In search of yield

Whether your client is heading into retirement or just wants to supplement their paycheque, the demand for income planning will only rise.

But with central bankers promising to keep interest rates in the basement until the Western world recovers economically, the trick is securing a decent yield. Bonds are yielding next to nothing and risk capital depreciation. Dividends expose your client to equity risk.

It’s time to hit the books and read up on income planning.

Income solutions for everyone The divide used to be fairly clear: Equities for the young ’uns, income solutions for retired folks. The mere mention of the word “dividend” to a pre-retiree sitting across your desk might have drawn stares.

Income planning tips When people think of income planning, they usually think of retirement. Prior to retirement, Canadians are mainly concerned with paying debt and accumulating retirement assets, so they ignore income-planning opportunities.

Find yield for your clients Market uncertainty has pushed retail investors to look for yield rather than returns, which has made fixed income investing expensive and potentially risky.

Growing income during retirement As much as 60% of retirement portfolio growth can come from investment returns earned during retirement. In other words: Just because you’ve stopped working, doesn’t mean your investments have to.

Income planning case studies Proper retirement planning requires planning for the worst, so deciding what to focus on in a retirement plan is no easy task. More often than not, financial planners think in terms of accumulation. But, once you switch from the accumulation stage to the distribution stage, the math is entirely different.

Focusing your practice on income planning Income planning has long been regarded as the dull cousin of accumulation. The ups and downs of the markets are always the talk of mainstream media, while people scratch their heads when the discussion changes to GICs or annuities.

Back to the land: Investing in real estate Real estate can do more than keep the rain off your client. It can form a solid foundation in an income portfolio, shelter your client from inflation, and smooth volatility.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.