Wish your income prospects would improve? W
hether you are a saver or a spender, planning your retirement, or enjoying your silver years, we all want to get our money working harder. But in the current financial climate, it’s difficult to know how. It’s 12 years since the onset of the financial crisis and the effects were still being felt as covid arrived, meaning that savers must also weather the storm of another global recession. Higher taxation, wage stagnation and rising living costs are some of the consequences. Cash savers in bank and building society deposits have been the real losers in recent years, and the outlook appears bleak. Retirement can now last 30 years or more, so it’s vital that your investments last. Any income generated also needs to maintain its spending power to combat the threat of inflation. History shows that through a combination of capital growth and dividend income, investing in equities, or shares, has provided investors with a better chance of outpacing inflation over the long term, compared with other asset classes. The economic crisis created by the pandemic has forced many companies to suspend or reduce their dividend payments. However, it is expected that companies will reinstate their dividend policies as soon as it’s prudent to do so. The long-term track record of shares delivering a rising income remains intact and investing in companies remains
a core component of an income strategy. Investors should have basic principles in place that they can stick to over the long term. For most investors, the best way to harness the dividend potential of equities is through investment funds, which spread your money across the shares of many worldwide companies. Equity funds seek to achieve an attractive total return through a combination of dividend income and capital growth. A diversified fixed-interest strategy will help position your portfolio to help benefit from growth and steady levels of income. Commercial property has a strong, long-term track record for generating a reliable stream
of rental income, as well as the scope for capital appreciation. Importantly, its returns are largely independent of other asset classes. Investors should, however, note that investing in real asset classes (equities, corporate bonds and commercial property) does not provide the security of capital which is characteristic of a deposit account with a bank or building society. To receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact MD Wealth Management on 01379 415511 or email michael.duale@sjpp.co.uk.
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