Today I want to discuss briefly about the quest for income generating investments. Many investors have the desire to invest in income generating instruments. Here is a particular fund which pays a dividend of 0.4 cents per unit almost every month. If one had bought the fund at the initial price of $1, the dividend yield is approximately 4.8%. The following chart shows the value of the fund assuming $100,000 was invested at the launch of the fund priced at $1 per unit. This chart does not include the dividends which the investors received during the entire period.

However, if you would to invest $100,000 in exactly the same fund but opt for ‘dividends reinvested’ and then manually sell $400 worth of units every month, the following chart illustrates the value of your remaining ...