Say, for example, you invested 10,000 in an income fund five years ago. You would have got an income of 300 a year. But during that time, your fund would have been growing in value too. With the average income fund, your capital would be worth 17,130 today, giving you an income of 513. But you need to pick your fund carefully.
Many funds carry the income label but have vastly differing remits some are more risky than others.
To help you make the right choice, our independent experts have selected a range of funds which are either suitable as core investments ie. This fund has been managed by George Luckraft since 1993 and has shown excellent performance consistency within its sector. If you had invested 1,000 five years ago and not taken any income, you would have a pot worth 2,896 today against 1,801 for the sector average. This basically means that he will hold pure growth stocks, which don't have a yield and at the other end of the spectrum he will hold very high yielding stocks to provide the income. Many technology holdings have been reduced significantly in recent months, most of them prior to the recent correction.