E D'S RANT April 2018
In short, it’s arguable that the wrinklies and the middle-aged are keeping the global fixed interest scene in liquidity during a time when yields have become painfully strained. And that their increased need for balance and security is not going to disappear in a hurry. The challenge for advisers and investment managers, then, is to judge their sector allocations correctly. And for investment groups to generate products that will cater specifically for risk-averse investors. The impact of pension freedoms is significant as it places responsibility for key decisions on individuals who may or may not be sufficiently well-informed to consider all the factors involved – especially the risks. The need for sound professional advice has never been more important.
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I NVESTI NG FOR I NCOM E
The numbers The Pensions Policy Institute forecast in 2015 that – even allowing for the increase in the State Pension age, especially for women – the numbers of women reaching SPA by 2040 would grow from 6.51 million in 2020 to 8.92 million. While males of State Pension age would swell from 5.48 million to 7.73 million. That would leave the SPA group equating to 37% of the working age population, up from 28% in 2020.
In short, it’s arguable that the wrinklies and the middle-aged are keeping the global fixed interest scene in liquidity during a time when yields have become painfully strained
Let’s also remember that Britain or (especially) the United States, with large migrant working-age populations, have relatively young workforces compared with Germany or Japan or China, where the problem of working-age balance is far more severe than it is over here. We could try to insist that those countries’ issues don’t really need to impact a UK investor’s retirement portfolio, but that would be to ignore the fact that the UK accounts for only 6% of the world’s financial markets, and that the kinds of income producers we buy in London may be buoyed up by the demand from retirees in other parts of the globe as well. The big picture is getting bigger all the time. And that’s another thing that isn’t going to change any time soon.
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