The risk is that the company that you bought has problems that justify its low valuation. However, if you choose companies that are in good financial shape and there's an explanation for why their stock is selling cheap, chances are the shares will resume their growth eventually. In looking at a stock, one tends to look at earnings growth and revenue growth. An answer of less than 1 is considered a signal that the stock may be undervalued. Before you begin to invest, it is a good idea to identify your financial needs and goals.
Bonds are the most common investment tools that are used to produce income.
There are several types of bonds ranging from taxable corporate and US Government bonds, to tax-free municipal bonds. Annuities are another example of an investment tool that can provide a steady income for a specified period of time or for life. Stable growth and preferred stocks are also common investments for providing dividend income and growth. You can also set up a mutual fund investment with an automatic withdrawal plan to provide a steady flow of income. There are many ways to receive income from your investments, you just have to identify which product meets your goals and provides you with the amount of liquidity that you need.