Beginner's Guide to Growth and Income Stocks

Regardless of the benefits, Kathleen isn't comfortable taking a lot of risk to fund her children's education. She's not sure she wants to put her money into a state college plan. Right now, she wants to create her own plan so she can have control over it, and she definitely wants to be more conservative with the risk she takes.

So let's look at some moderate growth stocks with income that would do well to meet Kathleen's education goals for her children.

To research dividend-paying stocks on TheStreet.com, enter "dividend" in the TheStreet.com "Search Articles" box. You can also get dividend-paying stock stock ideas on Stockpickr.

Then, let's look at growth stocks without income, which would be more appropriate for long-term horizon goals, such as Kathleen's retirement.

To research growth stocks that might not pay dividends, enter "growth stocks" in the TheStreet.com "Search Articles" box. You can also get growth stock ideas ideas on Stockpickr.

Let's look at a few other scenarios. If Kathleen is within five years of retirement, she would want to look closely at income-producing stocks and consider investing in high-dividend-yield stocks, a favorite investment for this age group. In addition to providing a regular stream of income, dividends offer a cushion to investors in bear markets and a source of stability during bull markets .

With the recent change in tax treatment for dividend payments, these stocks are becoming increasingly attractive for all investors, not just retirees. The maximum tax on capital gains , which is the tax you pay on your earnings, has dropped so that the most you'll pay is 15%, but it could be as low as 5%.

But what if Kathleen changes her mind later and wants to take on more risk? What would her best choices be? If Kathleen has time to ride out the waves in the market, then she may want to consider more aggressive growth stocks.

Ride the Market or Look for Value Plays?

In addition, she may want to look at stocks from a few sectors , such as energy, financials, health care, telecommunication services or utilities, to diversify and balance her risk (see "Beginner's Guide to Diversification").

Kathleen sits back with a big sigh of relief. She's got a lot of options. Risk isn't so scary once you understand it and learn how to benefit from it. She's not lost in the investing jungle after all!

To learn how to find growth and income stocks on your own, check out these tutorials on TheStreet.com:

• "How to Pick Momentum Stocks." Keeping an eye on what the big funds are starting to buy can net you big returns.
• "How to Find Winners Close to Home." With some homework, you could find the next winning stock before Wall Street does.
• "How to Find Top Dividend Plays." Learn how to find winning stocks that offer growth and income.

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