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Why It’s Important to be Clear on Investment Goals

Whether you are in the investment planning stage, the retirement planning stage or both, our parent company AMP recently provided information reminding us all how important it is to be clear on investment goals. We provide individual consults in our Perth office. One of the first questions we usually ask is about investment goals. Believe it or not, some of those we are consulting don’t have any investment goals yet.

Clear on Investment Goals

Why Now?

The cash interest rate is at record lows. While this is a boon for borrowers, it is causing many investors to rethink their strategies. One of the major decisions investors must make now is whether they prefer income sustainability or capital stability. *

Previously, term deposits and other cash investments have been regarded as “safe.” Under normal circumstances, cash investments deliver an adequate, if not large, level of income. In addition, their capital value is stable. *

So, what has changed? When the RBA cash interest rate is low, both loan rates and the income provided by long term cash deposits are also low. Since the RBA cash interest rate is the lowest it has ever been, many cash investments are no longer providing high enough returns to offset inflation. *

AMP mentions that a diversified portfolio of real assets, shares and bonds can be utilised to help investors produce income streams that are sustainable and predictable and rise progressively with age. They go on to mention investments such as shares offered by “quality companies,” corporate bonds of high quality with fixed coupons and property assets, especially those with long term rental agreements. Any infrastructure assets offering returns that can be linked to inflation are also seen as wise investments. *

Call Approved Financial Planners in Perth Today

We can’t provide advice on our blog, but we will be more than happy to provide a free consult in our office. To learn more or to start bringing clarity to your investment goals, call us today: 08 6462 0888.

*AMP Capital, 14 May 2015. “Be Clear on Investment Goals.”