There are a lot of suggestions these days about where to get extra income, but less discussion about the cost attached to it. A diversified multi-asset approach can help—and provide additional growth potential. But how it’s designed matters.

Earning investment income today is a challenge, and it’s not getting any easier. Years of central bank quantitative easing have reduced the supply of income-generating bonds. As a result, yields are very low—and even lower after taxes and inflation.

At the same time, the risks inside income-oriented indices are rising. The duration, or interest-rate sensitivity, of the Bloomberg Barclays Global Aggregate Bond Index has grown by 27% since 2008, leaving investors vulnerable as US interest rates rise. On the equity side, dividend-paying stocks, based on price-to-earnings ratios, are trading at a valuation of 24.0 times earnings. The 40-year average is just 13.9 times earnings.

In fact, many of the areas people turn to for an income boost run the risk of large drawdowns if things go wrong. Real estate is a good example. Over the last 10 years, the average drawdown in Morningstar’s Global Real Estate category was 15% and the biggest was about 60% (Display).

In just about every asset class, investors today must take more risk than they did a decade ago to earn the same level of income. In these conditions, it’s clear that simply piling into income trades isn’t the answer.