Investing for Yield means you are seeking income from your investment strategy.
There are several reasons why this may be a great strategy, but fundamentally it always needs to tie back to your specific investment objectives. For example, it is typical for retirees to invest for yield given they need their investments to provide income to meet their living needs.
There are several options that exist to generate Yield from your investments. Below is a chart that reflects a large majority of them, including how they can typically perform from a risk return objective. The vertical axis reflects relative return, whereas the horizontal axis reflects relative risk.
A characteristic of Yield investment is that it generally means lower risk, when compared to the pursuit of pure growth. However as this chart highlights there will almost always be a trade-off for higher returns, in the form of higher risk.
The way to determine the right investment blend is to consider short, medium and long term goals and objectives, personal risk profile and whether capital preservation or growth is the key investment objective.
"GOOD FORTUNE NEEDS GREAT PLANNING"
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Prashant Nagarajan is providing his expertise at our Learn From the Experts — Guide to Retirement Income Startegies seminar in Melbourne on Wednesday 21st September 2016. Come along for more tips, advice and information about how to prepare for your retirement. Click here for more info and to rsvp.
The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions. Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.