When I bought Yes, You Can Be a Successful Income Investor!, I was determined to learn everything there is to know about income investing. While I may not have learned everything, this book did not disappoint in its mission.

The book explains the following types of income investing:

1. Bonds
2. Stocks
3. Preferred Stocks
4. Real Estate Investment Trusts (REITs)
5. Annuities

I am not sure but I think the Bond Market was invented by unemployed Rocket Scientists. There were more highly trained geniuses than the NASA space program could employ and, as a way to fight boredom, the leftovers got together and invented the Bond Market (just my hypothesis).

I had read books about investing in bonds and I had done a great deal of research on the Internet. When I was finished, I only had one thing to say. "Huh?"

To me, the bond market seemed like one highly, over-complicated mess. Without using those exact words, Ben Stein and Phil DeMuth acknowledge just that. Then they do an excellent job of removing the complexity and explaining it in ways that just about anyone can understand.

The authors devote four chapters to explaining bonds and their place in income investing. They start with the basics and then move on to a Risk/Reward model for bond investing. They don't just list the risks involved. They tell you what the antidote is to minimize each type of risk.

For those of you who are itching to throw your money at something, the third and fourth chapters on bonds show actual investments you can make. Most of their recommendations suggest that you buy bonds through mutual funds that are focused on the type of bond you want. They provide you with names of Mutual Funds along with their trading symbols so you can start your research at that point. The third chapter called "Essential Bonds for Fixed-Income Investors" focuses on lower risk bonds. The fourth chapter called "Higher Yielding Bonds" focuses on higher risk bonds.

The next part of the book talks about my favorite form of investing - stocks. My background in stocks was the "buy low, sell high" concept that just about all amateurs start out with. Now I needed to look at stocks differently because I was looking for income - dividend income to be precise.

As with bonds, the chapter on stocks lists both individual stocks and mutual funds of interest, ones that focus on dividends. You walk away from this chapter with stock and mutual fund symbols from which you can start your research. For those who think "what should I invest in?" is the biggest problem you have to solve, this is the place to start.

They discuss various strategies that are not complex but may not instantly jump out in everyone's mind. For instance, if you can buy a mutual fund of dividend paying stocks that pays 3.5% there is no reason to assume additional risk by buying individual stocks that pay 3.5% or less.

There is an entire chapter devoted to Preferred Stock. It explains the characteristics, complexities, and differences from common stock investing. They list individual preferred stocks and preferred stock mutual funds. They suggest minimizing the risks involved by using a mutual fund. I have not personally invested in any preferred stocks. If you are considering this type of investing, this chapter is quite informative.

A REIT is a collection of real estate properties owned by a company. By investing in a REIT you, in essence, get the benefits of real estate investing without all the headaches that go along with being a landlord.

REITs are required to pay out 90% of their annual taxable income in dividends making them quite advantageous to income investors. By paying these dividends, they do not pay taxes on that money. Consequently, the dividends you receive are subject to normal taxes and you do not get any of the tax benefits associated with dividends from non-REIT stocks.

As they have done with all of the other types of investments, there are lists of companies and stock symbols you can use to start your research.

Annuities are an income investment tool that most people will consider as they get closer to retirement. With an annuity, you give a chunk of money to a company. They invest it for you and starting on a previously agreed upon date, they send you money every month until you die (or some other termination date). Annuities are complex. This is just a basic description. The authors stress extreme caution when buying an annuity.

The only difficult thing to deal with about this book is the timing. Most of the investments and their rate of return came from 2004. The authors suggest more than once that this information will probably be "dated" when you first read it and you will need to look at current numbers. But I do like the lists of investments they provide as a starting point for those who are interested in doing their own research.

We live in a world of extremes. Most investors concentrate on maximizing their yield on investments. We focus on growth and high returns. Some understand the risk/reward tradeoffs. Some don't and others are in denial saying "it won't happen to me." It's human nature to always want the most.

There are a lot of pre-conceived notions about income investing. Many people don't like the lower returns. The smart ones understand the role income investing plays in their total financial picture. For those of you who think that income investing is "something little old ladies do", let me tell you, Grandma was pretty smart.

Now that you have read about the four books that changed my life, let's go to the Conclusion. There you will see that there is still one more missing piece, the one I call Paycheck Independence Day.