Retirement Portfolio Resilience Perspective
Primary Pillar: Retirement Portfolio Construction
Supporting Pillars: Behavioural Survivability • Risk Pricing Discipline
This historical educational paper examines the retirement income dilemma facing investors in a prolonged low interest rate environment and explores how portfolio construction can seek to combine equity income with reduced exposure to major capital losses.
Viewed through today's Retirement Portfolio Resilience Framework, the enduring contribution of this publication is its recognition that retirement investing requires more than choosing between income and growth. It identifies the need for complementary portfolio construction that allows investors to participate in long-term growth while reducing dependence on favourable market conditions. Although the discussion reflects the market environment of 2016, the underlying objective of building more resilient retirement portfolios remains central to the evolution of Retirement Portfolio Resilience.
This publication forms part of Gyrostat's foundational educational archive documenting the evolution of the Retirement Portfolio Resilience Framework.
Innovative retirement income products – diversified income with capital stability
A perfect storm - An ageing population in a low interest rate, highly indebted world
The current global economic environment has produced a painful dilemma for retirement planning - invest in cash and term deposits and you receive insufficient income; invest in blue chip high yielding shares and you are subject to market fluctuations in the value of your nest egg. Many in the so called ‘Mum’s and Dad’s index’ such as the Australian banks, BHP and Telstra have seen share price falls of around 30% or more since April 2015.
Investing too much in defensive assets may mean that the growth in their portfolio does not keep up with what is required and savings may run out earlier than anticipated. However, investing too much in growth assets means that the assets are more exposed to market volatility and may also run out earlier than anticipate.
There is a solution, made possible by advances in technology and deregulation.
