The Art of Navigating Market Volatility: How Income Investing Can Keep Your Finances Afloat

CNBC EXCLUSIVE: Income Investing Expert Jenny Harrington Shares the Basics

April 8, 2025 - For investors seeking a steady stream of income without sacrificing principal, income investing is an attractive option. CNBC caught up with income investing expert Jenny Harrington to get the basics straight.

"The goal of income investing is to generate a predictable and reliable income stream, while also preserving capital," Harrington explains. "It's not just about the yield, it's about the total return."

Harrington, a veteran investment professional with decades of experience, emphasizes the importance of understanding one's own financial goals and risk tolerance before diving into income investing.

"Everyone's financial situation is unique, so it's crucial to start by assessing your own financial situation and goals," she advises. "What's your income? What's your expenses? What's your risk tolerance? Once you have a clear understanding of those factors, you can start building a personalized income investing strategy."

Harrington recommends a diversified portfolio that includes a mix of bonds, dividend-paying stocks, and other income-generating assets. She also stresses the importance of considering inflation when building an income investing strategy.

"Inflation is a major concern for income investors, as it can erode the purchasing power of their investments over time," she warns. "To combat this, investors should prioritize investments with built-in inflation protection, such as TIPS (Treasury Inflation-Protected Securities) or other inflation-indexed instruments."

In addition to these general principles, Harrington highlights the importance of tax efficiency in income investing. She recommends considering tax-loss harvesting, tax-deferred accounts, and other strategies to minimize tax liabilities and maximize after-tax returns.

"Tax efficiency is critical for income investors, as it can make a significant difference in their overall returns," she notes. "By taking a proactive approach to taxes, investors can reduce their tax burden and keep more of their hard-earned income."

In conclusion, Harrington emphasizes the importance of patience, discipline, and a long-term perspective in income investing.

"Income investing is a marathon, not a sprint," she says. "It requires patience, discipline, and a willingness to ride out market fluctuations. By sticking to a well-crafted strategy and avoiding emotional decisions, investors can generate a steady stream of income and achieve their long-term financial goals."