Many people receive income from their investments into their accounts, which they can reinvest, spend, or use to “make a stash.” However, my hunch is that very few investors understand how the income distribution process works.
“Money, it’s a gas. Grab that cash with both hands and make a stash.” – Pink Floyd, Money
Not so fast. Yes, many people receive income from their investments into their accounts, which they can reinvest, spend, or use to “make a stash.” However, my hunch is that very few investors understand how the income distribution process works and its impact on the investments themselves. While it’s not typically an issue, sometimes this lack of understanding can cause unnecessary concern. For example, in December 2021, our clients – or at least the ones who follow their accounts closely – awoke one morning to discover that one of their mutual funds had dropped -17% overnight.
If your initial reaction was, “Yikes! What happened to that fund?” you’re not alone, and that situation naturally led to some incoming client questions. But what if I told you that there was absolutely no issue with the investment and that the “loss” was simply a matter of optics related to an income distribution? That real-life situation is partially what prompted this current Alt Blend series. And with our income-generation basics in mind from Part 1, it’s what we’re going to continue learning more about today. Here we go…
Links mentioned in this episode: https://altblend.com https://thebahnsengroup.com
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