Investing to generate a supplemental cash flow

In this week’s issue, we are going to cover the concept of supplemental income, which can allow you to build cash-flowing assets and a monthly income focused on stocks, bonds, and mutual funds.

Author

Tanaha From RISE
July 07, 2023

Think back to all the investment advice you have received in the past. Did it follow the lines of saving your money for retirement and investing with the hope of around 4% returns?

What you may not have been told is that the concept of “investing” is not limited to the bank's interest rate, and it's not limited to your retirement. If you want to begin building supplemental income with your money, you have options for where you can place and grow your money, from real estate to bonds. So how do you decide which investment is right for you?

In this week’s issue, we cover the concept of supplemental income, which can allow you to build cash-flowing assets and monthly income focused on stocks, bonds, and mutual funds. Next week we will focus on alternative assets.

INVESTING FOR SUPPLEMENTAL CASH FLOW

1. STOCKS: Stocks, also called equities, are small portions of a company that you can buy. Purchasing stocks allows you to effectively become a part owner, or shareholder, thereby owning part of the company. When a company does well and makes a profit, so do you! You can then sell your stock for a higher price than you purchased it, which is called capital appreciation.

Another way to make money on stocks is through dividends, which are company profits that are usually paid out quarterly. Note that not all companies pay out dividends, especially not companies that are still growing and want to recycle profits back into building the business.

2. BONDS: Imagine your friend starts a small business selling her beloved cupcakes. She asks you to lend her some money to kickstart the business, promising to repay you with interest as a thank-you for your investment in her business. You agree to help, but instead of giving your friend all the money at once, you offer to pay her in smaller amounts over the first year of her business to help it get established. These smaller payments are called bonds! Interest on bonds is typically paid twice a year, which means you will receive not only the initial loan amount back but also additional money on the interest!

3. MUTUAL FUNDS/EXCHANGE-TRADED FUNDS (ETFs): By investing your money in mutual funds and ETFs, you can invest in a variety of companies in different industries through stocks, bonds, and securities. In mutual funds, professional fund managers handle these portfolios, while ETFs are pre-made and follow specific requirements, such as only including stocks from technology companies or companies from a particular country. These investments can provide you with additional income through dividends, interest, and capital gains, which are distributed to you as a shareholder of the fund.

Join us next week as we share 4 simple ways YOU can boost your income through alternative assets!

Cannot wait that long? Join the RISE community NOW for all our insider knowledge about investing!

Mellody Hobson

DID YOU KNOW…?

As we focus on the concept of diversifying investments, there is no better person to shine the spotlight on than Mellody Hobson. Mellody is the President and co-CEO of Ariel Investments, the largest black-owned investment firm in the US that manages an impressive portfolio of over $16 billion in assets. Hobson's accomplishments extend from her involvement with Dreamworks to her positions on the boards of JPMorgan and Starbucks. Hobson is a fierce advocate for the necessity of diverse voices in top leadership positions, particularly those of minorities and women.

FINANCE IN THE NEWS

(we read so you don´t have to!):

Student Debt Got You Down?

You might've caught the headlines about the US Supreme Court blocking President Biden’s bill. Yes, the one intended to wipe away a whopping $400 billion in student loan debt. If you're in the boat with millions of Americans grappling with student loan repayment, take heart, you're in good company. Who hasn't had that moment, squinting at their student loan balance like it's an unsolvable riddle in an alien language (Dothraki, anyone?).

But before we start sending out distress signals, there's a silver lining. The Biden administration is back at the drawing board, sketching out a new income-driven repayment strategy. It's already being applauded as the "most generous repayment program to date." Under this scheme, borrowers would only have to allocate 5% of their annual income towards loan payments. Any remaining debt after a certain duration would be completely forgiven. Now, wouldn't that brighten up our financial forecasts at the end of the summer season?

Shattering the Glass Ceiling, Navigating the Glass Cliff

A landmark moment has dawned in the media industry - women are now at the helm of every major US news organization!

This is tremendous news for an industry plagued by scandal during the #MeToo movement. The women leading this change - Kimberly Godwin at ABC News, Wendy McMahon at CBS News, Rashida Jones at MSNBC, Rebecca Blumenstein at NBC News, Suzanne Scott at Fox News, CEO Meredith Kopit Levien at The New York Times; Executive Editor Sally Buzbee at the Washington Post; and Vanity Fair’s Editor-in-Chief Radhika Jones - certainly deserve more than just fleeting applause.

These pioneers have successfully shattered the notorious 'glass ceiling' in a traditionally male-dominated sphere. However, as Salle Krawcheck from Ellevest points out, they might now be standing on the edge of a 'glass cliff.' This phenomenon happens when women are pushed into the highest roles of an industry or business is facing a crisis, and as Krawcheck describes it, “no one else (*cough* men) wants the job.”

No matter what you call it, this is a sure sign of progress, and it will be exciting to see where these women take the US media landscape in the coming years.

WEEKLY TIP FOR WOMEN

DON´T PUT ALL YOUR EGGS IN ONE BASKET…

After the Covid-19 pandemic, applying this age-old saying as part of your investment strategy has never felt more important. Mellody Hobson, reflecting on her own experience, shared this advice when her company faced an 80% loss of assets during the 2008 financial crisis. By diversifying your investments and generating additional income through the methods mentioned earlier, you can safeguard your portfolio and increase its resilience, even in the face of the most challenging economic conditions.

@risethemovement

www.risethemovement.com

Regardless of whether you are scared to take the first step or you are ready to dive right in, there's an Investment strategy perfectly suited for you. At R.I.S.E we are committed to guiding and supporting women investors at every stage of their investment journey because we believe the key to success lies in education and informed decision-making

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