreciation without dividends paid. No dividends means more money left in the fund for growth purposes. These funds are diversified and target above-average growth companies that reinvest earnings in expansions and research and development. This leads to immense growth opportunities, but the lack of diversification in the specific companies targeted could also result in higher-than-average risk.
Higher risk and volatility means these funds are less suitable for those retiring soon as the risk of losing money can be higher. There also tends to be a higher holding period for these funds leading to potential issues with liquidity.
Growth funds have their place in many portfolios, especially those looking to accumulate capital fast.
The Allianz Growth and Income Fund is a blended fund, but it’s tailored more towards growth and tends to have more aggressive capital appreciation. This means you can expect higher risk, but also realize higher returns as well.
Income funds work differently and are a passive income option for those who have money saved up and who’re looking to make money on that capital. Income funds are unique in that they provide dividends at regular intervals and the money earned is usually a percentage yield of the total money an investor leaves in the fund.
Income funds are offered as private funds, mutual funds, or exchange-traded funds. They’re ideal for passive income and structured to avoid lump-sum capital gains and appreciation. This could bring potential savings on taxes at the end of the year and results in lower, but more consistent returns.
Income and Growth funds may be combined to yield the features of income funds with that of growth funds. Income and growth funds are a true hybrid and provide great capital accumulation and monthly income. The PGIM Muni High Income Fund is an example of an income-heavy fund.
This fund is a large cap, blended fund that’s current allocation leans it toward more aggressive growth. The investment seeks total return on current income, current gains and capital appreciation. The fund invests primarily in common stock, debt securities and convertible securities, adjusting each allocation as the market changes.
While the fund presently leans toward growth, there is a point at which the allocations could lean more toward the value and income side.
As of 01/31/2022, Morningstar gives this fund 5 stars for the 3-year, 5-year, 10-year time frames overall. The risk and return both rank high for this fund. This means the fund is a great option and offers aggressive returns on investment. On the flip side, the high return is met with high risk.
This fund is a great option for those looking for growth and aggressive capital accumulation. Keep in mind that with this return comes high risk.
It depends. It’s a cryptic answer, but your goals and financial situation are the most important things to consider when deciding on where to invest your money. If you already have money saved and would like passive income, an income fund might be a better option. If you lack the funds for passive income or are just starting in your investing journey, a growth fund could be a better alternative.
If both sound good to you, a blended fund provides a happy medium that brings the benefits of both types of funds and wraps it all in one package. This allows you to earn income and earn capital at the same time, often with less effect in each.
As always, the best recommendation is to consult your financial services professional and discuss your goals and options. There are many options available that depend on your goals and the risk you’re willing to take to meet them. Also keep in mind that you might be willing to take on more risk, but the stage of your financial situation might not allow you to take on the risk. And while income, growth, and blended funds each have their benefits, commercial real estate investing is another option to consider and there are many ways to get started.
There are a variety of other funds that could work for you and your financial situation. The PGIM Muni High Income Fund is one example that provides high income while avoiding federal income tax liability. This fund is ideal for those looking to maximize their monthly income.
The most straightforward way to get started on your investing journey is to visit with your financial professional for more. And if you’re ready to dive into growth and income fund investing, get professional guidance for your investment decisions from the experts in financial services — Saint Investment Group. Contact our team today for a free consultation and discover the ways you can make your money work for you.
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.