Income investing vs growth investing
People often invest for all sorts of reasons, and your approach to investing may vary depending on your specific investment goals.
Two of the most common investment approaches are income investing and growth investing.
In this article, we’ll learn about:
- The difference between income investing and growth investing
- How to use the approaches to try to achieve your investment goals
- How to invest for growth or income
Growth investing vs income investing
The main difference between these approaches lies with how you manage the income earned from investments.
What can I invest in?
With a Lloyds Share Dealing Account or ISA you have access to a wide variety of investments with a ‘growth’ and ‘income’ flavour. We’ve given a few examples below.
Income-focused investments
- Shares: you may consider investing in established, cash-generating companies with a strong reputation for paying significant dividends to shareholders.
- Funds and ETFs with an Income (“Inc”) label, which indicates that your portion of income earned in the fund will be paid out in regular intervals.
- Investment Trusts: some are set up to pay out any dividends earned, like Income funds and ETFs.
- Bonds & Gilts: pay a fixed income.
Growth-focused investments
Shares: you may consider investing in companies that reinvest profits back into the business (rather than paying dividends) to boost growth. Small-cap stocks often fall under this category as the businesses are trying to grow and expand.
Funds with an Accumulation (“Acc”) label, indicates that your portion of income earned from the fund is automatically reinvested into the fund.
ETFs focusing on growth sectors or emerging markets.
Bonds and Gilts can be used for fixed returns.
You may also like
Do your research
Find your next investment and catch up with market news or investment ideas.
International trading
Take advantage of multiple international markets, with no trading commission.
Understanding risk
Understand what investment risk is and how to manage it for your investments.
Important legal information
The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
