Request a complimentary no-obligation consultation with Stephanie Fullerton today!
Phone: (623) 974-0300 / info@fullertonfp.com / Location
Free Social Security Guide
When should you draw benefits?
Access our free Guide today!

Income Vs. Growth


Asset management requires focus. It works best when investors have a clear investment objective. For many years, investors became accustomed to extended periods of stock market gain which generated enough capital appreciation from which they could live. However, for the last decade or more, many markets have proven unreliable in providing the consistent, long-term capital gains required to cover spending needs. Buying and holding investments in the hope that prices will eventually go up may no longer satisfy the lifestyle requirements of many investors. 

After a “lost decade” for stock market appreciation, is now a good time to focus on income and capital preservation when consistent income is required?

At Fullerton Financial Planning, we call this the “Lost Decade” for the stock market—a period similar to 1965 to 1982 in which months of price appreciation were followed by comparable, but opposite, periods of price depreciation.

Therefore, we ask those investors who are concerned about the future of financial markets to consider a different approach. What if your investments were able to generate enough income to meet your expenses even in a flat market? If you could secure a dependable foundation of investment income, would any additional growth in asset values be a bonus? 

At Fullerton Financial Planning, we discuss your income needs and put together a plan for the coming years—an income plan that you can use to monitor your financial well-being. Then, our investments are carefully selected with your income goals in mind. This isn’t a short-term attempt to maximize returns with little attention to risk. 

This is a focus on producing regular income to meet your living requirements while seeking to protect capital in volatile markets.

This is an alternative approach to asset managers who feel they can always beat the stock market. Always trying to beat the stock market can add significant risk and isn’t very useful when the market produces a negative return, as in 2008.

In our experience, planning for income is much more reliable than relying on market values consistently going up. 

Achieving an income level that meets your goals can therefore free you from the constant worry that comes with the need for prices to go up in order to maintain your lifestyle objective.

INCOME: THE RENTAL PROPERTY ANALOGY 

We often compare our investment methodology to owning a portfolio of rental properties.1 The first consideration for such a portfolio might be the search for, and selection of, quality properties in attractive neighborhoods with financially secure tenants. You would look to acquire these properties at a “good price” which would provide an attractive level of income and the potential for the property values to appreciate at some unknown time in the future. Ideally, this property and portfolio would produce a consistent rental income stream cash you can use for living expenses. 

Now, imagine you hear the price of property is falling and your portfolio is now worth less than it was just a few months ago. As the primary objective of your property portfolio is income, you probably wouldn’t worry too much about this decline in value—providing the properties are still in good condition and the tenants remain financially sound. 

In fact, a drop in property prices may be an opportunity to review your portfolio with opportunity to pick up undervalued property and thereby generate higher income. This is possible because, if the price of an income producing investment drops while the income remains the same in dollar terms, your income levels (yield) will increase as a percentage.

1 This is a hypothetical description intended to provide an insight into the income benefits and holdings quality of the DIAS investment philosophy when applied to income portfolios. DIAS Portfolios typically contain liquid securities traded on U.S. exchanges and covering a wide range of asset classes. Although these portfolios may periodically contain a small percentage exposure to property values, it is rarely a significant asset class. 

NAVIGATING VOLATILITY & PRESERVING CAPITAL 

Income investing is a journey with a long-term percentage yield as your destination. Sometimes the ride is smooth; sometimes it can get bumpy. We believe our job in managing income-generating portfolios is similar to that of an air traffic controller. The goal of an air traffic controller is to keep a number of planes in the air and as close as possible to a planned flight path while avoiding turbulence and storms. Think of each asset class we allocate capital to as an aircraft flying through the sky. Income is only produced if the aircraft is in the air. We actively manage the path of these asset classes, and the investments contained within to avoid the turbulence our research suggests may be approaching. If an asset class gets too turbulent, we’ll sell it and move to a calmer region or move to cash until brighter skies approach. If we feel the turbulence is temporary, we’ll prepare our investors and portfolios for a bumpy ride. We can’t promise to avoid stormy markets, but we do try to keep the income flowing throughout the journey.

DIVERSIFICATION: BONDS ARE NOT THE ONLY SOURCE OF INCOME 

Today’s markets offer a wide range of income opportunities. At Fullerton Financial Planning, our goal is to construct portfolios which benefit from diversified income streams. Diversification across non-correlated asset classes may increase yields and reduce your exposure to significant losses. 

RISK MANAGEMENT 

When you make income your primary investment objective, a number of things can change. Short-term price volatility should be less worrying because your investments are paying consistent income. The income generated from a Fullerton Financial Planning portfolio can be taken and used to cover your expenses without disrupting the underlying investment portfolio. Alternatively, it can be reinvested to increase your portfolio value.

Price gyrations may be less of a concern to you as an income investor because you no longer need to rely on prices going up to fund your lifestyle. When markets become volatile, the most important concern becomes: “Will the company behind the investment still be paying income in five years’ time?” instead of “My principal has fallen and I need to sell into a down market.” Income often provides the conservative investor with a comfort factor in difficult markets.

If asset prices going up and down represents your Investment Pain, receiving regular income is your Investment Gain.

If Fullerton Financial Planning can manage a portfolio that produces a desired income level, chasing capital gains by taking on more risk may become unnecessary. In challenging markets, we may even reduce income levels temporarily in an attempt to reduce risk and preserve principal.

When the price of an income-paying security falls, the percentage income level (the yield) increases. Purchasing at this lower level “locks-in” the higher yield and opens the possibility of increased portfolio yield and capital appreciation. 1

Portfolio yield provides a foundation of income which can be added to any risk-adjusted gains if and when such gains are periodically available. 

At some stage in life, you may need your investments to provide income which covers your living expenses.

When this time comes, is it wise to continuing focusing on investment growth? When income is something you rely upon, consistent investment yield with an element of capital preservation may be more appropriate. 

1 Dividends payouts can rise, fall or be suspended. They are regularly subject to the review of their continuation by the Board of Directors of the issuing company.








Stephanie Fullerton

Fullerton Financial Planning was established by Stephanie Fullerton, a native of Delaware, and resident of Phoenix for 37 years. She set out determined to help retirees preserve their nest egg and meet their financial goals for retirement.
learn more about Stephanie

Our Specialities
» Retirement Planning
» Wealth Accumulation
» Annuities
» Life Insurance
» IRA & 401(k) Rollovers
» Medicare
As Seen On



Giving Back
» The whole Fullerton Financial Planning team is dedicated to helping the needy in our communities and around the world.

Stephanie and Steve Fullerton, along with their staff, focus on helping individuals create retirement strategies using a variety of financial products to custom suit their needs and objectives. Stephanie Fullerton is a licensed insurance professional with Fullerton Financial Planning. Steve Fullerton is an Investment Adviser Representative with Kingdom Financial Group. Insurance products and services offered through Fullerton Financial Planning. Investment Advisory Services offered through Kingdom Financial Group, LLC, an Arizona registered investment advisor.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product.

*Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured.

The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation.