Where Do Mutual Funds Fit in Your Current Income Portfolio?

A current income portfolio is a device that is commonly used by retirees or those that wish to create additional sources of income. Many investors choose to include mutual funds in their current income portfolios. Here are a few things to consider about current income portfolios and where mutual funds fit into the equation.

Current Income Portfolio

This is a type of portfolio that focuses on creating a residual income for the investor. Instead of focusing on capital appreciation, the only concern is maintaining wealth and creating income from it. This makes it a very popular choice for retirees. Many retirees have retirement money that they want to make last for a certain period. By investing this into a current income portfolio, they can maintain their assets and create a monthly income for themselves.

Mutual Funds

Mutual funds make a suitable investment for this type of portfolio in many cases. There are many different types of mutual funds available, and several of them would be perfect for a current income fund. For example, you could choose to invest in a bond fund for this type of portfolio. With a bond fund, the mutual fund manager uses the money from investors to purchase many different corporate and government bonds. These bonds pay a monthly rate of interest to the mutual fund. The mutual fund then pays the investors on a monthly basis.

Another type of mutual fund that could be beneficial is the dividend fund. This is a mutual fund that invests in stocks that commonly pay dividends to shareholders. The mutual fund will hold a diversified portfolio of stocks and then collect dividends from the companies. These dividends are then passed along to the shareholders in the fund.

Benefits of Mutual Funds

Mutual funds can provide a few benefits to current income portfolios. For one thing, mutual funds do a great job of diversifying their investments. When you purchase shares of a mutual fund, you know that you are getting a piece of hundreds or thousands of different securities. This works to lower the overall risk of the portfolio and your investments.

Professional money management is another benefit that you get by including mutual funds in a current income portfolio. You have someone else making the individual decisions on what securities to buy and sell. This makes the process much easier for you.

Dividend Stocks

One alternative that you have to investing in mutual funds is purchasing dividend stocks on your own. This will require you to research individual companies and purchase their stocks with a brokerage account. You will want to focus on larger companies that have a steady history of paying dividends. Some companies will even pay monthly dividends to their investors, which would be beneficial to you in this situation.


As part of a current income portfolio, you might also consider investing in annuities. These are products sold by insurance companies. Annuities will pay you a regular paycheck every month in return for a lump sum or periodic premium payments over a given amount of time.

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