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Quest for the Holy Grail

  • Learn about the importance of dividend investing on income
  • Ascertain the effect of recent political events on income generation
  • Learn how to use bonds to generate an income
CPD
Approx.60min
Quest for the Holy Grail

Introduction

Many clients are driven to invest – and therefore seek advice – because they seek an income on their savings. In recent years seismic changes have intensified this quest for income.

Not least among these is the advent of pension freedoms.

Since April 2015 emboldened investors, faced with the prospect of seeing their money grow at a faster rate of return than even an inflation-linked annuity might allow, have added to the number of those chasing income.

Increasing longevity also means many older investors, who have admittedly benefitted from decades of economic growth, such as rising house prices and high interest rates, are needing to squeeze even more out of their savings. But at the same time income seekers are facing a challenge.

The credit crunch and subsequently stalling, and re-starting, of a sputtering global economy with low interest rates has squeezed dividend pay outs – a previously reliable source of income. In particular investors who rely on large cap stocks for their dividends as a source of income are wondering if these are sustainable over the longer term.

Infrastructure funds have for a number of years been offering reliable income for those looking at alternatives. Now that the newly elected US president Donald Trump and our own PM Theresa May have both announced that they will be looking to invest in infrastructure these funds may become an alternative for income seekers.

Bonds, another traditional income source, have had a spectacular rally over the past decade, but this has fallen back in recent months, as investors weigh the prospects of a rise in inflation. 

For those for whom income is a paramount concern this supplement will aim to provide an informative guide with some food for thought. 

Income is a large part of investing, the challenge now is to find new and ever more innovative ways of generating it, without taking unnecessary risks.

Samantha Downes is assistant editor of Financial Adviser

In this special report

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What does Mr Hollands warn investors about when it comes to blue chips?

  2. Mr Woodford has expressed disappointment in his fund's performance. True or false?

  3. How many investment companies have increased their dividend each year for the last 20 years?

  4. What does Mr Milburn say could leave an investor with unwanted or not understood duration or interest rate risk?

  5. What does Mr Doherty recommend to beat inflation?

  6. Which is one of the approaches Gavin Haynes recommends taking towards infrastructure investment?

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You should now know…

  • Learn about the importance of dividend investing on income
  • Ascertain the effect of recent political events on income generation
  • Learn how to use bonds to generate an income

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