Invest for Income

We have now arrived at the final step of the process for achieving financial independence: Invest for Income.
All of your income, savings and investments, so far, will be funneled into a system that will invest in property. You will earn rental profits, after you have paid your expenses (see Step Eleven: Invest in Property). It will be tempting to go out and spend this income, as if it were a pay-rise, however, you’re not going to do that. You will invest for income.

The Goose that Lays Golden Eggs

If you read enough around the area of financial independence, you will have undoubtedly have come across the term Passive Income. All investments will need at least some attention, even the most passive and secure – cash. The money you will finally get to live off, when you reach financial independence, should be as secure as possible. With risk, comes reward, particularly for investing for growth. For income, think security. Think of this as your goose that lays golden eggs. If you feed and look after your goose, she will reward you with a lifetime of golden eggs. Your system of investments: First Security and Growth, then Property, will provide you with more and more geese, laying more and more golden eggs.
Eventually you can live off this income without touching your earned or business income. You will then be financially independent.

Which Vehicles to Invest for Income

You could buy Managed Funds, similar to those for security and growth. Again these can be equity funds, Index trackers, Investment Trusts, which could be in a Tax efficient vehicle such as an ISA (UK). These funds could be invested into Equities, bonds and cash. Consult your Independent Financial Adviser before investing. They should help you with what is termed asset allocation, this means what proportion of equities, bonds and cash these funds hold.