The income you can get by leaving money in the bank is pretty bad these days. It's crazy to think that with a million dollars in the bank the most you might be able to get is $30,000, with most accounts offering less of a return than that.
So, what should an income-seeking investor do?
I think Australian shares are the answer. Many experts agree that, on the income side of things, Australian share investments are hard to match for the income they can produce.
Here are three ideas to generate good income for your lifestyle:
Rural Funds Group (ASX: RFF)
Rural Funds is currently the only purely agricultural real estate investment trust (REIT) on the ASX. It owns farms in a variety of different food sectors including cattle, vineyards, almonds, macadamias, cotton and poultry.
I think it's a really good income option because it has rent rises built into all of its contracts with indexation linked in some way to either a 2.5% increase or CPI increase each year. That allows management to predict that Rural Funds can increase its distribution each year by 4% over the long-term.
It currently has a distribution yield of 5%.
Magellan Global Trust (ASX: MGG)
This is a listed investment trust (LIT) run by the high-performing Magellan Financial Group Ltd (ASX: MFG). It invests in what it thinks are the highest quality businesses in the world, most of which are listed in the US.
Its largest holdings include Facebook, Alphabet (Google), MasterCard, Visa, Wells Fargo, Lowe's and Apple.
Magellan Global Trust has a target of a 4% yield of its NAV and also looks to provide shareholders with solid capital growth.
This is a listed investment company (LIC) operated by Naos. It looks to invest in mid-cap shares that are outside of the S&P/ASX 50, which should provide more growth than Australia's biggest blue chips but also be relatively safer than small caps.
Over the past three years its portfolio has returned an average of 15.25% per annum before fees and it has increased its dividend each year since the second half of FY15. The recent changes to its benchmark make it a more compelling choice.
It currently has a projected grossed-up dividend yield for FY18 of 8.1% which will soon be paid quarterly instead of every six months.
All three shares are trading at better value than they were in recent history. At the current prices it's hard to choose a winner, Naos has a much bigger yield but the other two may create stronger total returns over the medium-term.