Regular Income versus Capital Gain

An investment usually produces a combination of regular income and a capital gain. 

Different types of investment produce different combinations of these two types of return to the investor.

Some investments produce only a regular income without any capital gains; for example, fixed deposits.  While at the other extreme, some investments produce no regular income but promise the possibility of high capital gain; for example, investment in gold or diamonds. 

An investment which relies on capital gains alone is a much more risky investment than one which provideds a regular income. 

An investment which relies on capital gains alone to reward its investors is less attractive than one which provides the investors with regular income because the former is much less certain than the latter.  Furthermore, it is only received right at the end of the period of investment. 

An investment which relies on capital gains to reward its investor usually (but not always) produces much higher return than one which relies on regular income.

The above principles are similarly applicable to share investment and putting money in long term fixed deposits.  Over the long run, the return on an investment of shares is very much higher than the return on fixed deposits.  Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record}.