Close Menu
BestNewsOnline
    Facebook X (Twitter) Instagram
    BestNewsOnline
    • Retirement planning
    • Insurance
    • Real estate
    • Subscription
    BestNewsOnline
    Home»Retirement planning»The IFA challenges the concept of risk in retirement planning
    Retirement planning

    The IFA challenges the concept of risk in retirement planning

    November 16, 20223 Mins Read
    WhatsApp Facebook Telegram

    Independent financial advisory firm Chancery Lane has called on the industry to redefine the meaning of risk in retirement investing.

    In its latest white paper, the IFA argues for an income investing strategy as opposed to a capital gains strategy linked to retirement planning.

    The document warns that the “stubborn confusion” of income and capital returns is a “major stumbling block” to providing income to pay monthly living expenses.

    He argues that the income stability of an asset matters more than its capital value or share price if the goal is to ensure retirees receive income each month through reliable investments.

    Chancery Lane Managing Director Doug Brodie said: “Having had institutional risk descriptors as the backbone of defining ‘retail investor risk’ for so long, we shouldn’t miss an interactive discussion between the advisor and investor on income risk, capital risk, and emotional decisions and timelines.

    “The simplicity of the natural income approach is more predictable, more valuable, and ultimately more reassuring for investors, especially those in retirement.

    “It meets what is demanded by most pension investors – income for life, increasing each year to counter inflation, with a good degree of certainty, while retaining some or all of the capital at forward as needed.”

    Source: Chancery Lane

    According to data from Chancery Lane, there was no correlation between income and capital over the past 33 months.

    Among the major investment trusts tracked by Chancery Lane, the income payout record remained at 100%. Only one of them made a reduction, in 2020.

    In contrast, the FTSE All Share Index has fallen 16 times since January 2020, or 48% of the time. Chancery Lane said passive index investing is a “stressful and unreliable” method of generating income.

    For the bond market, Chancery Lane used the M&G Corporate Bond fund as a proxy. It also fell for 16 of the 33 months.

    Source: Chancery Lane

    Brodie added, “Even during this period of high investment volatility, investment trust dividends have remained consistent and outperformed earnings thanks to the total return of low-cost passive trackers and the traditional 60/40 portfolio.

    “This is because they have a rare ability to support dividend payments as balance sheet reserves, which is a good option to provide stable income for those who have bid a fond farewell to their former stable income – monthly salary.”

    In last year’s white paperChancery Lane sought to spread the assets of a portfolio to generate income.

    He has found that an equity investment is often the safest way to achieve this goal.

    Add A Comment
    Leave A Reply Cancel Reply

    What's hot

    Insider Selling: Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN) VP Sells 700 Shares

    November 14, 2022

    Biggest Changes to Retirement Accounts Due to New 401(k) and IRA Rules

    January 24, 2023

    Real Estate Source, Inc. Helps New California Residents Find Dream Homes

    October 25, 2022

    Checklist of financial planning steps to take before the end of the year | Company

    December 4, 2022
    Don't miss

    Cambridge Investment Research Advisors Inc. Strengthens Position in Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI)

    January 13, 2023

    Three-bedroom house sells in Worcester for $525,000

    January 19, 2023

    300 Kimball in Parsippany changes hands for $88 million

    December 24, 2022
    Picked for you

    LACERA invites tenders for the system’s emerging real asset management program

    Retirement planning February 2, 2023

    The Los Angeles County Employees Retirement Association invites proposals from qualified companies to implement the…

    BestNewsOnline.net is owned and managed by

    Top10 International FZ LLE
    Office 2002, 20th Floor, Creative Tower
    Fujairah, United Arab Emirates
    TRN: 100608946800003

    • Home
    • Contact us
    • Privacy policy
    • Terms and services

    Type above and press Enter to search. Press Esc to cancel.