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How do I Choose the Best High Income Funds?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 December 2016
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    Conjecture Corporation
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High income funds are funds that are structured to provide a steady source of income, often on a monthly basis. Funds of this type may involve various types of mutual fund accounts, stock funds, and bond funds. Since the goal is to secure a set of investments that generate a steady stream of income, choosing the right high income funds is extremely important. The task of evaluating funds offered through different providers includes considering factors like the amount of the initial investment, fees associated with the funds account, and the degree of risk associated with a given high income fund.

Typically, high income funds are designed to provide a level of additional income that can be used to supplement other income sources, like pension payments. In order to accomplish this, most funds require that investors be willing to commit a minimum amount of cash to the fund for an extended period of time, often five years. Depending on your individual circumstances, it may be wise to work with a fund that requires a shorter commitment rather than a longer one. This provides you with the option of renewing the relationship if those first several years prove fruitful, or moving the investment to another high income fund with another provider if you are unhappy with the service and the returns generated.

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Pay close attention to fees and costs associated with different high income funds. This includes any fees or charges that are associated with receiving monthly disbursements, processing checks or electronic funds transfers, or simply with maintaining the account. The goal is to minimize the amount of revenue that is consumed in charges and fees, resulting in a higher portion of the profits trickling down to the investor.

The quality of financial advice provided by different high income funds will also vary. Find out who is providing the advice and what type of reputation they have for making profitable investments. Since funds of this type carry a higher degree of risk than other types of investment funds, you want access to the best advice possible. Doing so will increase your chances of an equitable generation of regular dividends while limiting the risk to some degree.

Keep in mind that it may take some time to find the high income funds provider that is the right fit for you. Don’t rush the task, since you will need to make a commitment for several years or pay stiff penalties for pulling out of the plan. Ask lots of questions, look into the background of each underwriter for the funds and spend some time online looking into the historical performance of each of the funds. Once you find the one that is ideal for your needs, establish the relationship and begin enjoying those monthly dividend payments.

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